Love, Legacy, and Two Tax Systems

When Nicole Martin met Jack on the beaches of Byron Bay, it was pure serendipity. She was a 30-something entrepreneur fresh off the sale of a tech-enabled real estate platform. He was a widowed Australian surf instructor raising two young kids.

Fifteen years later, their blended family spans oceans with two adult children in Australia, two American teens in high school, and a shared life split between Laguna Beach and New South Wales.

Nicole’s net worth, now over $80 million, comes from a successful exit, smart real estate investments, and a sizable inheritance from her grandparents. What she didn’t have was a plan to protect it.

The Challenge: Four Kids, One Spouse, Two Tax Systems, and No Estate Plan

At 47, Nicole is thriving, but increasingly unsettled. Her advisors have warned her for years that she’s dangerously exposed:

• Jack isn’t a U.S. citizen, so he doesn’t qualify for the unlimited marital deduction.
• Her estate tax bill is already approaching $30 million — and growing.
• S. law doesn’t treat all four children equally, since only two are legally hers.
• Jack, careful to maintain his Australian tax residency, limits his time in the U.S., adding even more complexity.

What haunted Nicole most wasn’t the tax code. It was the fear that if she died first, the people she loved would face financial chaos, legal headaches, and heartache compounded by uncertainty.

The Solution

When Nicole finally sat down with her full advisory team (including the team from Robin Glen, her estate planning attorney, and a cross-border CPA), everything began to shift. Together, they created a plan that matched Nicole’s values, structure, and life.

Step One: Qualified Domestic Trust (QDOT) For Non-Citizen Spouse

• Allows income and principal distributions for Jack after Nicole’s death.
• Defers U.S. estate tax until Jack’s passing or earlier principal withdrawals.
• Ensures IRS compliance with a U.S.-based trustee.

Step Two: Two Trusts for the Children 

• Two U.S. dynasty trusts were created for Nicole’s younger children.
• One Australian discretionary trust was established for the older children, coordinated with a solicitor in NSW.

Nicole now makes annual exclusion gifts and plans strategic lifetime gifts using her exemption. She also uses the foreign annual gift exclusion ($190,000 in 2025) to support Jack, tax-efficiently.

Step Three: Life Insurance for Liquidity

To prevent forced asset sales, Nicole secured a permanent life insurance policy inside an ILIT. The policy’s death benefit will fund estate taxes and preserve key properties and investments. The proceeds remain outside her estate and benefit all four children and Jack.

Why It Works

Nicole’s new plan is more than technical. It’s transformational. The plan now provides:

• Liquidity for taxes, whether due at her death or upon Jack’s.
• Flexibility to control timing, beneficiaries, and asset flow.
• Tax efficiency through the combined power of the QDOT and ILIT.
• Clarity for her advisors, family, and future trustees.
• Protection for a blended, cross-border family built on love, not loopholes.