Why are non-US investors exposed to US estate tax?
The United States levies estate tax on the US-situs assets of anyone who dies, even if they were neither a citizen nor a resident. A US citizen enjoys an exclusion of millions of dollars, but for a non-resident alien the exemption is just $60,000. Above that, the tax is graduated and reaches 40%.
The point many miss: US shares and US ETFs count even when held through an Israeli bank or broker. There is no Israel–US estate tax treaty, and Israel has no inheritance tax, so there is no credit against the tax.
Which assets count?
- Count: shares of US companies, US-domiciled ETFs and mutual funds (such as SPY, VOO, QQQ), US real estate and tangible property located in the US.
- Generally do not count: ordinary deposits at a US bank, US government bonds, non-US funds (such as Irish UCITS funds) that track the US market, and shares of a non-US company.
What can be done?
The common way to reduce the exposure is to hold US market exposure through funds that are not US-domiciled. Any change should be checked with a tax adviser, because selling assets may trigger Israeli capital gains tax.
Frequently asked questions
Is an Israeli who is not a US citizen liable for US estate tax?
Yes, on US-situs assets only, such as shares of US companies, US-listed ETFs and US real estate. The exemption is only $60,000, and above it the tax reaches 40%.
Does holding through an Israeli bank or broker avoid estate tax?
No. US shares and US ETFs count even when held through an Israeli bank or investment house.
Is there an Israel–US treaty that prevents estate tax?
No. There is no Israel–US estate tax treaty, and Israel has no inheritance tax, so there is no credit against the US tax.
How can the exposure be reduced?
A common route is to hold US market exposure through funds that are not US-domiciled, such as Irish UCITS funds. Any change should be checked with a tax adviser, including the Israeli income tax consequences.
The calculator and the information on this page are general only, under 2026 US federal law, and do not constitute tax, legal or investment advice or investment marketing. Consult a qualified US tax adviser before making any decision.