Snippet

Hi All,

Long time lurker and first time poster here. I am urgently looking for some guidance and advice from someone who may have some knowledge about this issue. Thank you in advance for any replies.

A few years ago I received an inheritance from a UK relative. Actually, the estate was held up in probate/administration for a quite a while and the money ended up being distributed out over a few years. At the time I did not think anything of it as the funds were wired directly to my US account each time from I am assuming, some type of probate account. A solicitors firm handled the administration, and it was from them that the money was released to me. It never occurred to me that this money whilst being held in the UK in an account that did not have my name on it or in which I had no signatory authority or control was reportable on FBAR. But in doing some reading a couple of weeks ago I stumbled across a tax lawyers blog and they talked about how this would in fact be a reportable event for FBAR purposes.

Since then I have been searching around trying to find out more info and there seems to be some difference of opinion as to if this is declarable or not.
I am now worried sick as I have been reading all the horror stories about people who got find and penalised for not filing FBAR when they should have and now it looks like I am one of them. I have spoken to an accountant who think it is reportable, one tax attorney who wasnt sure, one tax attorney who says no, and another who says yes it is. Yikes ......I am so confused now. What to do and where to turn?

Additionally. I have looked at the FIncen form and dont really understand how or where this gets reported exactly. It only seems to address ownership or signatory authority of an account. Also to add, my relative was fairly well off, but I was only one of many beneficiaries of the estate so if I have to report the maximum account value wont that make it look like I had a decent stack of money stashed in a foreign bank?? If I can even obtain any information at all about the account, of which i have exactly zero knowledge. Something just doesnt seem right there.

Is there anyone who has any knowledge of this who can offer me any further info. Thank you again for any advice. It is much appreciated.

Pulaski

If you have received all the inheritance payments due, i.e. the trust account situation has ended, and all the money is now on shore in the US and fully visible to Uncle Sam, then I wouldn't worry about it. Let sleeping dogs lie!

ChrisK

Unfortunately this is one of the vagaries of the reporting system. I declined to have anything to do with my mother's accounts since I might have to report them one way or another.


I'm no tax person, but as the above post suggests, as long as you have done as much as you can reasonably do I would not worry (but keep any correspondence from the tax attorney who said no !).

lansbury

My take is as long as the money was in probate it was the estate of the deceased person, and not yours. When paid to you, it was paid to you in the USA. So I wouldn't have included on a FBAR report.

If para above is wrong I refer you to the honorable gentleman from NC (Pulaski)

Cook_County

I concur. Until the money was received I would not include anything on an FBAR. The more interesting question is whether the right to receive money might be a foreign financial asset & 8938 reportable. I believe it is not, but can't remember why I believe this...

durham_lad

I believe you are correct because you don’t have signature authority over it. In the case of an inheritance from the estate of a deceased person you may have the right to some money but it is the executors that have signature rights over it.

MidAtlantic

I would not have reported it. It was not your account; you had no signature authority; you don't even know anything about the account.

It is more like a defined benefit pension where the same things are true and it is not reported on the FBAR.

Don't let scaremongering tax attorneys and accountants get to you.

theOAP

Unfortunately, conflicting opinions are very much the norm where more obscure topics of foreign (UK) procedures are considered. Most people assume the regulations on foreign topics would be clear. They often are anything but clear. You've received some good advice above, but the decision as to how to proceed is yours alone. IMO, it's not reportable, but it's not my FBAR.

There will be no black helicopters circling, looking to drain your bank account, no matter what.

Snippet

Hi again everyone, and thanks for the response.

Oh dear.....I just sent a reply, but it seems to have disappeared and is not showing up, so here goes again. Sorry if it comes up as a duplicate.

Anyway, yes, I am now coming to the realisation that this seems to be a bit of a grey area. Some think it is declarable, others not.

In scouring everything I can for more information on this topic. I did run across a post on this forum from last year which was discussing an inheritance, and nun, who seems to be extremely knowledgeable in these matters mentioned that money held for your benefit in probate is reportable on FBAR.

The part that was quoted to me that I am told makes it reportable, is the bit
in the instructions where it says the owner of title is acting as your agent, representative or attorney. Because I have money due to me from the account, even though I hold no title and have no control or signatory authority, I am however deemed to have a beneficial interest and that makes it declarable. So I suppose that makes it a bit like a trust then.
Only the money didnt come from a trust it came from an estate.

