US Investments, US Estate tax, USD, Is the US the right place to hold your investments?

Many people, especially in Latin America, look fondly at the US as a safe haven to hold their savings and investments.

In many ways the US ‘ticks the right boxes’ of a stable currency and a secure financial system, that are lacking in many Latin American countries.

However, if we take a closer look, we see that the US may not be the financial paradise we are lead to believe and actually the same USD investments can be held far more efficiently elsewhere.

Here we look at some of the key points you should be aware of:

1) US Estate tax

What is it?

It is a little known fact that if an individual holds US assets (eg US stocks, ETFs, mutual funds etc), then upon death, the assets are likely to be subject to a hefty US Estate Tax.

In Summary:

  • Estate and gift tax rates currently range from 18% – 40%.
  • An exemption of only $60,000 is available against the value of assets for non-US individuals.
  • This compares to an exemption amount of $11.2 Million for US Persons / Citizens (2019).

The following table shows the assets that are subject to US Estate tax:

US taxation of non-resident aliens

In short, if you have investments worth more than $60,000 held in the US and you are not a US tax resident, it is very probable that this tax would apply to you.

You should pay particular attention if you have share awards, RSUs or stock options from a current or previous employer.

If it is a US listed company, they are commonly held with a US custodian (eg Computershare, Morgan Stanley, Fidelity etc). The choice to hold them in the US is circumstantial and taken by the company, rather than a conscious decision by you.

Therefore, it often passes unnoticed but could land your family with an enormous, and unnecessary tax bill in the future.

What can I do about it?

You can hold exactly the same USD assets in a correctly structured international account and negate US Estate taxes entirely. It is a very simple process and one which EBG will gladly assist you with.

2) What happens to your accounts when you die?

Apart from the tax implications detailed above, it is important to consider the practicalities of how easy it would be for your family to claim access to your US assets, should you pass away.

However unlikely this may seem, it is essential to put a clear plan in place to ensure that your family can easily access resources during what would be a very difficult time.

Below is a list of the current requirements to claim cash/investments held in a US bank, upon death of the account holder:

Citibank Estate Claim Application Checklist for Claimants of a Non U.S. Resident Decedent’s Funds

This article is not intended to go through each of these in detail but it is fair to say that collating the required information can be very costly and can take several months to obtain. There is also the small matter of translating everything into English and legalising documents with an acceptable certification (eg Apostille).

Once documents have been submitted, many institutions then state a period of 6-12 months before the funds will actually be released to the beneficiary/ies (and that is assuming all documents are in order).

Finally, the estate claim and supporting documents must be submitted before the “Succession Estate Claim Expiration Date.” (I understand this to be 1 year after the reporting of the death of the account holder).

Failure to meet this deadline will render the benefits subject to applicable state laws on abandoned property. This would begin another arduous process to reclaim the assets, with the risk that the assets could be lost entirely.

How can this be avoided?

Choosing to hold assets in an appropriate international investment account (outside the US) gives access to simple instruments that enable quick and easy passing of assets with the minimum of fuss. This typically has little or no cost associated, but can save your family an enormous amount of money and time if the worse we’re to happen.

3) Day to day account management

Opening an account in the US can be fairly simple but administering the account from afar is often more complicated than it appears.

We have first hand experience of clients who have been unable to transfer money out of their US accounts without being physically present in a branch in the US.

This creates complications during normal times and the COVID-19 pandemic has only served to exacerbate these issues, when travel has been very difficult.

We have also seen a number US banks closing the bank and investment accounts of foreign based clients with very little notice. This can cause serious disruption and again can require a client to travel to the US to receive the funds.

How can this be avoided?

Again, international USD bank and investment accounts are widely available outside of the US. They offer the same core benefits as a US based account but with far greater flexibility and suitability. EBG would be happy to help you set up an international bank and/or investment account with a choice of various currencies (USD, EUR, GBP etc).


The strategy of holding long term financial assets in USD has historically proven to be the correct course of action for residents of most Latam countries, and that is likely to continue to be the case.

However, it should not be automatically assumed that this can only be done through an account located in the USA. For the reasons explained above, this can lead to significant unexpected costs and other potential problems.

Conversely, an international account can give you access to exactly the same currency, investments and regulatory protection, but without the unnecessary headaches.