Inheriting Money From The USA When You Live In The UK – Part One: International Probate
Losing a loved one, whether an immediate family member or a close friend or relative, can be one of the most turbulent, difficult periods in life. For many Americans living in Europe it can come with a number of additional challenges such as long-distance communications with medical institutions, banks and lawyers (to name a few), the stress of repeated trips back and forth to visit ill relatives and ultimately needing to drop everything and fly back to the USA for an (un)expected funeral. With so much to handle and thousands of miles of distance it is easy to see why dealing with the death of a family member back home is frequently mentioned as the hardest part of living abroad.
With the death of a relative there are often assets to be passed on. A legacy gift from an inheritance is likely to change many people’s financial situation; for example, paying off debt, starting a business or a family, or bolstering household savings. However, American citizens living in the UK have additional considerations due to their dual tax obligations.
What needs to be done to make sure that your US inheritance doesn’t end up being taxed unnecessarily in the UK?
Dealing with Probate
Before an inheritance can be distributed the affairs of the person who has died need to be wrapped up through a legal process called probate.
The people responsible for making sure that the deceased’s financial affairs are in order and the probate process is settled are called “executors”. Quite often it falls to someone living abroad to act as an executor for a parent or close family member. This can be tricky at a distance and if you’ve been asked to act as an executor it is important to be on top of any responsibilities and required tasks. If you are appointed as an executor, be sure to get a copy of all of the relevant documents: wills, trusts, letters of wishes. It is also important to understand what assets and debts are part of the estate and which financial institutions are involved in holding assets or providing credit.
The process of acting as an executor is complicated and the exact forms and requirements vary between states. However, at a high level all executors are responsible for locating and itemizing assets, contacting creditors and settling any outstanding debts, filing records with the probate courts, preparing a final tax return, and managing the final payment to the heirs of the estate.
Don’t Go It Alone
Even at this early stage it’s important to start gathering a professional team to help. Acting as an executor from abroad can be made a lot easier by involving a local attorney who specializes in working with probate. They can help with the cataloguing of assets, shepherding the case through the probate courts, selling and distributing assets, and more. It’s also important to have a good accountant who is qualified to work in both the US and UK, since inheriting money from different countries may involve filing unusual tax forms. Having a good team is key.
Getting the advice of a dual qualified financial advisor can be extremely helpful as you plan how to structure your inheritance and deal with international probate.
To get more information and personalized help on your inheritance, please contact Patrick Mulhern at Tanager Wealth Management LLP at firstname.lastname@example.org.
Patrick is an American living in the UK and financial advisor at Tanager Wealth Management. You can learn more about Patrick on his biography page here.
* Please note that Tanager Wealth Management LLP is not authorised to provide tax advice and you should speak with a qualified accountant to understand how your inheritance will impact the rest of your taxes in the US and the UK.