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  1. @Chen,

    Yes, the covered expatriate could make a gift or bequest to the U.S. spouse. Later the U.S. spouse could give everything to the kids. There would be no Section 2801 “special punitive tax” on gifts/bequests received from covered expatriates, because the gift/bequest did not come from a covered expatriate.

    If the U.S. citizen spouse does not have sufficient wealth to incur the estate tax, then this is the logical strategy.

    For people whose wealth exceeds the unified credit amount ($5.43 million in 2015; indexed for inflation) then passing the money through the U.S. spouse’s hands will mean that an estate or gift tax will be paid.

  2. Per your article, covered gifts and estates are not taxable to US surviving spouses. So the surviving US spouse can give such gift to US children at a later time or after death without paying covered gift tax? So US children of a covered expatriates may not need to renounce their US citizenship as long as the other US parent is alive?

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.