Estate tax may cost desi IT techies up to 40% of US wealth: Equirus Family Office

A rapidly expanding pool of Indian IT professionals employed by US multinationals such as Microsoft, Alphabet (Google) and Broadcom now hold significant US-listed Employee Stock Option Plans (ESOPs) and equity. Equirus Family Office warned that that US estate tax represents a significant and often misunderstood threat for Indian households with US equity exposure.

In its latest white paper, Equirus Family Office said in the unfortunate event of death, up to 40 per cent of these US assets may become payable as US estate tax. This is even if the individual has lived and worked entirely in India. The absence of an estate or inheritance tax treaty between India and the United States leaves such investors without treaty protection and exposes cross-border wealth to considerable risk, it said.

Equirus explained that the US Federal Estate Tax is levied on the fair market value of an individual’s assets at death. For Indian citizens who are neither US citizens nor Green Card holders, the tax applies only to US-situated assets. These include US real estate, tangible property physically located in the US, as well as stocks of US-incorporated companies, including ESOPs of listed multinationals. Once the combined value of these assets exceeds $60,000, the tax rate progressively rises from 18 per cent to a peak of 40 per cent. By contrast, US citizens and permanent residents enjoy a significantly higher exemption threshold of $13.99 million in calendar year 2025.

According to Equirus Family Office, the executor or legal representative of the deceased must take responsibility for filing and settling the estate tax. Form 706-NA must be filed within nine months of death, the tax must be paid prior to distributing any assets, and unpaid balances can be recovered directly from beneficiaries. This creates legal and administrative obligations for families at a difficult time, often without prior awareness of these rules.

Equirus said that while India maintains a tax treaty with the US for income taxation, there is no treaty addressing estate or inheritance taxes. Although India itself does not impose estate tax, income arising from inherited assets — such as dividends or capital gains — will be taxed when realised in India. This combination, the firm says, frequently leads to double-layered exposure for heirs.

Equirus advised that mitigation strategies must be proactive. Selling inherited US assets soon after the transfer may benefit from a step-up in cost basis under US tax rules, reducing capital gains tax liabilities and helping offset estate tax outflows. Carefully structured non-US intermediaries — such as India-domiciled funds investing in U.S. equities or compliant offshore entities and trusts — may, in some cases, prevent shares from being treated as US-located assets. Equirus cautioned that such structures require advance planning and cannot be applied effectively after an estate event has occurred.

Neha Joshi, Head of Taxation at Equirus Family Office, said a lack of awareness is the biggest challenge. “Global wealth creation among Indian professionals and entrepreneurs has risen sharply. Yet awareness around cross-border estate and inheritance taxation has not kept pace. Estate taxes remain one of the most overlooked aspects of planning. Our mission is not only to help clients grow wealth but also to preserve it across borders and generations.”