US Situs Estate Tax for NRI Investors: The $60,000 Trap and How to Plan Around It

You have been investing in US stocks for twelve years through a Schwab account. You have $420,000 in US equities, some SPY units, some individual tech shares, accumulated methodically through dollar-cost averaging from your salary in California and then from remittances once you moved back to Bangalore. You consider this your long-term wealth. You have not thought about what happens to it if you die, because you are forty-four.

Here is what happens. Your estate would owe the US government roughly $125,000 to $145,000 in federal estate tax on those $420,000 in stocks, calculated after a $60,000 exemption that has not been updated since 1988. India has no estate tax treaty with the US. Your family has nine months to file IRS Form 706-NA and pay. If they miss it, penalties and interest accumulate. The tax is due in US dollars, and it comes out of the US assets before your heirs see a rupee.

The 30-second answer: Indian NRIs are Non-Resident Aliens (NRAs) for US federal estate tax purposes. The US taxes NRAs on all US-situs assets at death, at rates up to 40%, above a $60,000 exemption that has not changed since 1988. US-situs assets include shares of US corporations, US-listed ETFs, US real estate, and US corporate bonds held directly. India has no estate tax treaty with the US, so there is no treaty mechanism to raise the exemption or reduce the rate. The planning arsenal includes switching US stocks to Irish UCITS ETFs (shares of a non-US corporation, not US-situs), holding US real estate through a foreign corporation rather than a domestic LLC, and using life insurance in an ILIT for liquidity. None of these strategies require any US residency or citizenship; they require doing the restructuring before death.

This guide covers the full legal framework of US situs estate tax for NRAs, the asset-by-asset situs classification, the rate and calculation, why the India-US treaty gap leaves Indian NRIs particularly exposed, and six practical planning strategies with a worked example showing how restructuring can eliminate most of the tax bill.

The US estate tax and why most NRIs are caught off-guard

The US federal estate tax applies to two categories of people on death. US citizens and US domiciliaries pay it on their worldwide assets, subject to a $13.61 million exemption in 2024 (the doubling under the Tax Cuts and Jobs Act of 2017 is scheduled to expire after 2025 unless Congress extends it, reverting to approximately $7 million in 2026). Non-Resident Aliens pay it only on their US-situs assets, but with an exemption of just $60,000.

That $60,000 figure is not a typo. A US citizen with a $14 million estate pays no estate tax at all in 2024. An Indian NRI who holds $100,000 in US stocks faces estate tax on $40,000 of it. The asymmetry is not new; it was designed this way, and the NRA exemption has sat at $60,000 since the Revenue Reconciliation Act of 1990.

The reason most NRIs are caught off-guard is that the US estate tax is not deducted at source, is not reported anywhere during the investor's lifetime, and is only payable at death by the estate. Your Schwab account does not flag it. Your NRE account manager does not mention it. It surfaces when a US-based executor or attorney files the estate return, often after the family has already distributed the Indian assets and has little cash left in the US estate to pay the bill.

The tax is also separate from the US income tax obligations an NRI may already be managing (capital gains, FBAR, FATCA). It is imposed under a different statute (Chapter 11 of the Internal Revenue Code), has different filing requirements (Form 706-NA, not Form 1040-NR), and its calculation starts from the gross value of US-situs assets at the date of death, not from the gain.

What counts as a US-situs asset

The situs of an asset determines whether it enters the NRA's US taxable estate. The rules are statutory, with decades of case law and revenue rulings filling in the detail.

US-situs assets (taxable for NRAs):

Shares of US corporations. Any share of a corporation incorporated in the United States is US-situs, regardless of where the investor lives, where the brokerage account is held, or whether the share is held through an Indian demat or a Singapore account. Apple, Microsoft, Google, Berkshire Hathaway, and any US-listed ETF that is itself a US corporation (which includes essentially all exchange-traded products listed in the US, including SPY, VTI, QQQ, and the rest) are US-situs. This is the most common source of US estate tax exposure for Indian NRIs.

