Gifting to a Non-Resident Spouse: A U.S. Planning Opportunity

When you’re married to a non-resident, non-U.S. citizen spouse, the standard U.S. estate and gift tax playbook changes, often dramatically.

What many international couples don’t realize is that this difference can create both planning challenges and powerful opportunities. One of the most overlooked strategies is gifting assets to a non-resident spouse as part of a broader cross-border financial and estate plan.

Done thoughtfully, gifting can reduce future U.S. estate tax exposure and improve flexibility. Done incorrectly, it can trigger unexpected gift taxes, reporting issues, or foreign tax complications.

This article explains how gifting to a non-resident spouse works, when it can be helpful, and what to watch out for.

Who Is Considered a “Non-Resident Spouse” for U.S. Tax Purposes?

For U.S. tax purposes, the rules hinge on citizenship.

A non-resident alien (NRA) spouse is generally someone who:

Is not a U.S. citizen, and
Does not meet U.S. tax residency tests (green card or substantial presence)

This distinction is important because many of the unlimited spousal benefits U.S. couples take for granted do not apply when one spouse is not a U.S. citizen.

The Key Difference: No Unlimited Marital Deduction

When both spouses are U.S. citizens, gifts between them are unlimited and generally free of U.S. gift tax.

That is not the case when one spouse is a non-resident alien.

Instead:

Gifts to a non-citizen spouse are subject to an annual exclusion limit
Any amount above that limit may require a U.S. gift tax return (Form 709)
Large gifts can erode your U.S. Federal lifetime estate and gift tax exemption

The Annual Gift Tax Exclusion for Non-Resident Spouses

The IRS allows a special, higher annual exclusion for gifts to non-citizen spouses.

For 2026, the annual exclusion is $194,000 (indexed for inflation and adjusted periodically).

Key points:

The exclusion applies only to gifts to a non-citizen spouse
It is much higher than the standard annual gift exclusion, which is $19,000 (2026) per recipient
Gifts above this amount require reporting and may use the lifetime exemption

This exclusion resets every year, making it a useful tool for gradual wealth shifting over time.

Why Gifting Can Be a Smart Planning Strategy

Reducing Future U.S. Estate Tax Exposure

Assets owned by a U.S. person at death may be subject to U.S. estate tax, even if the surviving spouse lives abroad.

By gifting assets during life:

You reduce the size of your future U.S. taxable estate
Growth on gifted assets occurs outside your estate
Planning is proactive rather than reactive at death

This can be particularly impactful for clients with investment portfolios, business interests, or appreciating assets.

Transferring Non-U.S. Assets More Efficiently

Non-U.S. assets—such as foreign bank accounts, brokerage accounts, or real estate—are often well-suited for gifting in a cross-border context.

Once owned by a non-U.S. person, these assets may already fall outside the U.S. estate tax net, and transferring them earlier can remove future appreciation from U.S. exposure. Local ownership can also simplify ongoing administration and compliance, particularly when assets are already governed by foreign financial institutions or legal systems.

That said, local country gift or inheritance taxes must always be evaluated carefully; this discussion reflects U.S. tax considerations only and should be coordinated with country-specific advice.

Supporting Household Cash Flow and Financial Independence

In many international families, income and assets are unevenly held, often for historical or employment reasons.

Gifting can:

Balance ownership between spouses
Improve financial independence for the non-U.S. spouse
Simplify planning if the family expects to remain outside the U.S. long-term

What Types of Assets Can Be Gifted?

Common assets used in cross-border gifting strategies include:

Cash (U.S. or foreign currency)
Brokerage accounts or individual securities
Interests in private businesses
Non-U.S. real estate
Certain life insurance policies

Caution

Gifting U.S. retirement accounts (IRAs, 401(k)s) is generally not permitted and requires separate planning.

Critical Caveats and Risks to Understand

Gift Tax Reporting Still Applies

Even when no gift tax is ultimately owed, U.S. reporting requirements don’t disappear.

Form 709 may still be required for gifts that exceed the annual exclusion or involve certain non-cash asset transfers, and failing to report properly can create complications later—particularly during estate administration.

Consistent, accurate reporting helps preserve the integrity of the gifting strategy and reduces the risk of surprises when assets are reviewed years down the line.

Foreign Gift and Inheritance Taxes

While the U.S. may allow the gift, the recipient’s country of residence may not.

Some countries:

Tax gifts at the recipient level
Apply inheritance tax rules based on domicile or residency
Have clawback rules that bring gifts back into the taxable estate

This is where country-specific coordination is essential in cross-border planning.

Loss of Step-Up in Basis

Assets gifted during life generally do not receive a step-up in basis at death.

This means:

The recipient inherits your original cost basis
Future capital gains taxes may be higher if assets are sold

In some cases, holding assets until death (rather than gifting) may be more tax-efficient.

Marital and Legal Considerations

Once an asset is gifted, it generally becomes the separate property of the receiving spouse, and that legal reality carries long-term implications that extend well beyond taxes.

Before making any gift, it’s important to do the following.

Review marital property laws in both countries

Community property, marital property, and separation regimes vary widely by jurisdiction. A gift that is clearly separate property in one country may be treated differently in another, particularly if assets are later commingled.

Consider prenuptial or postnuptial agreements

These agreements can clarify ownership, protect both spouses, and reduce uncertainty if circumstances change in the future. For internationally mobile couples, they are often an essential planning tool.

