Marriages that cross national lines are common, and many of them involve one spouse who is a U.S. citizen and one who is not. There is nothing unusual about it and nothing prohibited about leaving your estate to a non-citizen spouse. What does change is the tax treatment. For estate and gift tax purposes, a non-citizen spouse — whether or not they are in the country legally — is treated differently, and the differences are large enough that they belong at the center of your planning.
No Unlimited Marital Deduction
For estate tax purposes, married couples are generally presumed to share their money and property. When the first spouse dies, everything usually passes to the survivor with no estate tax due at that point, because of the unlimited marital deduction available to couples when both spouses are U.S. citizens. That deduction delays any estate tax until the second spouse dies.
That breaks down when the surviving spouse is not a citizen. If a U.S. citizen spouse dies first and leaves property to a non-citizen spouse, the unlimited marital deduction is not available, and any estate tax that is due must be paid right away. The reason is practical: the government wants to collect before a non-citizen surviving spouse can take the inheritance and leave the country.
The standard solution is a qualified domestic trust (QDOT). The U.S. citizen spouse sets up the QDOT, which effectively gives the couple the benefit of the marital deduction while making sure the tax is eventually collected after the non-citizen spouse passes away. The non-citizen spouse must be the only beneficiary of the trust during their life, and the trustee must be a U.S. citizen or a U.S. corporation.
As the trust's beneficiary, the non-citizen spouse can receive the income the trust property generates without paying estate tax up front. The estate tax on the property in the QDOT is deferred. If a distribution of principal becomes necessary because the spouse has an immediate need and no other resources, that can be done without triggering the tax. And if the non-citizen spouse later becomes a U.S. citizen, the principal can be distributed with no further tax.
Keep in mind that Illinois adds its own layer. Illinois has a state estate tax with a $4 million exclusion and no spousal portability, so a surviving spouse here cannot absorb the other's unused Illinois exclusion. That makes careful planning around a non-citizen spouse even more valuable in our state.
Jointly Owned Property Is Treated Differently
When both spouses are U.S. citizens and own a home together, each is presumed to own half. That presumption does not apply when one spouse is not a citizen. Suppose the U.S. citizen spouse dies first and the jointly owned home is worth $200,000. The entire $200,000 — not just half — gets included in that spouse's taxable estate, unless the non-citizen spouse can prove they contributed toward the purchase. If the non-citizen spouse made $50,000 in mortgage payments, the amount included drops to $150,000.
No Unlimited Gifting
During life, spouses can normally give each other unlimited gifts with no federal gift tax. That changes when the recipient is a non-citizen spouse. There, the tax-free amount is capped at an annual figure, which for 2026 is $194,000. Gifts above that begin to draw on your lifetime exemption. In the same vein, if the couple buys property together and the U.S. citizen spouse pays the full price, half the value can be treated as a gift to the non-citizen spouse.
We Can Help
If your spouse is not a U.S. citizen, the right structure can save your family a great deal of tax and a great deal of stress. A QDOT, thoughtful gifting, and careful titling of your property all work together to protect what you have built. We can look at your situation and put a plan in place that fits it. If you own a business as well, we can coordinate your estate planning with the business law side so the whole picture holds together.
At Marvel Law, we are here to help with understanding, answers, and direction.