If a non-US person (the "Pre-Immigrant") is planning to become a US resident in the near future, he or she should consider taking the following steps before becoming US resident for income and estate tax purposes:-

i. Make Gifts to Non-US Persons either outright or in the form of a trust with no US beneficiaries. This will not therefore be considered a US Grantor Trust and avoid US income tax on future income of gifted assets and avoid later gift and estate tax on the transfer of those assets.

ii. Make Gifts to US Persons. A US trust might be preferable if US beneficiaries anticipate receiving distributions. These gifts will avoid later gift, estate and Generation-Skipping Transfer taxes.

iii. Create Irrevocable Discretionary Trusts. The Pre-Immigrant should consider transferring a portion of his or her assets to an irrevocable discretionary trust of which the Pre-Immigrant and other family members are permissible discretionary beneficiaries. If the transfer is properly structured and administered in a jurisdiction (either US or foreign) which protects such a trust from the claims of creditors, the assets should not be subject to US estate tax on the Pre-Immigrants death. The trust will become a Grantor Trust for US income tax purposes and its income will be subject to US income tax.

iv. Sell Appreciated Assets. The Pre-Immigrant should not bring appreciated assets into the US if subsequently selling them would appreciate capital gains. Appreciated marketable securities should be sold and the proceeds reinvested before the Pre-Immigrant enters the US.

v. Dispose of Foreign Corporations. The Pre-Immigrant should try to dispose of all interests in foreign corporations that are closely held by US persons or that have primary passive income.

vi. Make Gifts Between Married Couples. If a married Pre-Immigrant couple become US residents but not US citizens, any gifts made between them in excess of $100,000 per year will be subject to gift tax. Any gifts between spouses should be made before they enter the US.

vii. Invest in Annuity or Life Insurance. The Pre-Immigrant can purchase a US-compliant commercial annuity or life insurance policy and will not be subject to US tax on the earnings. If the Pre-Immigrant stays in the US for a number of years without withdrawing any funds from the annuity, then leaves the US, the funds invested in the annuity will not be subject to US income tax. Certain life insurance policies can provide funds while the Pre-Immigrant is a US resident without payment of US tax.