US real estate. Real property located in the United States is US-situs. This includes residential property, rental property, vacation homes, land, and any indirect ownership through a pass-through entity that is treated as transparent for US tax purposes. A limited liability company (LLC) owned by an NRA is generally a disregarded entity for US estate tax purposes; the NRA is treated as owning the real estate directly, not merely shares of the LLC. This point catches people who were told that an LLC provides estate tax protection. It does not, unless the LLC is a foreign LLC or the holding structure is more carefully designed.

US debt obligations held directly. Corporate bonds of US issuers and US Treasury securities held directly by an NRA are generally US-situs. There is a narrow exemption for "portfolio interest" (interest paid to a foreign person on certain US debt that is not effectively connected with a US business), but this applies to income tax treatment; for estate tax purposes, the debt obligation itself is US-situs unless it falls under a specific statutory exclusion. Get specific advice before assuming US Treasuries are outside the estate.

US tangible personal property. Physical goods located in the United States at the date of death, including art, jewellery, and vehicles. For most NRIs this is not a significant exposure.

US REITs. Real Estate Investment Trusts incorporated in the US are US corporations. Shares of a US REIT are US-situs under the standard corporate situs rule.

NOT US-situs assets (generally exempt for NRAs):

Shares of foreign corporations. The shares of a corporation incorporated outside the United States are not US-situs, regardless of where the company's assets are, where it is listed, or where it does business. An Irish-domiciled ETF is a foreign corporation. A Cayman Islands holding company is a foreign corporation. This is the planning cornerstone.

Life insurance proceeds on an NRA's life. The proceeds payable on an NRA's life insurance policy are explicitly excluded from US-situs assets under Section 2105(a) of the Internal Revenue Code. This exemption makes life insurance useful as an estate tax liquidity tool.

Ordinary bank deposits at US institutions. Cash held in a standard deposit account at a US bank or savings institution (checking, savings, money market deposits) is generally not US-situs, provided the interest on those deposits would qualify as portfolio interest exempt from US income tax withholding. This is the deposit exemption under Section 2105(b). Investment accounts and brokerage accounts holding US stocks are not covered by this exemption; only the cash deposit itself qualifies.

US open-end registered mutual funds (under Revenue Ruling 55-701). Shares of a US-registered open-end investment company (an ordinary mutual fund, such as a Vanguard Admiral Fund or a Fidelity mutual fund purchased direct) have been treated as non-situs under Revenue Ruling 55-701. However, ETFs that are structured as open-end funds (which includes most major ETFs) are treated differently: shares of a US ETF are shares of a US corporation and are US-situs. The distinction between a Vanguard mutual fund (potentially non-situs) and VTI, the Vanguard Total Stock Market ETF (US-situs), is genuinely important and genuinely under-appreciated. Verify with a US estate tax attorney before relying on the mutual fund exemption.

Shares of foreign corporations whose underlying assets are US stocks. This is the core planning insight. If an NRI holds the S&P 500 through an Irish UCITS ETF rather than through SPY, the NRI holds shares of an Irish company. The Irish company holds US stocks, but the NRI's estate holds Irish shares, which are non-US-situs. The underlying US stocks are assets of the Irish company, not of the NRA's estate.

The rate, the calculation, and what $500,000 in US stocks actually costs

The US estate tax is progressive. The rates under Section 2001 start at 18% and reach 40% at the top marginal rate, which applies to taxable estates above approximately $1 million (the brackets were not adjusted for inflation after the 1986 Tax Reform Act, so the bracket thresholds are low).

For an NRA, the formula is:

1. Identify the gross value of all US-situs assets at the date of death.
2. Deduct the $60,000 NRA exemption.
3. Apply the progressive estate tax rates to the remainder.
4. Deduct any marital deduction (limited; NRA-to-non-citizen-spouse transfers are not fully deductible).

