Is U.S estate tax applicable to joint brokerage account of non-US citizens if one party dies?
If the brokerage account holds US assets, such as the stock of US companies, then it may be taxable under some conditions. The rules are complex and depend on the nationality of the individuals, because the results may be affected by tax treaties between the United States and whatever country the person is from.
"They may be confused. The combination of ""my wife received stock when younger"" and ""her father just died"" leaves questions. A completed gift, when she was a kid, means she has a basis (cost) same as the original owner of that stock. This may need to be researched. The other choice is that she gets a price based on the date of dad's death, a stepped up basis, if it was his, but she got it when he passed.  No offense to them, but brokers are not always qualified to offer tax advice.  How/when exactly did she get to own the stock. Upon second reading it appears I answered this from a tax perspective. You seem to have issues of ownership. What exactly does the broker tell you? In whose name is the statement for the account holding these shares? Scott, saw your update. For the accounts I have for my 13 year old, I am custodian, but the tax ID is her social security number. When 21, she doesn't need my permission to sell anything, just valid ID. What exactly does the broker tell her?" Maryland is one of only two states (as of the writing of that article) that collects both inheritance tax and estate tax. These are two different issues, and it's important to differentiate between them sufficiently. I can't provide you a definitive answer, so consult a tax professional in Maryland for specific details to make sure you don't run afoul of tax authorities. This blog has a nice summary of the differences, as of 2012: The estate tax is assessable if more than one million dollars passes at death.  The total dollar value of the property determines whether there is an estate tax.  The inheritance tax is not dependent upon the value of the estate, as even very small estates can have inheritance tax imposed.  Inheritance tax is assessed on property given to a person who is further removed in relationship than a sibling.  Thus, for example, a 10% tax will be assessed on property passing to a cousin, niece, nephew or friend.  Another section of the page states, as an example: If you give someone $10,000 in cash, the inheritance tax will simply reduce the amount inherited – in this case to $9,000. There are several other exemptions to the inheritance tax in addition to the immediate family exception discussed above: Property that passes from a decedent to or for the use of a grandparent, parent, spouse, child or other lineal descendant, spouse of a child or other lineal descendant, stepparent, stepchild, brother or sister of the decedent, or a corporation if all of its stockholders consist of the surviving spouse, parents, stepparents, stepchildren, brothers, sisters, and lineal descendants of the decedent and spouses of the lineal descendants. Putting this information together makes me think that the inheritance wouldn't be taxable in your case because it's a cash inheritance from an immediate family member, so it qualifies for one of the exemptions. Since I'm not a tax professional, however, I can't say that for sure. Hopefully these pages will give you enough of a foundation for when you talk to a professional. "My tax preparing agent is suggesting that since the stock brokers in   India does not have any US state ITINS, it becomes complicated to file   that income along with US taxes Why? Nothing to do with each other. You need to have ITIN (or, SSN more likely, since you're on H1b). What brokers have have nothing to do with you. You must report these gains on your US tax return, and beware of the PFIC rules when you do it. He says, I can file those taxes separately in India. You file Indian tax return in India, but it has nothing to do with the US. You'll have to deal with the tax treaty/foreign tax credits to co-ordinate. How complicated is it to include Indian capital gains along with US   taxes? ""How complicated"" is really irrelevant. But in any case - there's no difference between Indian capital gains and American capital gains, unless PFIC/Trusts/Mutual funds are involved. Then it becomes complicated, but being complicated is not enough to not report it. If PIFC/Trusts/Mutual funds aren't involved, you just report this on Schedule D as usual. Did anybody face similar situation More or less every American living abroad. Also the financial years are different in India and US Irrelevant." As regards Inheritance Tax if your parents are abroad the question must be asked about their Domicile status as non doms are generally only subject to IHT on assets situated in the UK. There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do  not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because  while many states exempt exactly what the Federal Government does, others  exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you.  Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is  tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc.  One thing that you should check out is whether it is beneficial to take a lump sum  distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities  in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance  company issuing the annuity had planned on happening.  So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security  benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges. What I'm going to write is far too long for a comment, so I'll put it here even though its not an answer. That's the closest thing to an answer you'll get here, I'm afraid. I'm not a tax professional, and you cannot rely on anything I say, as you undoubtedly know. But I'll give you some pointers. Things you should be researching when you have international clients: Check if Sec. 402 can apply to the pension funds, if so your life may become much easier. If not, and you have no idea what you're doing - consider referring the client elsewhere. You can end up with quite a liability suit if you make a mistake here, because the penalties on not filing the right piece of paper are enormous. "I'll add a bit to Paul's excellent write up. Foreign Earned Income Exclusion (form 2555): notice the earned there. It doesn't exclude capital gains, interest, dividends, and basically everything that is not salary. You pay US taxes on it from the first cent. Foreign tax credit - foreign tax credit (form 1116) doesn't reduce your US tax dollar for dollar (even though it may appear that it does from the generic explanations). By using this form you may end up accumulating unused credit while still paying double taxes at the same time. Happened to me. Thank Congress for the logical and reasonable US tax laws. New FATCA form 8938: as opposed to FBAR (that goes to the FinCEN in the Treasury), this one goes to the IRS. it contains very similar info, but the threshold requirements are different. You may have to file FBAR, but not these, or you may have to file both. Being an American citizen, some European banks will refuse to provide services to you. Again, thank Congress for FATCA. It requires foreign banks to enforce US tax regulations on US citizens, and banks that won't will get penalized in the US. Many banks refuse to provide services to Americans because of that because what IRS requires is illegal in most countries. Some countries (like UK and some other EU countries) have signed treaties