My father was a non-resident alien who owned U.S. real estate. Do we need to file Form 706-NA?

When a non-resident alien (NRA) dies owning assets located in the United States ("U.S. situs assets"), those assets are subject to U.S. estate tax. Form 706-NA ("United States Estate (and Generation-Skipping Transfer) Tax Return — Estate of nonresident not a citizen of the United States") is the return used to report the estate. Your father's Texas condo (U.S. real estate) and U.S. stock holdings are both U.S. situs assets subject to this tax.

You are correct that the disparity is striking. U.S. citizens and residents receive a unified credit equivalent to an exemption of approximately $12.92 million (for 2026). Non-resident aliens receive a unified credit of only $13,000, which is equivalent to an exemption of approximately $60,000. With $550,000 in U.S. situs assets ($400,000 condo plus $150,000 in stocks), your father's estate exceeds the $60,000 threshold and is subject to U.S. estate tax. The marginal estate tax rates for NRAs range from 18% to 40%, same as for U.S. persons.

For NRAs, U.S. situs assets include: real property located in the U.S. (your father's condo), tangible personal property located in the U.S. (furniture, art, vehicles physically in the U.S.), stock issued by U.S. corporations (the brokerage holdings), and certain debt obligations of U.S. persons. Notably, bank deposits with U.S. banks are generally NOT U.S. situs assets for NRA estate tax purposes (a specific statutory exception). Also, stock in foreign corporations is not U.S. situs even if held in a U.S. brokerage account. The classification matters significantly for estate planning.

The U.S. has estate tax treaties with several countries that can increase the available exemption for NRAs. The U.S.-Mexico income tax treaty does not specifically address estate taxes (there is no estate tax treaty between the U.S. and Mexico). However, some countries — including the UK, Canada, Japan, and Germany — have estate tax treaties with the U.S. that provide a prorated unified credit based on the ratio of U.S. assets to worldwide assets. Without a treaty, your father's estate is limited to the $60,000 basic exclusion.

Form 706-NA is due 9 months after the date of death, with a 6-month extension available by filing Form 4768. The executor or administrator of the estate is responsible for filing. If no U.S. representative is appointed, the responsibility falls to any person in possession of the U.S. assets. The estate may also need to obtain an EIN (Employer Identification Number) for the estate. Payment of estate tax is due with the return — failure to pay timely results in interest and penalties.

For rough estimation purposes: with $550,000 in U.S. situs assets and a $60,000 exclusion, the taxable estate is approximately $490,000. The estate tax on this amount (using the graduated rate table) would be approximately $155,800 in tax. This is a significant amount relative to the asset values. Estate planning strategies such as holding U.S. real estate through a foreign corporation (which converts the U.S. situs real estate into non-U.S. situs stock) are commonly used by NRAs to mitigate this exposure — though such structures must be established during the decedent's lifetime.