At $500,000 in US-situs assets:

• Gross US estate: $500,000
• Less exemption: $60,000
• Taxable estate: $440,000
• Tax on first $100,000: $23,800 (24%)
• Tax on next $150,000: $38,800 (26-28%)
• Tax on next $190,000: approximately $66,500 (32-34%)
• Total federal estate tax: approximately $129,000 to $145,000
• Effective rate: approximately 26-29% of the gross US estate

At $1,000,000 in US-situs assets:

• Gross US estate: $1,000,000
• Less exemption: $60,000
• Taxable estate: $940,000
• Total federal estate tax: approximately $320,000 to $345,000
• Effective rate: approximately 32-34% of the gross US estate

These numbers are federal only. Several US states impose their own estate taxes on real property located in their state: New York (exemption $6.94 million in 2024 but with a "cliff" that can eliminate the exemption entirely), Massachusetts ($1 million exemption), Washington State, Oregon, Hawaii, and others. An NRI owning a $280,000 New York rental property would pay federal estate tax and potentially New York State estate tax on the same asset.

The filing deadline is nine months from the date of death. An extension of six months is available, but it is an extension to file, not an extension to pay. Interest on unpaid tax accrues from the original due date.

The India-US estate tax treaty gap

The United States has estate and gift tax treaties with fifteen countries, including Germany, France, the Netherlands, Japan, Australia, Canada, and the United Kingdom. These treaties typically extend to residents of the treaty country a proportional share of the US citizen's federal estate tax exemption, calculated as the ratio of US-situs assets to the worldwide estate. For a UK resident whose worldwide estate is $2 million and whose US-situs assets are $500,000, the applicable US exemption would be proportionally scaled from the US citizen exemption of $13.61 million, producing an exemption far larger than $60,000.

India has no estate tax treaty with the United States. India abolished its domestic estate duty in 1985 under the Estate Duty (Amendment) Act. There was no longer any domestic Indian estate tax for the US to agree to give credit for, and no treaty was ever negotiated. The absence of a treaty means that Indian NRIs receive no enhanced exemption, no proportional relief, and no bilateral credit mechanism. Every Indian NRI holding US-situs assets is subject to the raw $60,000 exemption with no treaty backstop.

This is not a gap that has been overlooked by planners. It is a structural feature of the current treaty landscape, and it is unlikely to change absent a new bilateral negotiation. The practical implication is that the planning burden falls entirely on the NRI: if you want to reduce US estate tax exposure, you must restructure the holding, because treaty relief is not available.

Six strategies to reduce US estate tax exposure

Strategy 1: Hold US equity through Irish UCITS ETFs

This is the cleanest, most accessible, and most widely applicable planning tool for India-based NRIs. An Irish UCITS ETF (UCITS stands for Undertakings for Collective Investment in Transferable Securities) is a fund incorporated in Ireland, regulated under EU law, and listed on exchanges including the London Stock Exchange, Euronext, and the Deutsche Boerse. The fund holds a portfolio of US stocks, but the investor holds shares of an Irish company.

Because the shares are shares of an Irish (not US) corporation, they are not US-situs for NRA estate tax purposes. The US estate tax does not reach them.

Examples of Irish UCITS equivalents:

• iShares Core S&P 500 UCITS ETF (CSPX, listed on the London Stock Exchange) is the UCITS equivalent of SPY.
• Vanguard S&P 500 UCITS ETF (VUSA) is the UCITS equivalent of VOO.
• iShares Core MSCI World UCITS ETF (IWDA) provides broad global developed-market exposure.

These ETFs are available through international brokers, including Interactive Brokers (which accepts Indian resident accounts), and are fully accessible to NRIs who are Indian residents or residents of the UAE, UK, or other non-US jurisdictions.

One critical restriction: this strategy is only suitable for NRIs who are not US persons. A US person (US citizen, Green Card holder, or US tax resident) who holds a UCITS ETF holds a Passive Foreign Investment Company (PFIC) and faces punitive US income tax treatment on PFIC gains, including the excess distribution regime. If you are a US person, UCITS ETFs are not a viable alternative. See the dedicated guide on the PFIC trap for the details.

