californiaukexpat

I am a British Citizen living in California, married to a US Citizen, and have a Green Card.
My parents are still married, in their 70's, and living in the UK.
We are jointly looking at estate planning and inheritance tax in the case of their death.

One key question that we have, would inheritance be taxed in the UK or US or both?

Any comments on this or suggestions on things for us to consider would be really helpful (including any suggestions on who/what sort of firm would be able to give us estate/inheritance tax advice on this)?

durham_lad

From my experience inheritance tax on the parents’ estate will be totally a UK affair. We were both dual citizens living in the USA at the time our parents died. Parents were UK citizens living in the UK.

After the estate and any inheritance tax has been settled in the UK all monies received by the US persons is US tax-free and can be moved over tax free. We had our monies paid into our UK bank account.

californiaukexpat

Thanks for the reply and experience. Did you have to note it on tax submission or FBAR?

I should have clarified as well - both my parents are UK Citizens with no US connection (other than us living here).

durham_lad

Our UK balances always are above $10k so we always have to file an FBAR. If the balances had been above the limits for FATCA then they would also have needed to be reported on our IRS tax return on form(s) 8938. In both cases it is reporting only, the balances are not taxed.

our parents were also only UK citizens with no US connection.

Nutmegger

When I received an inheritance, the Executor of the Estate wired it directly into my US account, in dollars, with no fees. If you do a search you will find a number of threads on the topic of inheritances, including the form to file with your US taxes, the 3520. (Please note: I believe that it must only be declared if the bequest is over $100,000, and don't worry, the form is purely informational, no taxes will be levied!) I received a UK Revenue form R185 from the Executor, and was advised by him (an accountant) that the form showed my percentage of the net income during the administration period and the tax already deducted therefrom. He told me the total gross figure that I needed to declare on my US tax return and the amount of UK tax that had already been paid thereon that I also needed to indicate. I was to convert both figures into USD and he suggested that I use the exchange rate on the date on which the legacy funds were transferred to me.

Cook_County

A foreign estate is reported on Form 8938. A distribution from a foreign estate is reported on Form 3520. FBARs and Form 8938 may separately be relevant.

californiaukexpat

Thank you for pointing me towards the forms... that helps in understanding what we should be looking at... still concerned about double inheritance tax.

S Folinsky

It seems you are talking about three jurisdictions. California does not have an inheritance tax. The US Federal government does not have an inheritance tax. I have no idea about the UK. Note I am not talking about estate taxes.