I recently spoke to the Kerala Muslim community Association in the San Francisco Bay area about Islamic Estate Planning. My focus was on noncitizens and nonpermanent residents in the United States. It is beautiful that at this time, many community groups continue to meet regularly on zoom and discuss vital issues.
While I have discussed the major issues concerning Islamic inheritance and Islamic estate planning on this website at length, other issues concern some immigrants and, in particular, H1-B professionals in the United States.
H1-B (that is a work visa classification, and there are similar ones) professionals come into the United States for their talents and skills. They are usually well compensated and in high demand, particularly in places like Silicon Valley. They are also present in other industries throughout the United States, where there is a demand for global scientific, technical, academic, and artistic talent.
The Guardianship problem
When people name guardians for minor children in their last wills, who do they typically name? Close family. They name parents, brothers, and sisters. But those people are usually not nearby. These are people who came from another country to work. There is a severe risk then that if the parents (the H1-B professionals) were to pass away, children may end up with a government agency that would place them in foster care.
One thing H1-B professionals can do is address guardianship. We address guardianship in a last will. An H1-B professional can always nominate a family member overseas as a guardian in the event the parents pass away. However, there are a few problems with doing this. The first is that the proposed guardian needs to get to the United States. If you come from an affluent family, where it’s easy to jump on a plane and fly somewhere, this usually is not going to be a problem except, of course, when flights, visas, and money are hard to come by.
It may be a problem for a short time, where it takes time to get on a plane and the flight time (assuming the proposed guardian has a visa ready or is from a visa waiver country.
Even after the emergency subsides, as it inevitably will, there are always risks. Before the global health emergency, I have seen situations where family members cannot get flights or visas. Embassies get attacked, war or insurrections break out, or there may be sectarian violence. A government may confiscate property or suddenly declare the currency of the country is worthless. The world is an unpredictable place.
Then the Courts
Courts are well known for being unpredictable. Throughout the United States, the standard for judges doing anything related to children, including guardianship, is this vague term known as “best interests of the child.” Is it in the best interests of the child to live in California with strangers, or be with uncles and aunts in a foreign war zone?
Maybe it will take a day for family members to arrive from overseas. Perhaps it will take months. In the interim, though, you need to name someone who can make sure your children are safe. You can designate a temporary guardian who can take your children in until their family arrives.
Temporary Guardians Need to Know they are Temporary Guardians
Let’s do this with an example:
Haris and Tabassum, parents of three children under 7, have been in the United States on an H1-B for the past three years. They have a social circle, consisting mostly of technology professionals from India. They have no relatives anywhere in North America.
Haris and Tabassum are concerned about what may happen to their children if they both passed away. They name their friends Muhammad and Khadija, who live about a mile away from them, as temporary guardians to take care of their children in the event something were to happen to them. The couple also names permanent guardians like Salman, Tabassum’s brother in India. They figure her brother can come to the United States in an emergency and take care of the children.
It’s not enough to name these people in the last will. Haris and Tabassum need to tell Muhammad and Khadija. They need to know it’s their job to spring into action if anything were to happen to them. They will also make sure their children are familiar with Muhammad and Khadija. Haris and Tabassum will also tell Salman about his role as well. Once they complete their Islamic Estate Plan, they will share copies of their legal documents. We make sure our Islamic Estate Planning clients have digital records so that they can share these documents.
If Salman, Tabassum’s brother, lived a mile away instead of an ocean away, he would immediately know his responsibility would be to pick up the children and take care of them if tragedy struck the parents. Muhammad and Khadija would not have any reason to know to do this unless Haris and Tabassum told them they had both the legal authority and moral responsibility.
When you are a Resident and a Non-Resident, but also a Resident
When most immigrants think of the dichotomy between resident and non-resident, they usually think of immigration law. You are a “permanent resident” when you get something called a “green card.”
Federal law related to estate planning goes beyond immigration law, though. There is also tax law. There are two separate systems of tax law. The first is income tax law, known by most people who have a history of living and working in the United States. The second is the Estate and Gift Tax system, which most people are less familiar with but could bite pretty hard. A person can be a resident and non-resident simultaneously. Undocumented immigrants can easily be residents for both federal tax systems. A “green card” holder can be a non-resident for both purposes.
Estate, Income, and Visa
I am deliberately over-simplifying since there are technical rules, tax treaties, and we are talking about tax law, so it’s more complicated. However, the income tax definition is related to how much time a person spends in the country. For the Estate and Trust definition, there is an intentionality based test that is quite vague and subject to a court challenge. The difference can be enormous. If you are a US person, you get the same estate tax exemption as a citizen, which is 11.58 million per person. So folks need to worry about the Federal Estate Tax if they have more. If you are not a US person, that exemption becomes $60,000. That means you at least need to wonder.
Many non-Americans who have assets in the United States know, however, that several things are exempt from this rule. A limited liability company owned by a foreign business organization does not have the same concern. Many wealthy non-Americans see the United States as a tax and asset protection haven. If you are an American, you might be surprised by this.
The US is one of a small group of countries that taxes your assets worldwide. But this rule may or may not apply to you. The rule that does apply to you and everyone else is the Islamic Rules of Inheritance– your heirs need to get an inheritance in Islam, no matter where the asset is.
However, your plan in the United States won’t cover assets in other countries. You will need a lawyer in every country you have assets. To get affairs in order in different countries using lawyers from those countries applies to US Citizens and Permanent Residents as well.