For an India-based NRI who is not a US person, switching US-listed ETFs to Irish UCITS equivalents removes US equity from the estate tax net entirely, without changing the economic exposure to US markets.

Strategy 2: Use a non-US holding company for large US equity portfolios

For NRIs with US equity holdings above $500,000, establishing a non-US holding company (incorporated in Cayman Islands, the British Virgin Islands, or Singapore) to hold US stocks achieves the same non-situs result as UCITS ETFs through a different mechanism. The NRA holds shares of a foreign company. The foreign company holds US stocks. The NRA's estate includes foreign company shares, which are non-US-situs, not US stocks directly.

This structure works. It has been used in cross-border estate planning for decades. Its costs are real: company formation typically runs $2,000 to $5,000, annual maintenance (registered agent, accounting, annual government fees) adds $1,000 to $2,000 per year, and the NRA must file any required information returns in their home country regarding interests in foreign entities. Indian residents holding a foreign company should be aware of the Indian Controlled Foreign Corporation rules and reporting requirements under the Foreign Exchange Management Act.

There is also a US-side risk to manage. The IRS can apply look-through rules if the holding company is a sham with no economic substance beyond tax avoidance. The structure needs genuine corporate formality: a real board resolution approving the investment policy, a separate bank account, and ideally a third-party director. A properly documented holding company passes scrutiny. A one-page BVI company that does nothing except hold $450,000 in SPY and has had no board meeting in three years invites challenge.

At portfolios below $500,000, the annual cost of the company structure is unlikely to justify itself purely on estate tax grounds. For those portfolios, UCITS ETFs are the cleaner solution.

Strategy 3: Hold US real estate through a foreign corporation

A domestic LLC is not an effective US estate tax shelter for an NRA. Under US estate tax regulations, a single-member LLC owned by an NRA is a disregarded entity; the NRA is treated as owning the underlying real estate directly. The LLC provides liability protection but not estate tax protection.

A foreign corporation holding US real estate is treated differently. The NRA holds shares of a foreign corporation (non-US-situs), and the foreign corporation holds US real estate. The real estate is inside the foreign company but outside the NRA's US taxable estate. This is a legitimate and recognised planning structure for NRAs owning US real property.

The costs of this approach are higher than for a pure equity portfolio. FIRPTA (the Foreign Investment in Real Property Tax Act) applies to the sale of US real property by a foreign corporation, with withholding at 15% of the purchase price. The foreign corporation may also trigger US income tax compliance obligations on rental income. State-level rules vary. New York, for example, imposes a real property transfer tax and scrutinises foreign holding structures carefully. The structure should be set up with a US attorney who knows both federal and state-level real estate tax.

The critical timing point: the foreign company must be established and the real estate transferred into it before the NRA's death. A structure created after death has no estate tax benefit. And a transfer of US real property to a foreign company triggers FIRPTA withholding on the deemed disposition, so the timing and mechanics of the contribution need professional guidance.

Strategy 4: Irrevocable Life Insurance Trust for liquidity

Even after other planning strategies, some NRIs will retain US-situs assets, particularly US real estate that is difficult to restructure. The problem with an illiquid US estate that owes estate tax is that the executor must pay cash within nine months of death, potentially forcing a distressed sale of the US property to raise the funds.

An Irrevocable Life Insurance Trust (ILIT) addresses the liquidity problem. The NRA (or their family) purchases a US life insurance policy on the NRA's life. The policy is placed in an ILIT, an irrevocable trust with a trustee other than the NRA. Because the NRA does not own the policy at death (the trust does), the proceeds are not includable in the NRA's US estate. The insurance proceeds fall outside the US estate and can be used by the trust to pay the estate tax bill, to purchase assets from the estate for cash, or to make loans to the estate.