with the US to resolve this, but many haven't. Currency conversion - as I commented to Paul, you convert the amounts when you receive them, which may have your fixed EUR salary be converted to different dollar amounts every time. You need to make sure you do it right. Pensions, savings, investments - if you're doing these in non-US instruments prepare to be penalized. US taxes foreign investments much more aggressively than domestic. If you're investing in indexes/mutual funds, or you're a principle in a corporation, or you create a pension account - you'll get hit by additional reporting requirements and tax. Tax treaties - the US has tax treaties with many EU countries, and equalization treaties with some. The tax treaties affect the standard tax treatment by the US and some of the ""generic"" info you got here may not apply because of a tax treaty, and some other rules may apply. Equalization treaties work similarly with regards to the Social Security. Bottom line, and I know Paul disagrees with me on this - talk with a US-licensed adviser in the country you're going to. It is very important for your tax adviser to know the relevant treaty (and not read it the first time when you call him), and to understand each and every financial instrument in your country. Missing piece of paper in your tax return can cost you thousands of dollars in penalties (not exaggerating, not filing form 3520 triggers a $10000 penalty, even if there's no tax) and additional taxes." There is a tax treaty between Canada and the US that recognizes RRSPs as retirement accounts.  You won't be taxed on the gains in your RRSP like you would be if it was in a TFSA.  So you don't really have to do anything (except fill out a form for the IRS every year).   The problem that usually arises is if you want to buy something else.  I don't know of any Canadian brokerage that will sell products to a US resident.  It's a question of where they're licensed.  However the SEC has issued an exemption so you can try to argue with your broker to get a trade done. Link to SEC order With such a small amount in the account you may be paying fees or have it invested in funds with higher fees.  You will have to do the math on whether or not you should just withdraw the money and invest in cheaper funds and accounts in the US. When you withdraw the money Canada will withhold a flat rate of 25% or in some circumstances 15%. For more info go to Serbinski (a cross border tax specialist). "This is why California tax code is even more messed up than the Federal - they take the Federal and then add some. Or remove. Or mix up. Whether your brokerage will send 1099 or not is up to the brokerage. Its a Federal requirement. California may require them to send it out for CA residents, or may not. They may adhere to the FTB, or may not. It doesn't matter to you. You'll have to keep track of the interest and dividends received, cost basis for the securities, etc etc., just as any other brokerage account. You cannot rely solely on the information on the 1099 anyway, since it doesn't include many things you have to take into account for your Federal tax return as well, wash sales (inter-brokerage) being the most obvious example. As to what happens when you're 65 - you'll have to keep track, again, of all the taxes paid, and track your California basis in the account, and your Federal basis in the account, and they will not be  the same. Reconciliation time again when you get there. What a mess. If you move to another state - the taxes you paid to CA are ""lost"".  Similarly, if you move in to California, all the gains prior to moving in are not taxed by California. Whatever happens after - is taxed by CA as if it was a regular investment account." I am not a tax professional, only an investment professional, so please take the following with a grain of salt and simply as informational guidance, not a personal recommendation or solicitation to buy/sell any security or as personal tax or investment advice. As Ross mentioned, you need to consult a tax advisor for a final answer concerning your friend's personal circumstances. In my experience advising hundreds of clients (and working directly with their tax advisors) the cost basis is used to calculate tax gain or loss on ordinary investments in the US. It appears to me that the Edward Jones description is correct. This has also been the case for me personally in the US with a variety of securities--stocks, options, futures, bonds, mutual funds, and exchange traded funds.  From the IRS: https://www.irs.gov/uac/about-form-1099b Form 1099-B, Proceeds From Broker and Barter Exchange Transactions A broker or barter exchange must file this form for each person: Edward Jones should be able to produce a 1099b documenting the gains/losses of any investments. If the 1099b document is confusing, they might have a gain/loss report that more clearly delineates proceeds, capital returns, dividends, and other items related to the purchase and sale of securities. "Securities and ETFs are also subjected to Estate Tax.  Some ways: Draft a ""Transfer on Death"" instruction to the broker, that triggers a transfer to an account in the beneficiary's name, in most cases avoiding probate. If the broker does not support it, find another broker.  Give your brokerage and bank password/token to your beneficiary. Have him transfer out holdings within hours of death.  Create a Trust, that survives even after death of an individual.  P.S. ETF is treated as Stock (a company that owns other companies), regardless of the nature of the holdings.  P.S.2 Above suggestions are only applicable to nonresident alien of the US." The LLC portion is completely irrelevant. Don't know why you want it. You can create a joint/partnership trading account without the additional complexity of having LLC. What liability are you trying to limit here? Her sisters will file tax returns in the us using the form 1040NR, and only reporting the dividends they received, everything else will be taxed by Vietnam. You'll have to investigate how to file tax returns there as well. That said, you'll need about $500,000 each to invest in the regional centers. So you're talking about 1.5 million of US dollars at least. From a couple of $14K gifts to $1.5M just by trading? I don't see how this is feasible. My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them.  They signed paperwork making me the advisor on their account.  I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results?  Certainly the tax situation for each is different, yes?  Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take.  I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing. There are two different tax returns you'll be doing: one is for her, until the day of her death. The other is for the estate. The personal one you could probably do on your own, it's nothing different from the one for a living person, except for the cut-off date in the middle of the year. The estate tax return may be a bit more nuanced, since it is a trust return and not an individual return, and is done under a different set of rules. I'd suggest talking to a tax professional who'd help you. Your estate executioner should be doing the estate tax return (or hiring someone to do it). Sorry for your loss. A gift between spouses has no tax implications.  If one spouse dies the inheritance tax is always zero no matter how much of the estate passes to the surviving spouse. Gift taxes are actually related to estate taxes, so a gift no matter how large never requires filing any tax forms or paying any taxes.