Foreign Nationals in the U.S. - Estate Tax, Wills & Guardianship - Part 3

Guardianship Issues

A surviving spouse is the natural Guardian of any minor children. However, in the event of a common accident, a United States Will would contain nomination provisions of Guardians for the minor children of persons not domiciled in the United States. U.S. law recognizes these nominations and upon the non-residents' death, the U.S. Court would appoint the Guardian nominated under the Will to be the Guardian of the person of the minor child.

Without a Will Provision appointing a Guardian of the minor children, however, the local courts in the U.S. will typically require that an application be made to have a Guardian appointed for the person and/or property of the minor children. Without a United States Will, another requirement of many local courts in the U.S. is to require the Guardian of the child's property to obtain local court approval of the investment plan and the situs of the assets.

A United States Will (or, when appropriate, a Will substitute) avoids any court involvement in the investment and management decisions of the Guardian. It would contain trust provisions for minor children along with Trustee nominations for each child's trust. The nomination of a Trustee would obviate the need to obtain post mortem court approval of a Guardian of the minor child's property. The Trustee of the minor child's assets would then be in charge of making all investment decisions without court involvement.

Guardian Trap

It is, of course, common for foreign nationals to wish to appoint similarly U.S. nondomiciled Guardians under their Wills in the event of a common accident. However, this may not be effective. In order to qualify as a Guardian, a person may also be required to be eligible to qualify as a Fiduciary (i.e., as an Executor or Trustee).

Under New York law, for example, persons ineligible to serve as Fiduciaries include (1) an infant, (2) an incompetent, (3) a non-domiciliary alien, (4) a felon or (5) one who does not possess the qualifications required of a fiduciary by reason of substance abuse, dishonesty, improvidence and want of understanding or who is otherwise unfit for the execution of the office.

Consequently, a non-domiciliary with children located in the U.S. who dies and is not survived by a spouse cannot name, for example, his or her alien sibling or parent as Guardian. One solution to this problem is to name the alien Guardian as first choice and also a default U.S. Guardian, who can then act in the best interests of the child. Further guidance on this point should be sought from legal counsel.


It is hardly surprising that foreign nationals in the United States do not regard estate planning as their most pressing concern. This article highlights some of the reasons why addressing such issues at an early stage, however, can help to pre-empt potentially significant problems.

* R. Scott Jones, Esq. is a partner with New York law firm Goldstein Jones LLP. Copyright ©, GOLDSTEIN JONES LLP - March, 2009

Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose.

The information contained herein is general in nature and is not intended as a substitute for specific legal advice nor is it to be relied upon for individual circumstances.

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