Investing in U.S. financial markets – US companies listed on the New York Stock Exchange and NASDAQ and US equities, bonds and treasuries, has long been attractive for expats living in the UAE and GCC and investors internationally. The scale of U.S. companies, strong corporate governance and global dominance of American equities make them a natural choice for building long-term wealth.
However, what many international investors do not realise is that U.S. tax rules apply based on where assets are listed (in America), not where you as the investor lives. This distinction has serious consequences for non-U.S. citizens holding U.S.-listed investments.
Without proper assessment, U.S. investments can expose expats to significant tax liabilities, inheritance tax charges, probate delays and administrative burdens that only emerge at the worst possible time, on death.
This guide explains, step by step, how U.S. estate tax and probate apply to non-U.S. expats, why common assumptions are incorrect, and how the risks can be addressed through proper planning.
Most expats in the UAE assume that living in a tax-free country protects them from international tax exposure. While this is true for income and capital gains tax, it does not apply to withholding tax and estate tax (inheritance tax).
The United States applies an estate tax based on asset situs, meaning the legal location of the asset, not the investor’s residence or nationality.
This means:
And still be fully exposed to U.S. estate tax if you hold U.S.-domiciled assets. If you’re holding U.S. assets and haven’t reviewed your exposure, a quick structured check can save your family from a future 40% surprise.
Example: If you are a non-American living in the UAE with $2,000,000 invested across the world’s largest tech stocks – Amazon, Meta, Nvidia and Apple – your estate tax liability to the U.S. upon death could reach 40% of that value – $800,000 – over and above the inheritance tax charge imposed by your own country.
U.S. estate tax rules apply differently depending on your status.
U.S. citizens and green card holders benefit from a very high estate tax exemption, currently exceeding $15 million.
Non-U.S. individuals, including most expats living in the UAE and GCC, are treated very differently.
For non-U.S. persons:
This low exemption means that even modest portfolios can fall within the scope of the U.S. estate tax.
Understanding what qualifies as a U.S.-situs asset is critical because this determines exposure.
The following are fully exposed to U.S. estate tax:
If the investment is domiciled in the United States, it is considered U.S.-situs regardless of where you live.
The following are typically not subject to U.S. estate tax:
This distinction is based on domicile, not market exposure. An ETF can track the U.S. market but still be non-U.S.-domiciled.
One of the most common misconceptions among UAE expats is that using an offshore or international broker avoids U.S. tax exposure.
This is incorrect.
It does not matter whether you invest through:
If the underlying asset is U.S.-domiciled, it remains exposed to U.S. estate tax. The IRS looks through the platform and focuses on what you own, not where you hold it.
Estate tax is only part of the problem. Even if your U.S. assets fall below the $60,000 exemption, they may still be subject to U.S. probate.
Probate is a court-supervised legal process that determines how assets are transferred after death. For non-U.S. residents, this process can be complex, slow, and expensive.
If U.S.-situs assets are held directly:
This can occur even if you have a will.
Each U.S. state has its own probate rules, meaning heirs may need U.S.-based legal representation to access assets.
If U.S. assets exceed the $60,000 exemption, heirs must file IRS Form 706-NA.
This process involves:
During this period, assets often remain frozen, adding financial stress for families at an already difficult time.
Many expats remain exposed simply because of incorrect assumptions, such as:
Under U.S. law, all of these assumptions are false.
With a $60,000 exemption, estate tax risk applies far earlier than most people expect.
The UAE and most GCC countries:
This makes proactive planning essential.
As portfolios grow, exposure grows silently in the background. By the time the issue becomes visible, the planning window may already be closed.
The good news is that U.S. estate tax and probate risk is structural, not unavoidable. By restructuring how U.S. investments are held, it is possible to:
This is typically achieved by transferring U.S. investments into an offshore, tax-compliant ownership structure. The investment exposure can remain the same. What changes is legal ownership.
| Area | Direct U.S. Holdings | Structured Ownership |
| Estate tax exposure | Up to 40% | Eliminated |
| Probate process | Required (Costly, 12–18 months delay0 | Avoided |
| Asset access for heirs | Delayed | Immediate |
| Administrative burden | High | Simplified |
This approach is commonly used by:
Estate planning is one of the few areas where timing matters more than complexity.
Once death occurs:
Addressing structure while you are alive ensures control, clarity, and protection for your family.
U.S. investments can play a valuable role in a diversified global portfolio. However, for non-U.S. expats living in the UAE and GCC, holding them directly can introduce risks that are often misunderstood and underestimated.
U.S. estate tax and probate are not future problems. They are existing rules that apply today, regardless of where you live.
Understanding how these rules work and structuring investments accordingly is not about avoiding tax unfairly. It is about taking care of your family and passing on your wealth efficiently, predictably and without unnecessary legal obstacles.
If you hold U.S.-listed investments and live in the UAE or GCC, reviewing how those assets are structured can provide clarity and peace of mind long before it becomes the costly mistake we see made all too often.
Speaking with an experienced financial adviser and estate planning specialist such as Kevin Crowther will help you assess the possible liability you face and navigate the complexities of structuring your wealth so it stays within your family, not the tax man.
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Meet Kevin Crowther
Kevin Crowther is a trusted financial advisor in the UAE, providing expert financial planning for families, expatriates and high-net-worth individuals.
Kevin delivers a Family Office solution to each client, including personalised strategies for wealth preservation, investment growth and intergenerational estate planning – he ensures your assets are protected and optimised at every stage of your life and every plan is aligned with your long-term goals.
With an exceptional track record, evidenced by client testimonials (below) and Amazon No1 best-selling book, Kevin delivers continuous guidance, risk management and emphasis on building a long-term partnership with every client. Contact Kevin so you can confidently secure your family’s legacy and achieve financial success with Dubai’s leading financial planner.
