UK client has died and owned a property in Arizona, as well as two bank accounts.
Am correct in assuming that for Estate Tax I only need to concern myself with the assets in USA and as these are under $13,990,000i do not need to do anything?
Hi Wayne, I hesitated before even attempting to comment on this - I wondered if anyone else would weigh in and provide something more conclusive than the tentative thoughts I’ve produced here. I hope the following is of some help.
The short answer is I’d strongly recommend getting advice in AZ from an Attorney-at-Law there regarding estate tax reporting obligations. For US citizens (anywhere), the estate tax exemption threshold is huge and as you’ve said, likely not an issue. When a UK citizen and taxpayer has real estate in a US State, you’re going to need local probate anyway - and as I anecdotally understand it, when you do, you don’t need to worry about the much lower estate tax exemption threshold of $60,000 USD for nonresident aliens, as the US likes to call…everybody else. I’m still seeking source material to confirm this.
There are two ‘buts’: first: seek legal advice in AZ to confirm, preferably from a firm with cross-border experience. Second: US banks are subject, not only to Federal and State rules, but their own internal compliance processes. They have a way of disregarding ‘normal’ rules for deceased nonresident aliens. Notwithstanding that they, too, might sweep other requirements off the table once they’ve had sight of a US Court Order/Letters Testamentary, I never rule out that they may require confirmation that estate tax clearance isn’t required; again, the involvement of the US Attorney might be key to ensuring you only do what’s absolutely necessary to comply with the banks’ requirements. Wishing you all the best with this!
Louise Levene
Finders International
Louise has mentioned the limitation on the estate tax threshold for non-resident aliens.
However, there is a UK-US tax treaty which may help. I imagine you would need to claim any benefit that might give you in a return, however.
State taxes - not just federal taxes - may apply?
You should certainly seek Arizona advice.