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FYI regarding wills and estates

FYI regarding wills and estates

Old Jan 8th 2011, 3:32 pm
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Default FYI regarding wills and estates

At some time we all have to worry about wills and estates. If you are US citizen or have a green card and have family back in the UK then it can get complicated. I've been looking into this as my mum is aging and I'm an executor and beneficiary of here will. I'm a US/UK dual citizen and my mum is a UK citizen, living in UK with no US assets.

I looked into the issues of a US citizen being an executor on a foreign estate and you have to deal with cross border trust issues and FBAR. It's complicated and the penalties for getting it wrong are nasty. So my advice is if you are a US citizen or green card holder DON'T be an executor on a foreign will. There's also the issue of if you are a beneficiary it's often best not to be an executor and it can be impractical if you live in a foreign country.

So now that you're just a beneficiary life is much simpler. You only have to report a bequest if it's over $100k and then you'd use form 3250. Next is the issue of FBAR (ie foreign accounts). I've read arguments that a foreign trust formed on the death of a NRA is not a foreign account so no FBAR is required. But I think I'd file anyway just to CMA as a large wire transfer from a foreign bank to a US account will probably generate a few questions.
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Old Jan 8th 2011, 11:02 pm
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Default Re: FYI regarding wills and estates

Originally Posted by nun View Post
I looked into the issues of a US citizen being an executor on a foreign estate and you have to deal with cross border trust issues and FBAR.
I'm a dual UK/US citizen living in the US and was co-executor of my uncle's estate. He was a UKC living in the UK. My cousin was the other co-executor... she's a dual UK/AUS citizen living in OZ. Additionally, we were both beneficiaries of the estate! We had no problems whatsoever settling the estate... and it was worth close to £0.5M.

Ian
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Old Jan 8th 2011, 11:18 pm
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Default Re: FYI regarding wills and estates

Originally Posted by ian-mstm View Post
I'm a dual UK/US citizen living in the US and was co-executor of my uncle's estate. He was a UKC living in the UK. My cousin was the other co-executor... she's a dual UK/AUS citizen living in OZ. Additionally, we were both beneficiaries of the estate! We had no problems whatsoever settling the estate... and it was worth close to £0.5M.

Ian
That's great. When was this? Did you do your taxes yourself? I'm probably a bit paranoid about this stuff, but since FBAR came in I get worried about any international aspects of my finances. The more I looked into the issues with being a US fiduciary of a foreign trust, the more I didn't want to deal with it.
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Old Jan 9th 2011, 1:20 am
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Default Re: FYI regarding wills and estates

Originally Posted by nun View Post
When was this? Did you do your taxes yourself?
This was last year, and yes... my wife and I did our own taxes. We took advice from my uncle's UK attorney. He took care of everything on the UK side, and we took care of the rest. The money was transferred directly to our US bank, and the bank took care of the reporting paperwork. At the end of things, there was no foreign trust... the estate was settled and the money disbursed.

I will note something though... being the executor of a foreign estate isn't the same as having control over a foreign trust.

Ian
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Old Jan 9th 2011, 5:55 am
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Default Re: FYI regarding wills and estates

Originally Posted by ian-mstm View Post
This was last year, and yes... my wife and I did our own taxes. We took advice from my uncle's UK attorney. He took care of everything on the UK side, and we took care of the rest. The money was transferred directly to our US bank, and the bank took care of the reporting paperwork. At the end of things, there was no foreign trust... the estate was settled and the money disbursed.

I will note something though... being the executor of a foreign estate isn't the same as having control over a foreign trust.

Ian
That's good to know. I got a bit worried by the language in the 1041 wrt US fiduciaries of a foreign estate. I think I'm probably being paranoid, but I worry about the TDF-90.22-1 and whether being an executor of a foreign will requires it to be filed or not. I'm assuming you filed form 3250 to declare the bequest. Did you file a TDF 90-22.1 or were you told that that wasn't required?
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Old Jan 9th 2011, 5:15 pm
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Default Re: FYI regarding wills and estates

Originally Posted by ian-mstm View Post
I will note something though... being the executor of a foreign estate isn't the same as having control over a foreign trust.
+1

I was a co-trustee of a family trust for around 13 years prior to moving to the US. The legal support for the trust made it quite clear there was an ocean of pain awaiting, so I had to resign and get a replacement trustee sorted out.

