If a non-domiciliary, non US-Person dies while owning US property (such as real estate), such property is generally subject to US estate taxation. So too, for example, will a German citizen and resident be subject to US Estate taxes if he invests in a US Vacation Home and then dies.
In the United States, the decedent is subject to Estate Taxes, which is different than German Law, where the beneficiary is subject to taxation. The decedent is allowed to receive a US Unified Credit amount of $5.25 Mio (Inflation Adjusted each year). However, this Unified Credit is applied in a ratio that places US Assets in Relation to worldwide assets.
For example, is the decedent owns $3 Million US Assets and $5 Million in German Assets, he will receive 3/8th of the Unified Credit against his US Assets, or just under $2 Mio. All US assets that exceed this amount are estate taxable in the United States.
In addition, the decedent’s beneficiaries would be subject to estate taxes in Germany as well. However, they would receive credit for the estate taxes paid in the US on the assets they receive.
Disclaimer: This Article is meant to provide general information only and is not intended to be used as legal advice.