Life insurance proceeds on an NRA's life are expressly exempt from US-situs under Section 2105(a), so the ILIT proceeds are also outside the estate tax net for the NRA. The trust is irrevocable, meaning the NRA cannot take the policy back, and it requires a separate trustee. These are real constraints, and the trust needs a US estate attorney to draft properly. But for an NRA with $400,000 in rental property that the family intends to retain, an ILIT providing $150,000 of insurance for the estate tax bill is often the most cost-effective solution.

Strategy 5: Annual gifting to reduce the US-situs estate during life

NRA-to-NRA transfers of US-situs property made during life are not subject to US gift tax. This is an important and under-utilised point. The US gift tax applies to transfers by US persons (citizens and domiciliaries) on worldwide assets, and to NRAs only on transfers of US-situs tangible personal property. Shares of US corporations transferred by an NRA during life are not subject to US gift tax.

This means an NRA can gift US stocks to a spouse, a child, or any other person during their lifetime without triggering US gift tax, regardless of the value of the transfer. The transfer removes the US stocks from the NRA's estate. The recipient's estate may have its own US estate tax exposure if they also hold US-situs assets at death, but the gifting strategy can shift assets to younger generations over time and reduce the senior generation's exposure.

For gifts to US persons, the annual exclusion of $18,000 per recipient per year (2024) applies as a practical planning ceiling for regular annual gifting without any reporting. For gifts to a non-citizen spouse, the annual exclusion is $185,000 (2024, indexed). Gifts above these amounts to US persons require a gift tax return (Form 709), though no gift tax is due until lifetime taxable gifts exceed the applicable exclusion amount.

Strategy 6: Sell or convert US-situs assets before death

The most direct approach is simply to reduce US-situs exposure before death. For an NRI who has retired from international investment and is winding down their US portfolio, converting US-listed ETFs to UCITS equivalents (a taxable disposal in the US, but only on capital gains, not at estate tax rates) reduces the future estate tax bill at the cost of realising the capital gain now.

For US real estate, selling the property removes the estate tax exposure entirely. The sale triggers capital gains tax and FIRPTA withholding (15% of the purchase price, credited against the eventual income tax liability), which is a real cost. But for an NRI whose family has no interest in keeping a US rental property and for whom the estate tax exposure is large, the capital gains tax on a sale may be less than the estate tax on retention.

The timing consideration: these conversions and sales should happen well before any health event that makes the estate tax exposure imminent. A sale triggered while the NRI is hospitalised or after a terminal diagnosis may attract scrutiny, and in any case the stress of executing financial transactions in that period is avoidable with earlier planning.

Worked example: Arun's estate before and after planning

Arun is 58, Indian resident, Indian citizen, no US citizenship or Green Card. He spent fifteen years working in California and has accumulated the following US assets:

• Schwab brokerage account: $450,000 in US-listed ETFs (SPY, QQQ) and individual US stocks. Entirely US-situs.
• US rental property in Phoenix: current market value $280,000. Held in a single-member LLC (disregarded entity). US-situs, treated as directly owned.
• Schwab cash account: $30,000 in a US savings deposit. Likely non-situs under the deposit exemption, but include for conservatism.

Before planning:

• Total US-situs estate: $450,000 + $280,000 + $30,000 = $760,000
• Less NRA exemption: $60,000
• Taxable estate: $700,000
• Progressive estate tax on $700,000 (rates from IRS Schedule R):
  • First $100,000: Rs 23,800 (18-24%)
  • Next $150,000: Rs 38,800
  • Next $200,000: Rs 68,000 (34%)
  • Remaining $250,000: Rs 92,500 (37%)
  • Total US federal estate tax: approximately Rs 2,23,100 in equivalent INR terms, or approximately $250,000
• Plus potential Arizona state-level estate tax (Arizona does not impose a separate estate tax, but a state with its own estate tax would add to this)

Arun's family would owe approximately $250,000 to the IRS within nine months of his death. The $280,000 rental property would likely need to be sold to fund the payment, and a distressed nine-month sale timeline in a rising-rate environment would not achieve full market value.

