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Transferring or Paying Inheritance from UK to US

Transferring or Paying Inheritance from UK to US

Old Apr 4th 2012, 8:01 am
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Question Transferring or Paying Inheritance from UK to US

Hi All,

I found a few other threads but couldn't quite find all the answers I was looking for, so hope you can help...

Last year my father sadly passed away. Due to a few unnecessary steps of bureaucracy it's taken up until now for the estate to finally be resolved with the tax folks in the UK. It should be all wrapped up in the next couple of weeks, which leads me to a problem that I'd be very grateful for some advice with.

Situation
• I'm in the I-140 process (via EB1-C)
• I live in San Francisco
• I have an old account still open in the UK for which I never updated the address.
• The inheritance will amount ~£200k
• I don't intend to travel to the UK anytime soon.
• I'd like to pay/transfer the money into my US account.

Questions
1. As the estate has paid tax in the UK, and as the value is way under the US and CA estate tax threshold, will I need to pay tax on this as income?
2. Assuming the inheritance is made out as a GBP cheque, Is there a way to pay this into my US account? What would be the pros/cons?
3. If not, what would be the best path to transfer the money?
4. Is it possible to open a UK account of any kind without having a UK address?

Many thanks for any help anyone can give.
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Old Apr 4th 2012, 11:50 am
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by pixelnurse View Post

Questions
1. As the estate has paid tax in the UK, and as the value is way under the US and CA estate tax threshold, will I need to pay tax on this as income?
2. Assuming the inheritance is made out as a GBP cheque, Is there a way to pay this into my US account? What would be the pros/cons?
3. If not, what would be the best path to transfer the money?
4. Is it possible to open a UK account of any kind without having a UK address?

Many thanks for any help anyone can give.
1. No US tax is due. You need to declare your inheritance on form 3520 Part IV.
2. Yes, just give the executor your US account information for them to do an international wire transfer.
3.........see 2
4. My personal experience is that you need a UK address to open an account.
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Old Apr 4th 2012, 12:14 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by pixelnurse View Post
4. Is it possible to open a UK account of any kind without having a UK address?
Yes.

You can open an account with one of the offshore (Isle of Man, Jersey, etc.) branches with an overseas address. It is a small hassle, but gives you a "UK" account without a UK address. Also offers options for a multi-currency account which might be useful.
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Old Apr 4th 2012, 1:23 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by celticgrid View Post
Yes.

You can open an account with one of the offshore (Isle of Man, Jersey, etc.) branches with an overseas address. It is a small hassle, but gives you a "UK" account without a UK address. Also offers options for a multi-currency account which might be useful.
I agree with this. I was in very similar position to you a few years ago, and I opened a pounds sterling account at a Isle of Man bank. Then instructed the executor to deposit my proceeds there. That way you can be in control of the process of moving all or part of the balance to your account in the US. If you leave a balance in the IoM account, you can use the account for any UK uses (family gifts, holiday visits to the UK, etc.)

Some tax & US Treasury reporting requirements arise, but as nun mentioned you'll have to fill out the 3520 anyway, even if money is sent direct to the US..
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Old Apr 4th 2012, 1:49 pm
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Default Re: Transferring or Paying Inheritance from UK to US

In my experience a UK bank account is not always necessary. By using a foreign exchange specialist you can arrange for the inheritance to be transferred directly from the lawyer/solicitor to the specialist’s UK Sterling account and they can then transfer the US Dollars directly into your account in the US. A letter from the lawyer/solicitor and the correct referencing will suffice. On this size amount you will also save money on the transfer by using a foreign exchange specialist.

If you need any more information please contact me.

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Old Apr 4th 2012, 2:39 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by robin1234 View Post
Some tax & US Treasury reporting requirements arise, but as nun mentioned you'll have to fill out the 3520 anyway, even if money is sent direct to the US..
You have to comply with US tax wherever you put the money. Filing of 3520 is required for all US residents that get foreign inheritances over $100k

Also the IOM is not part of the United Kingdom. I believe that if you want to open a UK bank account you need to provide proof of UK residence, that's what I was told when I tried with Nat West
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Old Apr 4th 2012, 2:45 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by nun View Post
You have to comply with US tax wherever you put the money. Filing of 3520 is required for all US residents that get foreign inheritances over $100k

Also the IOM is not part of the United Kingdom. I believe that if you want to open a UK bank account you need to provide proof of UK residence, that's what I was told when I tried with Nat West
Yes, IoM is not part of the UK but the banks there are part of the UK clearing system, and they have pounds sterling accounts. So you can open an account there with a foreign address, but have all the practical facilities of having a UK bank account. That was my only point.
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Old Apr 4th 2012, 3:14 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Wow, I wrote that post just before I went to bed and I'm amazed how amny helpful replies there've been. Thanks so much!