And it made my life easier anyway
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Old Jan 9th 2011, 6:16 pm
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Default Re: FYI regarding wills and estates

What I get worried and confused about are all the definitions. The executors certainly hold the assets of the estate in trust for the beneficiaries, but does that qualify as a foreign financial account for FBAR or a foreign trust for the trust tax forms. I'm hoping that it doesn't.

Having said that there is an instruction on form 1041 that a US fiduciary of a foreign estate should fill out form 1040NR for the estate. I'm unsure if the fact that the foreign estate is that of a NRA decedent is important here. If I was still executor of my mum's estate I'd definitely get a professional's opinion.

But to be safe I'm no longer the executor on my mum's will and I'll file a "protective" TDF 90-22.1 just in case along with a 3250 if my bequest is above $100k.

Last edited by nun; Jan 9th 2011 at 6:23 pm.
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Old Jan 9th 2011, 11:52 pm
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Default Re: FYI regarding wills and estates

Originally Posted by nun View Post
I'm assuming you filed form 3250 to declare the bequest. Did you file a TDF 90-22.1 or were you told that that wasn't required?
I filed both, yes... but that's because I had to file both anyway, since I have my own retirement fund in Canada which needs to be declared annually. My uncle's gift from his estate wasn't really an undue burden and nothing came of my filing the forms.

Okay... I see you've removed yourself as executor! It's probably for the best if you're at all hesitant about the ramifications of taking care of things. Best of luck to you, then.

Ian

Last edited by ian-mstm; Jan 10th 2011 at 12:19 am. Reason: D'uh... spelling needs improvement.
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Old Aug 2nd 2011, 5:11 pm
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Default Re: FYI regarding wills and estates

Originally Posted by ian-mstm View Post
This was last year, and yes... my wife and I did our own taxes. We took advice from my uncle's UK attorney. He took care of everything on the UK side, and we took care of the rest. The money was transferred directly to our US bank, and the bank took care of the reporting paperwork. At the end of things, there was no foreign trust... the estate was settled and the money disbursed.

I will note something though... being the executor of a foreign estate isn't the same as having control over a foreign trust.

Ian
Was the attorney a co-executor? And what are the concerns dealing with a foreign trust?

We are US citizens living in the UK, going to meet with a solicitor tomorrow about making a will. We're not sure what to do about executors. We plan on each of us being the executor of the other's will (though I have read we should have two even then in case the remaining one is incapacitated???), but we are trying to decide who should be executor should we die together in an accident. I'm assuming it needs to be someone who can travel, as they'd need to come here to clear out the apartment? And someone with enough funds to travel or cover other costs?

Basically, our parents are too aged, and my sister, whom I trust and love, is in bad health and very low income. So we were going to have an American friend do it and possibly put a solicitor in the UK as the co-executor?

The biggest part of the will, should anything happen to us before 20 years pass, is my husband's life insurance policy. We probably are going to put that in a trust to pay out to me, and if anything happens to me it should go to my estate (I presume). I would be the trustee and beneficiary, but probably need another trustee and have no idea whom should do that.

Any tips or advice appreciated!

Last edited by Dazey; Aug 2nd 2011 at 5:36 pm.
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Old Aug 2nd 2011, 5:41 pm
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Default Re: FYI regarding wills and estates

I was glad this issue came up because I'm in the dark about this. My husband is here on an H1B visa and I am on the H4. We have just made our wills in the UK when we were visiting last month. Do we need any kind of will for here in Florida, because if I'm correct we are classed as "non-resident aliens".
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Old Aug 2nd 2011, 5:54 pm
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Default Re: FYI regarding wills and estates

Originally Posted by Dazey View Post
Was the attorney a co-executor? And what are the concerns dealing with a foreign trust?

