I Buy US Stocks, Shares and ETF’s but I live in UAE, so I won’t pay tax…. Right? RIGHT?? Wrong!

Many internationally mobile investors and expatriates hold US assets without fully understanding the structural implications.

In this blog I will discuss:

• Is holding US shares directly a problem?

• What happens if I pass away owning US assets?

• Will the IRS really get involved?

• Can my family access the assets easily?

• How much could legal and probate costs be?

These are not theoretical concerns.

Incorrect structuring of US assets can create significant IRS exposure, forced asset sales, delayed distributions, and substantial legal costs for beneficiaries.

Let’s break this down clearly.

The Core Issue – US Situs Assets

The United States applies estate tax to certain assets classified as US situs property.

This includes:

• US-listed shares (Apple, Microsoft, Tesla, etc.)

• US ETFs domiciled in the United States

• US real estate

• Certain US bonds and mutual funds

For a non-US domiciliary, this creates a major risk.

The Estate Tax Problem for Non-US Residents

If you are not a US citizen and not US domiciled, the estate tax threshold is dramatically lower than most investors realise.

• US citizens receive an estate tax exemption in the millions of dollars.

• Non-US individuals generally receive only a $60,000 exemption on US situs assets. Therefore, if you hold ETF’s and shares above that threshold, it will be taxed at rates of up to 40%.

This means:

A £500,000 US equity portfolio could create a six-figure IRS estate tax liability upon death.

And that tax is assessed before your beneficiaries receive anything.

If you add in expensive legal processes, it can be a costly mismanagement.

The Probate and IRS Clearance Process

Even where estate tax is not ultimately payable, holding US assets directly can create administrative complications.

Your executors may need to:

• Apply for an IRS Transfer Certificate

• File US estate tax documentation

• Engage US attorneys

• Navigate US probate procedures

• Freeze accounts until clearance is granted

This process can take months, sometimes longer, during which assets remain inaccessible.

For families relying on liquidity, this can create stress at exactly the wrong time.

Legal Fees and Forced Sales

In practice, estates holding US assets often incur:

• US attorney fees

• Cross-border solicitor fees

• Accounting and tax advisory costs

• Currency conversion risks

• Potential forced asset sales to cover tax liabilities

The total cost can materially reduce the net estate value.

In some cases, beneficiaries are forced to liquidate assets quickly to settle tax liabilities, regardless of market conditions.

The Structure Matters More Than the Asset

The issue is not the quality of the US investment.

It is the ownership structure.

There are compliant and efficient ways to gain exposure to US markets without triggering direct US situs exposure, including:

• Holding non-US domiciled funds

• Using properly structured offshore investment wrappers

• Using estate planning vehicles

• Structuring through tax-efficient platforms

• Coordinating ownership with overall estate planning

The objective is to maintain market exposure while mitigating unnecessary estate tax risk.

Common Planning Mistakes

Some of the most frequent errors I see include:

• Buying US ETFs because they are “cheaper” without understanding estate exposure

• Holding US brokerage accounts personally while resident abroad

• Assuming a UK or UAE will automatically bypass US tax

• Believing that having a will solves IRS jurisdiction

It does not.

A will governs distribution.
It does not eliminate estate tax liability.

Who Is Most at Risk?

This issue commonly affects:

• Expatriates in the UAE

• International professionals investing via global brokerage platforms

• Business owners holding US equities directly

• Individuals with concentrated US stock positions

• Investors using US-domiciled ETFs for diversification

The more internationally mobile you are, the more important structure becomes.

Final Perspective

US markets are deep, liquid, and attractive.
Many of the world’s strongest companies are US-listed.

But for non-US investors, direct ownership without planning can create:

• 40% estate tax exposure

• Administrative delays

• Legal costs

• Family stress

• Reduced legacy value

Proper structuring preserves both growth potential and intergenerational wealth.

The asset selection matters.
The ownership structure matters more.

If you would like a confidential review of your US asset exposure and current investment structure, I invite you to connect to discuss your position in detail.

Important Disclosure

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.