Your Parents' U.S. Stocks or Condo: A Small Estate Tax Threshold Few Expect
Your parents hold U.S. stocks, or they bought a condo here for you. If they are not U.S. citizens and are not domiciled in the United States, U.S. estate tax can apply to those U.S.-situated assets above a very low threshold of about $60,000, not the $15,000,000 that citizens and domiciliaries enjoy. Planning is possible, but it works best while your parents are alive and with an estate attorney.
Short answer
If your parents are not U.S. citizens and are not domiciled in the United States, U.S. estate tax can apply to their U.S.-situated assets above a very low threshold. A U.S. brokerage account or a condo bought for a child can create a large tax bill and a slow release of assets. Planning is possible, but it should be done while your parents are alive and with an estate attorney.
Key facts and figures
- The $15,000,000 exemption applies to U.S. citizens and domiciliaries (IRS What's New, Rev. Proc. 2025-32, verified Oct 15, 2026). Nonresident non-citizens generally have a $13,000 credit, which covers only about $60,000 of U.S. assets (IRC §2102(b), verified Oct 15, 2026).
- Estate tax turns on domicile, not residency. A decedent can be an income tax resident yet a nonresident for estate tax, and a person acquires domicile by living in a place, even briefly, with no definite present intention of later moving (Form 706-NA instructions, verified Oct 15, 2026).
- U.S. stocks and U.S. real estate are generally U.S.-situated, wherever the certificates or the owner are (Form 706-NA instructions, verified Oct 15, 2026).
- There is no U.S.-China estate tax treaty (Form 706-NA instructions, verified Oct 15, 2026).
- Form 706-NA is due 9 months after death, and the IRS issues a transfer certificate once it is satisfied the tax has been paid or provided for (IRS, verified Oct 15, 2026). Custodians commonly restrict a nonresident decedent's account and ask for a transfer certificate before releasing assets; requirements vary by firm.
What counts as a U.S.-situated asset
The IRS lists U.S. real estate, tangible property located in the U.S., certain intangibles such as U.S. marketable securities, debts of U.S. persons, and a U.S. trade or business (IRS FAQ, verified Oct 15, 2026). Stock of a U.S. corporation is U.S. property no matter where the certificates are kept (Form 706-NA instructions, verified Oct 15, 2026).
| Asset | Generally U.S.-situated? |
|---|---|
| U.S. home or condo | Yes |
| U.S. stocks in a brokerage account | Yes |
| Deposits at a U.S. bank (not tied to a U.S. business) | No |
| Life insurance proceeds on the parent's life | No (IRC §2105(a)) |
| U.S.-organized mutual funds, ETFs and money-market funds | Yes (the instructions' partial exclusion for fund stock covered only deaths in 2005 to 2011) |
| Shares of a non-U.S. corporation, including U.S.-listed foreign companies and ADRs | No |
How the tax is computed
The tax uses the same graduated rate schedule as for U.S. persons, reaching 40% above $1,000,000 (IRC §2001(c), verified Oct 15, 2026), reduced by the $13,000 credit. Some deductions are available, but claiming them requires reporting and documenting the decedent's worldwide gross estate (Form 706-NA, Part IV), and expense, claim and debt deductions are generally prorated by the U.S. share of that estate (IRC §2106(b), Form 706-NA instructions, verified Oct 15, 2026). Property passing to a U.S. citizen spouse may qualify for a marital deduction (IRS FAQ).
Illustrative example (illustrative numbers)
A father in Shanghai, never domiciled in the U.S., dies owning $500,000 of U.S. stocks and a $700,000 condo in San Jose used by his daughter. He also has $300,000 in a U.S. bank savings account.
- U.S.-situated gross estate: $500,000 + $700,000 = $1,200,000. The bank deposit is generally excluded.
- Tentative tax: $345,800 + 40% × ($1,200,000 minus $1,000,000) = $425,800.
- Less the $13,000 credit: about $412,800, before any deductions.
If the same assets belonged to a U.S. citizen or domiciliary, the $15,000,000 exemption would generally mean no estate tax at all.
The practical problem: getting assets released
A transfer certificate is issued when the IRS is satisfied the estate tax has been paid or provided for, and it is generally needed for assets not administered by a U.S. executor (IRS, verified Oct 15, 2026). Custodians commonly restrict a nonresident decedent's account and ask for a transfer certificate before releasing assets; requirements vary by firm, and this is practice rather than an IRS rule. Where no Form 706-NA is required, the IRS quotes 12 to 18 months to process a complete submission (IRS, verified Oct 15, 2026). If the estate sells U.S. real property, the buyer generally withholds 15% of the amount realized under FIRPTA; lower rates apply to some residential purchases (10% above $300,000 up to $1,000,000, and none at or under $300,000, if the buyer will use it as a residence) (IRS FAQ, IRC §1445, verified Oct 15, 2026).
Planning ideas to discuss with an attorney
- Inventory which family assets are titled in a parent's name versus a U.S. child's name.
- Consider whether gifts during life make sense. Nonresident donors are generally subject to U.S. gift tax on U.S. real estate and tangible property, but generally not on intangibles such as U.S. stock (exceptions apply) (IRS, IRC §2501(a)(2)-(3), verified Oct 15, 2026). The main exception covers certain former citizens and long-term residents. This is a planning lever that needs attorney review. A U.S. recipient may need Form 3520 for gifts above $100,000 a year from a nonresident individual (Form 3520 instructions, verified Oct 15, 2026).
- Ask about holding structures and life insurance. These are legal and Chinese-law questions as well as U.S. tax ones.
- Keep records of who paid for each asset; titling should match the real funding.
If your parents spend long periods in the U.S., the estate-tax question is whether they are domiciled here, a facts-and-circumstances test that looks at where they live and whether they have a definite plan to leave. It is separate from income-tax residency (see B-2 parents and residency). For year-end giving rules, see 2026 family gifts.
Frequently asked questions
How much can a nonresident parent own in the U.S. before estate tax applies?
Form 706-NA is generally required when U.S.-situated assets (plus certain prior gifts) exceed $60,000 at death (IRS, verified Oct 15, 2026). The estate gets a $13,000 unified credit, which offsets tax on roughly the first $60,000 (IRC §2102(b)).
Is there a U.S.-China estate tax treaty?
No. The IRS lists death tax treaties with Australia, Austria, Canada (via the income tax treaty), Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom; China is not on the list (Form 706-NA instructions, verified Oct 15, 2026).
Are my parents' U.S. bank deposits subject to U.S. estate tax?
Generally no. Deposits with a U.S. bank are treated as located outside the United States if they are not effectively connected with a U.S. trade or business (Form 706-NA instructions, verified Oct 15, 2026). Brokerage accounts holding U.S. stocks are different.
When is Form 706-NA due?
Within 9 months after the date of death, unless an extension is granted; tax is also due within 9 months (Form 706-NA instructions, verified Oct 15, 2026).
Can my parents just give me their U.S. stocks now?
It depends. Nonresident non-citizen donors are generally subject to U.S. gift tax on U.S. real estate and tangible property, but generally not on intangibles such as U.S. stock, with exceptions (IRS, IRC §2501(a)(2)-(3), verified Oct 15, 2026). Get attorney advice on this planning step. Income tax basis, Form 3520 reporting on your side, and Chinese rules also matter, so get advice first.
Talk it through
If you would like a review of your family's U.S.-situated assets and filing exposure, you are welcome to book a consultation. We coordinate with estate attorneys. See our cross-border family tax services.
Primary sources
General information, not tax or legal advice. Estate planning requires an attorney. Results depend on your facts, and law and guidance can change.