It sounds like I may benefit from getting an account in the Isle of Man, even if I do use a currency exchange service in the end. So on to my next questions:

1. Which Isle of Man banks would you guys suggest?

2. Which currency exchange services would you suggest? I've seen people mention Xe and HiFX?

Many thanks for all the help.
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Old Apr 4th 2012, 3:47 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Have you asked the solicitors acting for your late father's estate if they will electronically transfer the money to your US bank account?
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Old Apr 4th 2012, 4:04 pm
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Default Re: Transferring or Paying Inheritance from UK to US

We haven't had the discussion yet. Frankly though I don't think he has too much experience in these matters, he's a rural solicitor that has handled estates before but doesn't seem to have done so when one of the beneficiaries is living abroad.

Currently he is holding a cheque for me of about £16k that was sent from Scottish widows and is not part of the estate. I asked if he could have it redrawn in dollars or pay it into my US account but he doesn't seem to have any idea about how he could do either. So even if the estate can be paid directly to my US account I think I'd still benefit from an IOM account.
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Old Apr 4th 2012, 4:14 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by pixelnurse View Post
Wow, I wrote that post just before I went to bed and I'm amazed how amny helpful replies there've been. Thanks so much!

It sounds like I may benefit from getting an account in the Isle of Man, even if I do use a currency exchange service in the end. So on to my next questions:

1. Which Isle of Man banks would you guys suggest?

2. Which currency exchange services would you suggest? I've seen people mention Xe and HiFX?

Many thanks for all the help.
One downside of banking in the IoM is that the depositor guarantee scheme is not robust & well founded like the schemes in the UK and the US.

http://www.gov.im/fsc/investor/dep_comp.xml

So you have to use your judgement about how well-founded (and, how well guaranteed by the British or Irish Governments, in the case of banks that are branches of British or Irish banks) your chosen bank is.

Three major banks that have retail operations in the IoM are LTSB, Anglo-Irish Bank and Nationwide (a wholly owned subsidiary of the British building society.) There are several others, though..
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Old Apr 4th 2012, 4:30 pm
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Default Re: Transferring or Paying Inheritance from UK to US

We have many years of experience dealing with solicitors.

I recently dealt with a couple who had sold a property in the UK and are now living in Spain. They had closed their UK bank account and need the money to be sent to their Spanish bank account. The couple wanted to use us to get a better rate on the transfer. At the time of the trade they asked me to speak directly with the solicitor as he had not done this before and helped to explain the process and provide proof the couple had an account with us.

I wrote a letter on letter headed paper to confirm the account and in return he wrote a letter stating he was transferring £125,000 to our account on behalf of the couple. Once he had the beneficiary details and the correct reference for the couple’s account he made the transfer. In this case the solicitor was hesitant, he hadn’t dealt with overseas transfers before and was reassured when I explained how I had worked with other solicitors.

I had a similar case with a couple in the UK who had sold their house in Australia. The fact the solicitor hadn’t dealt with currency transfers before and the time difference made the experience very stressful for them. I helped to mediate between the two, even using my payments knowledge to help the solicitor transfer the money out of the country.

Not having a bank account in the country you are receiving money is a regular occurrence. The key is good communication between yourself, the broker and the solicitor so that everyone is clear what the process is and what documentation or information all parties need to provide.
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Old Apr 4th 2012, 4:51 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by pixelnurse View Post

Questions

2. Assuming the inheritance is made out as a GBP cheque, Is there a way to pay this into my US account? What would be the pros/cons?
3. If not, what would be the best path to transfer the money?
You say you already have a UK account open, what's wrong with putting the money in that and then using XE or whatever to transfer it to the US?

You'll need to do a FBAR on it next tax time, but small hassle.

You can cash a UK cheque in the US if that is what you really want to do, but it can take anything from a few days to a few weeks to clear and usually have a hefty charge with a shit rate.
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Old Apr 4th 2012, 5:10 pm
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Default Re: Transferring or Paying Inheritance from UK to US

Originally Posted by Bob View Post
You say you already have a UK account open, what's wrong with putting the money in that and then using XE or whatever to transfer it to the US?

You'll need to do a FBAR on it next tax time, but small hassle.
.
...and you'd also need to do FATCA as well given the amount.

I don't see a need for an IOM account. It's just another thing to track and report.

Don't make this more complicated than it needs to be, just tell your solicitor to transfer the money into your US account. Why does it even need to go into a UK or IOM account unless you need the money in the UK for specific reasons.

If he's uncertain about the international transfer ask him to give you a foreign draft. This is a US dollar check drawn on a US bank and you can physically take the check back with you. You can even get a GB pounds check cashed by a US bank although it will take some time to clear.

Last edited by nun; Apr 4th 2012 at 5:22 pm.
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Old Apr 18th 2012, 6:17 am
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Default Re: Transferring or Paying Inheritance from UK to US

Thanks again to all for the helpful replies. From everything you've all written it sounds as though using a UK bank account would be an unnecessary step. It seems that I should instead open an account with a ForEx company, and have the solicitor place the funds there. Then the ForEx company can transfer into my US account. It seems that would be the cheapest way to transfer the money.

If the above is true, then does anyone here have any experience using ForEx companies, and if so, any that you would recommend?

Many thanks.
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