Understand the outcome in the event of divorce or death

Gifted assets are typically excluded from the marital estate and may not be subject to division in a separation. While this can be intentional from a planning standpoint, it’s important that both spouses understand and agree to the implications.

Framing Gifting Strategically

Gifting should be approached as legitimate financial planning, not tax avoidance.

That means:

Keeping clean, well-documented records of each gift
Clearly identifying gifted assets and maintaining separate ownership
Avoiding repeated transfers of the same funds back and forth between spouses, which can undermine the integrity of the gift and raise red flags

A properly executed gift is a completed transfer, not a temporary reshuffling of assets. Treating it as such protects the strategy, supports compliance, and ensures the plan holds up under scrutiny, both in the U.S. and abroad.

When Gifting to a Non-Resident Spouse Makes the Most Sense

Gifting assets to a non-resident spouse is not a universal solution, but in the right circumstances, it can be a highly effective cross-border planning strategy, both from an estate planning and an income tax perspective.

This approach is often most appropriate when:

One Spouse Is a U.S. Citizen With a Growing Estate

As assets grow, so does potential exposure to U.S. estate tax. Strategically gifting assets during life can reduce the size of the U.S. taxable estate and shift future growth outside of it. Over time, this can materially improve estate outcomes, particularly for families who expect to remain internationally mobile.

The Couple Expects to Live Abroad Long-Term

When a couple plans to remain outside the U.S. indefinitely, it often makes sense to align asset ownership with where the family actually lives, spends, and invests.

In these cases, concentrating all assets in the name of the U.S. spouse may be inefficient, both tax-wise and practically. Gifting can help rebalance family wealth so that planning opportunities in the country of residence are not unnecessarily constrained by U.S. tax rules.

Assets Are Appreciating Significantly

Gifting appreciated assets, rather than cash, can be particularly powerful when:

The assets are expected to continue growing, and
Future gains would otherwise remain fully exposed to U.S. taxation

By transferring ownership earlier, future appreciation may occur outside the U.S. estate and, in some cases, outside the U.S. income tax system altogether, depending on the asset and the spouse’s tax profile.

The Non-U.S. Spouse Has Access to Favorable Local Tax Treatment

In many countries, the non-U.S. spouse may have access to tax planning opportunities that are unavailable, or heavily restricted, for U.S. persons.

For example:

In Switzerland, private individuals generally do not pay capital gains tax on securities held as private investments.
A non-U.S. spouse who receives appreciated stock may be able to sell it without local capital gains tax, while the U.S. spouse would face U.S. taxation on the same transaction.

Beyond capital gains, non-U.S. spouses may also be able to:

Invest in foreign mutual funds or pooled vehicles that are punitive for U.S. taxpayers
Purchase foreign real estate without the same reporting or tax complexity
Access local investment structures that are taxed more favorably under local law

In these cases, gifting assets can unlock flexibility and efficiency that simply isn’t available to the U.S. spouse.

Gifting Helps Even Out Family Assets and Financial Autonomy

In many international families, assets accumulate disproportionately in the name of the U.S. spouse, often unintentionally.

Gifting can:

Balance ownership between spouses

Support financial independence for the non-U.S. spouse

Simplify household cash flow and long-term planning

This can be especially important where one spouse is subject to significantly more restrictive tax, reporting, or investment rules than the other.

Planning Is Done Well Before a Health Event or Death

Like most effective cross-border strategies, gifting works best when it’s approached proactively rather than reactively.

Planning early allows gifts to be made gradually within annual exclusion limits, reduces the pressure to make financial decisions during emotionally difficult moments, and creates the time needed to coordinate U.S. tax rules with foreign inheritance, marital property, and reporting requirements.

Waiting until a health event or estate settlement often narrows the available options, increases the risk of costly or irreversible mistakes, and may heighten emotions and interpersonal tensions.

A Final Word on Gifting from a U.S. Spouse to a Non-U.S. Person

Gifting assets to a non-resident spouse is not about skirting tax rules; it’s a form of thoughtful financial and estate planning.

When done correctly, it reflects clear intent, proper documentation, and a genuine transfer of ownership that stands up to scrutiny across borders. When done poorly, however, there can be unintended tax consequences in both the U.S. and your spouse’s country of residence.

The difference lies in coordinated, cross-border planning that considers U.S. tax law, foreign tax systems, estate implications, and—importantly—family dynamics.

How Connected Financial Planning Can Help

At Connected Financial Planning, we work with U.S. expats and internationally married couples to evaluate whether gifting strategies make sense, coordinate U.S. gift and estate tax rules with foreign tax systems, and design plans that balance financial efficiency with real-life family priorities. If you’re married to a non-U.S. citizen and want to understand whether gifting could play a role in your long-term strategy, a cross-border planning conversation can bring much-needed clarity.

Schedule a complimentary introduction call to explore your options.

References

Meet the Author

Arielle Tucker is a Certified Financial Planner™ and IRS Enrolled Agent with Connected Financial Planning. She’s spent over a decade working with U.S. expats on U.S. tax and financial planning issues. She is passionate about working with U.S. expats and their families to help secure their financial future reflective of their core values. Arielle grew up in New York and has lived throughout the U.S., Germany, and Switzerland.