We are US citizens living in the UK, going to meet with a solicitor tomorrow about making a will. We're not sure what to do about executors. We plan on each of us being the executor of the other's will (though I have read we should have two even then in case the remaining one is incapacitated???), but we are trying to decide who should be executor should we die together in an accident. I'm assuming it needs to be someone who can travel, as they'd need to come here to clear out the apartment? And someone with enough funds to travel or cover other costs?

Basically, our parents are too aged, and my sister, whom I trust and love, is in bad health and very low income. So we were going to have an American friend do it and possibly put a solicitor in the UK as the co-executor?

The biggest part of the will, should anything happen to us before 20 years pass, is my husband's life insurance policy. We probably are going to put that in a trust to pay out to me, and if anything happens to me it should go to my estate (I presume). I would be the trustee and beneficiary, but probably need another trustee and have no idea whom should do that.

Any tips or advice appreciated!
Surely you would make a provision in your will to cover your friend's/executor's out of pocket costs to travel and stay in the UK whilst sorting our your affairs. IMO it's not fair to expect them to pay for flights/hotel/meals etc themselves.
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Old Aug 2nd 2011, 6:13 pm
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Default Re: FYI regarding wills and estates

Originally Posted by Jerseygirl View Post
Surely you would make a provision in your will to cover your friend's/executor's out of pocket costs to travel and stay in the UK whilst sorting our your affairs. IMO it's not fair to expect them to pay for flights/hotel/meals etc themselves.
Yes, but is the money paid out before the estate is settled? And of course we wouldn't ask anyone to be executor who isn't getting money in the will, and reimbursed expenses on top of that. But I don't know if they'd be able to get funds up front to cover expenses, or if they would be reimbursed later. And for my sister, she ain't got it up front, not even via credit.

However, the money issue is only half the problem for my sister -- as I said, her health is bad and if she had to come deal with things personally in the UK, it would be a problem. And a couple other problems there that I don't need to go into here. So, anyone know if it's wise to use a solicitor to execute, or a solicitor and a friend, or any of the other questions in my original post?
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Old Aug 2nd 2011, 6:15 pm
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Default Re: FYI regarding wills and estates

Originally Posted by Dazey View Post
Yes, but is the money paid out before the estate is settled? And of course we wouldn't ask anyone to be executor who isn't getting money in the will, and reimbursed expenses on top of that. But I don't know if they'd be able to get funds up front to cover expenses, or if they would be reimbursed later. And for my sister, she ain't got it up front, not even via credit.

However, the money issue is only half the problem for my sister -- as I said, her health is bad and if she had to come deal with things personally in the UK, it would be a problem. And a couple other problems there that I don't need to go into here. So, anyone know if it's wise to use a solicitor to execute, or a solicitor and a friend, or any of the other questions in my original post?
Your solicitor should be able to advise you regarding choosing an executor and the executor's expenses.
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Old Aug 3rd 2011, 12:13 am
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Default Re: FYI regarding wills and estates

Originally Posted by Dazey View Post
Was the attorney a co-executor?
No.


And what are the concerns dealing with a foreign trust?
Mostly IRS/Treasury reporting nightmares!


I'm assuming it needs to be someone who can travel, as they'd need to come here to clear out the apartment?
This should not be a concern.


And someone with enough funds to travel or cover other costs?
Again, this should not be a concern.


So we were going to have an American friend do it and possibly put a solicitor in the UK as the co-executor?
That would work... although I, personally, would never have an attorney as a co-executor... but that's just me. There's too much potential for a conflict of interest.


The biggest part of the will, should anything happen to us before 20 years pass, is my husband's life insurance policy. We probably are going to put that in a trust to pay out to me, and if anything happens to me it should go to my estate (I presume).
This should be sorted out with the insurance company first. If you inadvertently create a conflict with directives, it could take ages to sort out - an no money at all will be disbursed until the case is settled which could take many years.

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Old Aug 3rd 2011, 12:15 am
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Default Re: FYI regarding wills and estates

Originally Posted by Dazey View Post
... is the money paid out before the estate is settled?
Sometimes, but not usually. However, legitimate executor expenses can be invoiced against the estate. Money may be reimbursed when invoiced but will most likely be added to the final disbursement.

Ian
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