I still cant wrap my head around where exactly how and where this would even officially get reported on the FBAR form. As I mentioned previously, I was one of many beneficiaries. Something doesnt make quite sense to me there.

Oh dear..... still at a bit of a loss as to what to do. I have a meeting with
an attorney this week. After explaining my situation I am told that I must file the FBARs and need to discuss how to move forward to disclose.


Thanks once again for all your replies. Please keep them coming if there is anyone who can offer more insight.

jammiie

In this scenario, is there any danger of reporting it to be on the safe side?

There is no stipulation that forces you to ever bring FBAR reported money into the US so couldn't you just list it on the form (even the whole amount of the estate you mentioned) and at least that way its covered if you ever want to bring any of it in, but if you don't then no harm done.

Snippet

Sorry, the money was wired directly from the probate/estate account to my US account at the time it was released to me.

The issue for me is that this was in years past, so if it is reportable then I would be considered deliquent over several years, and would, I am being told have to enter a disclosure program which could subject me to severe fines and penalties. This is what I am trying to determine, is it reportable or not? I certainly dont want to go declaring something that didnt even need to be in the first place, and risk losing god knows what. Actually it could be way more than I even have.

You know I am probably making it sound like I inherited alot of money from this estate, which I definitely did not. The amounts were in fact quite modest. However, the total amount of the estate was quite large. I dont know how large exactly, I dont have that information. However I do know that it was quite substantial. As I previously mentioned, I was only one of many beneficiaries and only received a small portion of the estate. This is one of the main areas of concern for me, because it appears that I will be required to report the total value of the estate, not just my portion of it, and could then face penalties based on the total value reported, which I am being told is how they are assessed.

MidAtlantic

You will not get a clear yes or no answer because the guidance simply does not address the issue.

If, maybe for your own peace of mind, you decide to file then see the section almost at the bottom of this page headed "Deliquent FBAR Submission Procedures": https://www.irs.gov/businesses/small...-accounts-fbar

Don't let any attorney or accountant scare you about this. You would not be involved in a "disclosure program which could subject you to severe fines and penalties".

Even if you choose to report I don't see how you would do it when you have no information about the account.

theOAP

Whoa! Slow down and step back from this for a while.

Is this only an FBAR concern, or are you (or your counsel) indicating tax on the monies will also be owed? Normally, funds held in an estate are retained by the executor in an account designated for the estate, and when the estate is closed, those funds are then distributed, including any interest received, as part of the final estate settlement. At that point, the funds belonged to the estate, not the beneficiaries. During probate, an interest might have to be filed on an 8938 (FATCA), given the right circumstances (hence the amount of the entire estate). If the estate had been closed yet the money retained for a period, gaining interest on behalf of the beneficiaries before distribution, then that is a different problem (and may include a US tax declaration).

Filing late FBARs has become a very common. There are (tens of?) thousands of accidental Americans going through the streamlined procedures who are filing late FBARs. Nothing usually happens. No fines and no penalties. Most file the late reports themselves without the aid of an accountant/attorney. And they do this at no monetary cost to themselves.

But, you're also indicating this all occurred years ago. If no additional tax would be owed, why are you pursuing this? FBARs lie in a dead file and are not resurrected unless there is an audit related to tax delinquency, which for small sums (subjective) is most unusual. What would be the amount of your share of the total interest amount if the funds were held after closure and tax is owed?

All IMHO. I'm only a punter, not an expert.

In the end, you must proceed with what will let you sleep at night, but please don't let someone frighten (scaremonger) you into paying for their new Mercedes.

EDIT:
Are you indicating the estate was closed, with the proceeds placed into a UK Trust for a period of time prior to distribution to the beneficiaries? Some UK (foreign) Trusts would require FBAR, possibly FATCA, possibly 3250, and tax reporting. If so, and there was a Trust, did the Trust have a GIIN (a number for US tax reporting)?

Nonetheless, even in these circumstances, extreme fines and penalties should be unlikely.

Snippet

AFAIK, the estate administration ended when I received the final payment.
In the letter from the solicitor when I received the prior payment, it said I
would receive the final payment when the estate administration was concluded.

No, the money did not come from a trust. I did enquire about that because I
know you have to specifically report trust distributions. I was told the money
only came from the estate. I did think if the money came from a trust that
fact would have been reported to me, but I did check just to be sure.

Snippet

Just to add. Thanks for all your replies.

I will be moving on with this matter now.