Stocks of us domicile companies, cash in brokerage accounts, US domicile ETF and MF
are all considered US situs assets and will be taxable in the hands of the inheriting person.
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Its not applicable to Indians only certain countries that donāt have a tax treaty. Your broker will make you sign w8ben form, if you donāt sign that form, your assets will be subject to USA tax. Almost all countries have a tax treaty with usa but I didnāt check as it doesnāt affect me and Iām not interested in learning if there are citizens of certain countries who have to pay estate tax
Tax treaties with India only covers capital gains tax, dividend tax not estate and gift tax
US has estate tax treaties with The United States has estate tax treaties with Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom
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My thoughts exactly raised much earlier. Apparently the previous poster (@edwardlobo )dismissed my views on estate tax merely on the surface that india has a tax treaty and articles from Grow (Mostly click bait worthy) but not the fine print. Unforunate as the devil lies in the details.
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Considering 60k usd is quite a big amount for average indian investor Groww and INDMONEY do not disclose this issue as it is not widely applicable. But, they should. My request to fellow investors, please research on estate tax laws thoroughly before planning your US investments. Go to sources like US IRS directly. I would be very happy if folks can find me a workaround.
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@rkirana, how do you convert inr to USD?
When I wanted to transfer 1000$ to the interactive brokers account from India. my banks charge 1000rs + GSTā¦ The bank charges itself comes close to 1.5 percent. Like to know, how are you doing itš¤
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@rkirana Hi, request if you could post an update on your portfolio and also list down stocks youāre currently buying alongwith the rationale for purchase
I have recently invested in Mirae FANG+ETF. I am new to international investing. What is the implications on taxes after investing in Mirae FANG+ETF.
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Checkout this for more information: Investing overseas? Keep these tax rules in mind
This is from October 2022 and things have not changed.
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This is year end (2022) and the above message was posted few months back.
Although US stocks have corrected very sharply in last 6-7 months.But we still feel that , a lot more correction is due.
'The following is the yearly chart of Nasdaq . After 12 -13 years of bull run, we entered into correction cycle only in 2022.
We feel that a correction after 13 years of run may not end in one year and may take more time.
The reasons for the correction were mentioned some months back , repeating again.
Be patient, be watchful - you might get lots of discounts in US markets in coming year.
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Nice topic touched by you. I also did some research on the Estate Tax. This site has 3 recommendations for resident Indians to bypass Estate Tax. 60K USD is not the issue being informed investor is better. you start taking nibble and over a long time corpus will be built.
- " As an Indian, the best thing is to buy term insurance to cover this tax liability"
2 . " set up joint accounts to deal with Estate taxes, so in the event of the death of one of the account holders, its estate tax is levied only on the portion of the asset held by the deceased."
3. " if you are a UHNI (Chances are you would not be reading this, still) and looking at better ways of managing all of this, setting up an offshore trust to invest in the US seems to be the recommended route"
What they donāt tell you about investing in US Stocks from India Ā» Capitalmind - Better Investing
The 60k usd limit is real. Please check on US IRS. 60k usd is federal estate tax exemption. Some states may levy additional.
option 1 is a bad idea. Why would I pay from my cash flow now? Besides, I need term insurance to protect my future earnings.
Option 2 is a good option, but note husband and wife toral exemption will still be 120k usd.
Option 3 will be major hassle.
In my opinion, the better option than 2 is to invest now itself in the name of your children/descendents.
By buying india based nasdaq etf a lot of the headache is solved. Periodically keep rotating stock fund into india based us etf like navi nasdaq.
In my opinion, US MARKETS are extremely efficient, no point in owning well known tech stocks as opposed to nasdaq 100. You cannot beat the index. Hardly any body can.
From my long look into this, only reason to go individual stocks is if you have real conviction on some high risk high gain names. Say something that may become AMZN of next decade. Say less than around 5% of your networth as a long shot life changing gamble. Hopefully they will turn to gold before you croak and you may move it e proceeds out of us estate tax exposure.
Just my 2 paisas. Please do your own investigations. I am not a pro or certified advisor.
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Note that in playing the individual stocks game, you are pitting your wits against US based hedge funds - cut throat, they have superior knowledge, itās their home turf, they can meet management in person etc.
I have domain knowledge in electronics, semiconductors, communication, AI etc. I am gambling with a small portion of my networth in domain related stocks via a dollar cost averaging BUY and long term HOLD strategy. I am humble to recognize that āgamblingā is not an overstated. Considering theeffeciency of US markets, it is sheer hubris to think otherwise. By playing in domain, I am just stacking odds slightly more in my favor.
In india, since the whole economy is expected to grow over multi decades (thatās the hope anyways), market cap of many mid and small cap too small for global hedge funds to bother, also, we indians better feel for our economy, dabbling in individual stocks with a portion of your net worth makes sense. Stock selection mistakes, IMHO, will be less disastrous in India.
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Estate tax is over 12 million. Not sure if there is diffrrent rule for resident vs not residents
What if you have a non U.S. broker
Liquidate holdings in case of death, teach your partner how to do it.
Cash with non U.S. broker like tiger brokers who are Singapore based although US listed and majority owned by interactive brokers might not be considered as assets held in USA
Although Iām not sure so please double triple check before committing any funds
For countries with no treaty like India the limit is 60k
Just an update : It seems that a rally is underway - can last few weeks/months. Some of the old economy stocks are looking good from valuations as well as technicals prespective.
Not sure whether this rally would last long enough for a buy and hold strategy.
I would say the long term trend is still bearish though, fed might rise the rates. Even the inflation donāt seem to smooth down as expected.
Yes, market is at a critical point. Many big stocks seem to be at a fair valuation. I too, recently added Meta, Google, Disney and Comcast to my portfolio for that reason.
(Disclaimer: Not a recommendation. Do your own research)
But still, I am holding on to some cash in case the market continues its bearish trend (where wall street expects the market to go down another 25% from current levels).
We are at a moment where debt securities are doing well than stocks. People are shifting. But in this stock market cycle, we are not at that stage where people finally say āscrew stocks foreverā.
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What you are saying basically amounts to market timing. Counterintuitively, a macro-blind DCA approach has shown to be a better performer. I know this goes against every fiber of your thinking, but fact is macro situation can reverse Ina very short timescale, what is the prevalent idea can easily be up seated.
Prices are already highly corrected. They may shoot back up anytime.
This is why I mostly index and chill with buy the dips (bit of a timing thing). I know this dull and unexciting. I also āgambleā with a small (2.5% of net worth) on a set of high risk high gain tickers using my domain expertise in electronics, semiconductors, telecom, and AI. More than anything,I realize this is
just a scratch that itch thing, one little indulgence to keep me entertained.
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Indian markets are less efficient and it is known that active stock picking has shown long term advantage over passive indexing, especially in the mid and small cap universe. Already large cap funds in india are approaching passive fund performance. In a few years, many india tickers will come very well priced in.
Just would like to add one point here to your beautiful insight. Passive investing may not work for next few years in US also.
In last 10-12 years of bull-run in US , everything was going up due to FED liquidity injunction (QE). This helped index to go up much higher and people flocked to passive funds .
That might not be the case in future , index may not move much higher.But certian stocks may go much-much higher.And that might give an advantage to active investors ove passive -investors .