Dave J

I can't imagine this has not come up before, but I can't find a thread. Apologies if I have missed it.

My question is pretty simple. I am a dual Brit/US citizen having grown up in the UK and moving here about 30 years ago. My dear old dad back in the UK is 96 and while he is in good health, the odds are that sooner rather than later I will have to deal with the subject line. He just sold his house and moved into rented accommodation, so that my sister and I will not have to deal with the hassle of selling his house ourselves. His total worth (in monetary terms) is about 300,000 pounds, to be split equally between my sister and myself. So I have two questions. How best to transfer 150,000 over here and will it somehow get taxed? I believe it is under the estate tax threshold for the UK, but don't know how that pertains over here. Any information and/or advice anyone could offer would be much appreciated. The plan would be to sock it all away for my two kids looming college tuitions. Thanks in advance

md95065

If any estate tax is due then that will be paid in the UK.

An inheritance is not "income" so you should have no US federal or state income tax liability as a result.

Be sure to follow the FBAR reporting requirements since it is likely that at some point after your father's death, even if only for a short while, you will have assets of more than $10,000 in an overseas account.

Dave J

Thanks for the swift and helpful reply. Good point about the overseas holding. Hopefully this will not pertain too soon, but re the logistics of moving such a sizeable chunk of change over here, any ideas about the best way to do it without several intermediaries taking their cut at the exchange/processing/handling etc etc level?

JAJ

Some states will tax the inheritance even if there is no federal estate tax. Also you may need to file an information return (form 3520?) with the IRS.

ian-mstm

Whether he has to file FBAR will depend on whether or not he is the executor of the estate, and where the money ends up. If he is the executor and the proceeds are transferred to a US account, there will be no FBAR filing requirement. Why? Because the executor does not have control over the foreign assets, and the estate is not considered settled until all disbursements are made. Once the money is transfered to his US account, his duties as executor are over - and not for one moment did he ever have control over the foreign assets.

Ian

Nutmegger

Lots of info in this thread:

http://britishexpats.com/forum/showthread.php?t=709061

md95065

Yes, that is indeed a possible scenario and one which is covered by my comment that the OP should be sure to comply with the FBAR filing requirements since that includes the possibility of not filing if he doesn't have to.

The important point is that I wanted to make sure that the OP was aware that the requirement existed because if, as a beneficiary he receives his share of the estate in a UK bank account he would need to disclose it.

Anyway, that's enough pedantry for the next few hours at least ...

Dave J

Thank you all for your helpful comments. It seems a little more straightforward than I had been fearing- somehow I still can't quite believe that great chunks will not be extracted at both ends and by all intermediate processors. Anyway, I am more prepared now and of course hope that actually having to deal with this will not be any time soon.

Bob

xe.com, hifx.com or any of the other currency exchange companies will do a decent rate....but who to use would depend on who's still in business when you need the service. It'll be better generally than what a bank would offer you.

Personally, I'd stick the money into retirement, you'll hopefully be old a lot longer than the kids will be in college, plus if they've got savings for college, they'd be screwed out of other potential money streams such as scholarships/bursaries and loans.

ian-mstm

I'm a USC and was the executor of my uncle's estate in London. All the estate taxes were paid in the UK and, at the end of the process, my share of the inheritance was direct deposited to my bank account in the US. My bank took care of reporting the deposit to the Treasury Department and I never had any dealings with the IRS, as the inheritance was tax free.

Ian

nun

Any gift or bequest from a foreign person or trust over $100k must be declared on form 3520. There's no tax due as the tax will have already been paid by the estate.

As far as being the executor of a foreign estate I decided not to do it and just let my mum's solicitor do that job......frankly it's often better just to let the lawyers do it if you like outside the UK.