After planning: Phase 1 (converting the equity portfolio)

Arun liquidates his US-listed ETFs and individual US stocks in the Schwab account ($450,000) and reinvests the proceeds into Irish UCITS equivalents through an Interactive Brokers account. He pays US capital gains tax on the disposal: assume a blended cost basis of $220,000 and a long-term capital gains rate of 15% (he is a non-resident and the net investment income tax does not apply to NRAs). Tax on $230,000 gain: approximately $34,500. Net invested in UCITS ETFs: approximately $415,500.

Updated US-situs estate:

• US equity: $0 (now held in Irish UCITS ETFs, non-US-situs)
• US rental property: $280,000
• US cash deposit: $30,000
• Total US-situs estate: $310,000
• Less exemption: $60,000
• Taxable estate: $250,000
• US estate tax: approximately $61,000 to $70,000
• Saving from Phase 1: approximately $180,000 to $190,000 in estate tax, at a cost of $34,500 in capital gains tax. Net saving: approximately $145,000 to $155,000.

After planning: Phase 2 (restructuring the rental property)

Arun also transfers the Phoenix rental property from the domestic LLC to a Cayman Islands holding company, with proper legal documentation and FIRPTA compliance on the transfer. The Cayman company is properly documented with a board resolution and a separate bank account.

Updated US-situs estate:

• US equity: $0
• US rental property: $0 (held through Cayman company; NRA holds foreign company shares)
• US cash deposit: $30,000
• Total US-situs estate: $30,000
• Less exemption: $60,000
• US estate tax: $0 (US-situs assets below the $60,000 exemption)
• Total estate tax saving from both phases: approximately $250,000

The cost of Phase 2 includes Cayman company formation (approximately $3,000), annual maintenance ($1,500/year), and FIRPTA compliance on the property transfer (US attorney fees of approximately $3,000 to $5,000). Total Phase 2 cost: approximately $10,000 to $12,000 in the first year, plus $1,500/year ongoing. Against a $180,000 estate tax saving on the property, this is a straightforward calculation.

Edge cases

Green Card holders. A Green Card holder is taxed as a US resident for US income tax purposes while the card is valid. For estate tax, the relevant question is domicile, not income tax residency. If the Green Card holder was a US domiciliary (intended the US to be their permanent home), their worldwide estate is subject to US estate tax, subject to the full US citizen exemption. If they were not a US domiciliary (the Green Card was a work authorisation but India was always home), their estate is taxed as an NRA on US-situs assets only. The domicile test is a facts-and-circumstances inquiry: where did they live, where did they maintain a permanent home, where did they intend to remain permanently? This is litigated regularly, and the answer is not always obvious. A Green Card holder who has lived in India for five years since leaving the US and who has sold their US home is in a different position from one who left their US house available and visits regularly.

Indian HUFs and trusts owning US assets. If an HUF (Hindu Undivided Family) or an Indian trust holds US real estate or US stocks, the US estate tax treatment depends on how the IRS classifies the entity. An HUF may be treated as a foreign trust or as a foreign person for US tax purposes. The estate tax consequences for the karta (HUF head) or the trust settlor depend on whether the structure is transparent (and the individual's proportionate share is in their US estate) or opaque (in which case the entity is the taxpayer, not the individual). This requires specific advice and should not be assumed to solve the estate tax problem.

The TCJA sunset and its effect on NRAs. The Tax Cuts and Jobs Act of 2017 doubled the estate tax exemption for US citizens and US domiciliaries to $13.61 million in 2024. This increased exemption is scheduled to expire on 31 December 2025, reverting to approximately $7 million (inflation-adjusted) unless Congress acts to extend it. This sunset affects US citizens and US domiciliaries, not NRAs. The NRA exemption of $60,000 is a separate statutory provision and is not tied to the TCJA provisions. Whether or not Congress extends the TCJA, the NRA exemption stays at $60,000.

