You will be able to sort your holdings into likely US-situs and likely non-US-situs assets.
After lesson 4.1, Rachel opened her own broker app to see how exposed she was. She held shares in two US companies, a US-listed world equity ETF, a London-listed fund on the same index, some US dollar cash, and an S-REIT bought through the same app. She had assumed that anything bought through a Singapore-licensed broker counted as a Singapore asset. That assumption is the first thing to drop.
What matters for US estate tax is where the asset itself is treated as located, called its situs. Where your broker sits, which app you used and which currency you paid in don't change that.
Shares of a company incorporated in the US are US-situs assets for a non-resident alien. That stays true whether you hold them through a US broker, an international broker, or a Singapore broker with a custodian in New York. Moving the account does not move the shares out of the US, because what decides it is where the company is incorporated.
Rachel's two US company shares were the easy part. Both went on her list as likely US-situs.
A US-domiciled ETF or mutual fund is itself a US entity. When you own units in it, you own shares of a US fund, so they are generally treated as US-situs assets. This holds even when the fund owns no US companies at all. A US-listed fund that tracks European or emerging market shares is still a US fund, and its units are generally still US-situs for you.
That surprises many investors, who think about what is inside the fund. For estate purposes, what counts first is what the fund itself is and where it is set up. You find that in the fund's prospectus or factsheet, under domicile. Lesson 5.1, Same index, different wrapper: what domicile means, looks at this in more detail.
Rachel's factsheet showed her US-listed world equity ETF holding plenty of companies from Europe and Asia. It still went on the list as likely US-situs.
A fund set up outside the US, such as an Irish-domiciled UCITS ETF, is generally not a US-situs asset, even if most of what it holds is US shares. You own units in an Irish fund. The Irish fund owns the US shares. Module 5 covers these funds and their trade-offs.
The same reasoning applies to Singapore-domiciled funds and to SGX-listed shares of companies incorporated outside the US, such as most S-REITs and local companies. The prospectus of Rachel's London-listed fund gave Ireland as its domicile, so she marked it likely not US-situs. Her S-REIT was set up in Singapore, so she marked it the same way.
"Generally" matters in each of these lines. The rules are set by US tax law and IRS guidance, and edge cases exist. Treat your list as a first sort that a professional could refine.
Some holdings do not sort cleanly. Cash in a brokerage account, especially US dollars held with a US entity, has its own treatment that depends on where and how it is held. Some US bonds and US Treasury securities are treated differently from shares under specific rules. Fund structures outside the main types can be unclear too.
Do not guess on these. Mark them unsure, and note them as items to confirm with a tax professional who works with US estate tax for non-residents. Rachel's US dollar cash went in that column.
Work through your statements line by line. For each holding, write its name, what it is, its domicile or country of incorporation, and your mark. A company's country of incorporation is in its annual report, and for US companies the annual filing with the US securities regulator states it on the cover page. A fund's domicile is in its prospectus and usually on its factsheet.
Rachel's finished list had seven lines. Three were likely US-situs: two US company shares and the US-listed ETF. Two were likely not: the Irish-domiciled fund and the S-REIT. One was unsure: the US dollar cash. The seventh, a small holding in a fund she could not find a prospectus for, also went in unsure until she found the document.
The values come in lesson 4.4. For now, the sort is the work. Make the same list for every overseas holding you own, with its domicile and one of three marks: likely US-situs, likely not, or unsure.
List every overseas holding with its domicile and mark it likely US-situs, likely not, or unsure.
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