Intergenerational Wealth Transfer Strategies: A Guide for NRIs and OCIs in the USA

The One Big Beautiful Bill Act, passed on July 4, 2025, marks a major shift in U.S. estate and tax law. It offers an exceptional window of opportunity for High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs), especially NRIs and OCIs living in the U.S.

This new law permanently raises the federal gift and estate tax exemption to $15 million per person, or $30 million per couple. Unlike the earlier exemption, which was set to reduce in 2026, this exemption is now permanent and inflation-indexed. That gives families the certainty to plan ahead and build secure intergenerational wealth transfer strategies.

Understanding the Legislative Game Changer: The One Big Beautiful Bill Act and Its Impact on Intergenerational Wealth Transfer Strategies

The most important feature of this law is its permanence. Earlier exemptions were time-bound, but this one has no sunset clause. Because the exemption is indexed to inflation, its real value will rise over time.

Key Provisions:

Gift & Estate Tax Exemption: Set permanently at $15 million per individual.
GST Tax Exemption: Aligned with the gift exemption, allowing wealth transfer to grandchildren without extra taxes.
No 2026 Sunset: Earlier planning urgency is gone, but proactive, long-term planning is more important than ever.

1. Strategic Opportunities for Tax-Efficient Wealth Transfer

The new U.S. law allows NRIs and OCIs to adopt sophisticated cross-border wealth transfer strategies. These must align with both U.S. estate law and Indian inheritance law.

Maximizing Lifetime Gifting

With the higher exemption, you can gift appreciating assets like real estate or shares while alive. This removes future gains from your taxable estate.

Tip: Use the $19,000 annual exclusion (2025) alongside your lifetime exemption. Report these using IRS Form 709.

Leveraging Irrevocable Trusts

You can transfer up to $15 million into an irrevocable trust, removing it from your taxable estate and shielding it from creditors.

Tip: Set up a Spousal Lifetime Access Trust (SLAT). It allows you to gift while still retaining indirect access to the assets via your spouse.

Case Study: Dual SLAT Strategy

An NRI couple with $25 million in U.S. assets sets up two SLATs—each spouse gifts $12.5 million. This strategy removes all assets from their taxable estate, ensuring a tax-free transfer to their children.

Generation-Skipping Tax Planning

Thanks to the $15 million GST exemption, you can create Dynasty Trusts. These trusts protect and grow wealth across multiple generations without additional estate or GST tax.

Aligning U.S. and Indian Legal Frameworks

A U.S. estate plan is not enough for NRIs with Indian assets. You need to coordinate across jurisdictions.

Tip:

Draft a separate Indian will compliant with the Indian Succession Act, 1925.
Ensure transfers comply with the Foreign Exchange Management Act (FEMA) to avoid penalties.

2. Navigating Challenges and Pitfalls for NRIs and OCIs

Despite the benefits of the new law, several legal and tax challenges remain for cross-border families.

Understanding Domicile Status

Only U.S. citizens and domiciliaries qualify for the full $15 million exemption. If you’re a non-domiciled foreign national, your exemption is limited to $60,000 on U.S.-based assets.

Tip: Work with a legal advisor to determine your domicile status accurately.

U.S.-India Tax and FEMA Compliance

Cross-border gifting requires you to meet compliance standards in both countries.

U.S. IRS Compliance:

File Form 709 for gifts exceeding $19,000 (2025 limit).
Report any trust contributions or international gifts per IRS rules.

Indian Tax Law:

Gifts from relatives are exempt under Section 56(2)(x) of the Income Tax Act.
Gifts to non-relatives over INR 50,000 in a financial year are taxable.

FEMA Compliance:

All remittances to India must comply with FEMA rules on property acquisition and financial transfers.
Violations attract penalties and potential legal consequences.

3. Key Takeaways for Wealth Transfer Strategy

The $15 million exemption is a permanent, inflation-protected opportunity—not a short-term loophole.
Effective wealth planning should combine U.S. estate law with Indian inheritance laws and FEMA compliance.
Irrevocable trusts, like SLATs and Dynasty Trusts, help preserve wealth for future generations.
Maintain dual wills and ensure cross-border transfers are fully documented and compliant.

FAQs: Direct Answers for NRIs and OCIs

1. Can I use the $15 million gift tax exemption?

Yes, if you’re a U.S. citizen or domiciliary. Non-resident aliens receive only a $60,000 exemption on U.S.-based assets.

2. How do I avoid Indian gift tax when gifting from the U.S.?

Gifts to Indian relatives are tax-free under Section 56(2)(x). Gifts to non-relatives over INR 50,000 are taxable.

3. Are Indian trusts valid in U.S. estate planning?

No. U.S. authorities do not recognise Indian trusts automatically. Create parallel structures in both countries.

4. What if I have U.S. assets but no will?

Your estate will be distributed under U.S. intestacy laws. This could lead to probate delays and unintended outcomes.

5. How does Generation Skipping Transfer tax work?

It applies to gifts to grandchildren or beyond. The new $15 million GST exemption lets you fund Dynasty Trusts without triggering GST tax.

Outlook: Planning for a Secure Family Future

The One Big Beautiful Bill Act gives NRIs and OCIs a stable legal and tax framework to build lasting wealth. You now have the clarity to shift from short-term tactics to long-term intergenerational wealth strategy.

Conclusion: Act Now to Maximise Your Legacy

This is your golden window to create a cross-border estate plan. Don’t delay. With the help of experienced legal advisors who understand both U.S. and Indian law, you can ensure your family’s wealth is preserved, protected, and passed on tax-efficiently.

About LawCrust Legal Consulting

LawCrust Legal Consulting, a subsidiary of LawCrust Global Consulting Ltd., is a trusted legal partner for NRIs and Indians across the globe. Backed by a team of over 70 expert lawyers and more than 25 empanelled law firms, we offer a wide range of legal services both in India and internationally. Our expertise spans across legal finance, litigation management, matrimonial disputes, property matters, estate planning, heirship certificates, RERA, and builder-related legal issues.

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NRI & OCI Wealth Succession Planning in the United States