State estate taxes on US real property. New York imposes a state estate tax with a $6.94 million exemption in 2024, but it includes a "cliff": if the estate exceeds 105% of the exemption, the full value of the estate (not just the excess) is subject to New York estate tax, eliminating the exemption entirely. For an NRA with a $1.5 million New York property, the federal estate tax would be joined by New York state estate tax with no exemption benefit. Massachusetts has a $1 million exemption with no cliff; Washington State has a $2.193 million exemption; Oregon has a $1 million exemption. Each state's rules apply to real property in that state, and multi-state property portfolios require state-by-state analysis.

Valuation discounts on US real property held through entities. Even where a foreign corporation holding US real estate successfully removes the real estate from the NRA's estate, the IRS may argue that the discount applied to minority interests or lack of marketability in the foreign company should be limited. Professional valuation of the foreign company interests at the time they are contributed and at the time of death is important to defend the non-situs treatment.

US gift tax on lifetime transfers to US persons. While NRA-to-NRA transfers of US stocks during life are not subject to US gift tax (as discussed above), NRA transfers of US-situs tangible personal property (jewellery, art physically located in the US) to any person are subject to US gift tax. Cash gifts from an NRA to a US person are generally not subject to US gift tax (cash is not US-situs tangible property for gift tax purposes). The intersection of estate and gift tax planning for NRAs holding diverse US assets requires precise asset-by-asset analysis.

The closing read

The US estate tax on NRAs is not a marginal issue. At $60,000 exemption and 40% top rate, an NRI with $600,000 in US stocks faces an estate tax bill larger than many Indians earn in a decade. The absence of an India-US estate tax treaty means the bill cannot be negotiated or treaty-credited down.

The three facts that matter most: the $60,000 exemption has not moved in thirty-five years, US stocks held in a US-listed ETF are US-situs regardless of where your broker is, and there is no estate planning that works after death. The restructuring, whether that means UCITS ETFs, a foreign holding company, or a foreign corporation for real estate, must happen before the estate tax event.

The good news is that the tools are available, well-understood, and cost-effective at typical NRI portfolio sizes. Switching to Irish UCITS ETFs costs nothing except the capital gains tax on the current portfolio, which would have been owed eventually anyway. For most India-based NRIs who are not US persons and who hold their US equity in US-listed ETFs, the UCITS conversion is the single highest-leverage financial planning action available, and it requires no attorney, no offshore company, and no ongoing maintenance cost.

Get the structure right while you are healthy and your family will not face a nine-month deadline and a six-figure US tax bill on top of the grief of losing you.

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Related guides

• US Exit Tax and Covered Expatriates: What Indian NRIs Must Know
• The PFIC Trap: Why US NRIs Cannot Safely Hold Indian Mutual Funds
• Roth IRA for US-Based NRIs: Rules, Limits, and the India Angle
• 401(k) Planning for NRIs Returning to India
• HSA for US-Based NRIs: Tax Benefits and What Happens When You Leave
• US Social Security and the India-US DTAA
• US NRI Annual Tax Filing Calendar
• UK Inheritance Tax for NRIs: The Domicile Trap
• NRI Succession Certificate: What It Is and When You Need It
• HUF Tax Planning for NRIs

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Disclaimer: US estate tax is a highly fact-specific area of law. The $13.61 million federal estate tax exemption for US citizens and US domiciliaries is scheduled to change after 2025 depending on Congressional action; the NRA $60,000 exemption is a separate provision and is not expected to change. The domicile determination for Green Card holders requires a detailed facts-and-circumstances analysis and should not be self-assessed. Irish UCITS ETFs and foreign holding company structures have their own tax implications in India, the UAE, the UK, and other jurisdictions; UCITS ETFs are PFICs for US persons and are not appropriate for US citizens or Green Card holders. State estate taxes vary by state. Nothing in this article is legal advice or tax advice. Consult a US estate tax attorney and an Indian chartered accountant before restructuring your holdings.