[FR] Cross-Border Inheritance Matters
[FR] U.S. tax counseling for international inheritances and cross-border estates — when assets, decedents, and heirs are not all in the same country.
[FR] From Form 3520 reporting through Form 706-NA compliance and multi-jurisdictional estate administration.
[FR] Cross-Border Inheritance Is Where Multiple Tax Systems Collide
[FR] When a family member dies and assets, beneficiaries, or both span multiple countries, the U.S. tax implications can be significant — and are frequently mishandled by advisors who lack international tax experience. The issues differ fundamentally depending on which side of the border the decedent and heirs stand on.
For U.S. persons inheriting from a foreign estate, the primary U.S. issues are income tax on distributions from foreign trusts — which may be subject to the throwback rules and interest charges if the trust is a foreign non-grantor trust — and Form 3520 reporting obligations for gifts and inheritances received from foreign persons or estates. For non-resident alien decedents holding U.S.-situs assets, the primary issues are U.S. estate tax exposure (with only a $60,000 exemption), Form 706-NA compliance, frozen U.S. financial accounts requiring an IRS transfer certificate, and U.S. probate proceedings for real property held in the decedent’s name. Many families encounter both sets of issues simultaneously.
We advise both sides — U.S. beneficiaries receiving foreign inheritances and foreign families with U.S.-situs assets — and coordinate with foreign counsel to ensure that the U.S. tax analysis is consistent with the administration proceeding in the foreign jurisdiction.
[FR] Who We Advise
[FR] U.S. Persons Receiving Foreign Inheritances
[FR] U.S. citizens and residents who inherit from a foreign estate or receive gifts from non-U.S. persons — requiring Form 3520 reporting, income tax analysis on trust distributions, and coordination with the foreign estate administration.
[FR] Non-Resident Alien Estates with U.S.-Situs Assets
[FR] Estates of non-resident alien decedents holding U.S. real estate, securities, or business interests — requiring U.S. estate tax analysis, Form 706-NA preparation, and IRS transfer certificate procedures.
[FR] Non-Resident Alien Heirs Inheriting U.S. Assets
[FR] Non-U.S. beneficiaries of a U.S. estate or trust — requiring analysis of U.S. income tax on inherited assets, FIRPTA implications for inherited real property, and ongoing U.S. reporting obligations.
[FR] Families with U.S. and Non-U.S. Members
[FR] Multi-jurisdictional families with a mix of U.S. and non-U.S. persons navigating a cross-border estate — requiring coordinated U.S. tax advice alongside foreign counsel to minimize friction across both systems.
[FR] Technical Depth Across Cross-Border Inheritance Issues
[FR] Form 3520 — Foreign Gifts & Inheritances
[FR] Advisory on Form 3520 reporting for U.S. persons receiving gifts or inheritances from foreign persons or estates — including threshold analysis, characterization of receipts, and coordination with income tax treatment.
[FR] Foreign Trust Distribution Analysis
[FR] U.S. income tax analysis of distributions from foreign non-grantor trusts — including DNI, UNI, throwback tax, and interest charge calculations — and coordination of Form 3520 reporting obligations.
[FR] Form 706-NA — NRA Estate Tax Returns
[FR] Preparation advisory for the U.S. Estate Tax Return for Nonresident Not a Citizen — including U.S.-situs asset identification, treaty-based deductions and credits, and coordination of the filing with the foreign estate administration.
[FR] IRS Transfer Certificates
[FR] Coordination of the IRS transfer certificate process for estates of non-resident aliens with frozen U.S. financial accounts — required to release accounts held at U.S. financial institutions pending confirmation that estate taxes have been paid or secured.
[FR] Treaty-Based Estate Tax Analysis
[FR] Analysis of applicable U.S. estate tax treaties — identifying treaty-based exemptions, deductions, and credits available to decedents and beneficiaries in treaty countries, and coordinating the treaty claim with Form 706-NA.
[FR] Multi-Jurisdictional Estate Coordination
[FR] Coordination with foreign counsel on the interaction between U.S. estate administration requirements and parallel proceedings in the foreign jurisdiction — including consistency of asset values, transfer documentation, and beneficiary reporting.
[FR] Representative Matters
[FR] Select anonymized engagements. Prior results do not guarantee a similar outcome.
[FR] CROSS-BORDER INHERITANCE / U.S. PROBATE
[FR] United States / Latin America
[FR] Advised the heirs of a Latin American decedent in a U.S. summary administration proceeding involving U.S.-situs real estate, multiple non-U.S. beneficiaries, and a parallel estate proceeding in a foreign jurisdiction — coordinating international service of process, advising on U.S. estate tax return obligations, and counseling on the U.S. income tax consequences of post-death transfers of U.S. real property among non-resident alien heirs.
[FR] CROSS-BORDER INHERITANCE / FORM 706-NA
[FR] United States / Europe
[FR] Prepared and filed Form 706-NA for the estate of a European decedent holding U.S.-situs assets — including coordination of certified translations of foreign notarial documents and submission of the full estate tax compliance package to the IRS. Coordinated the IRS transfer certificate process to release frozen U.S. financial accounts.
[FR] CROSS-BORDER INHERITANCE / NRA ESTATE TAX PLANNING
[FR] United States / Latin America
[FR] Advised non-resident alien heirs on U.S. estate tax exposure for U.S.-situs assets held by a European decedent — including U.S.-situs asset classification, application of the $60,000 NRA exemption, treaty-based estate tax analysis, and IRS transfer certificate procedures.
[FR] EXPATRIATION / DUAL CITIZEN
[FR] United States / Europe
[FR] Advised a dual citizen who acquired U.S. citizenship at birth on the applicability of the dual citizen exemption from covered expatriate status under Section 877A(g)(1)(B) — analyzing the conditions for the exemption, the five-year compliance requirement, and the steps required to formally relinquish U.S. citizenship while satisfying all U.S. tax obligations.
[FR] Frequently Asked Questions
[FR] I am a U.S. person and I inherited money from a foreign relative. Do I owe U.S. tax on it?
[FR] Generally no — inheritances and gifts are not included in the U.S. recipient’s income for federal income tax purposes, regardless of whether the source is foreign or domestic. However, you almost certainly have a reporting obligation. U.S. persons who receive gifts or inheritances from foreign persons or foreign estates must report those receipts on Form 3520 if the aggregate amount exceeds applicable thresholds — $100,000 or more from a nonresident alien individual or foreign estate (adjusted annually for inflation; confirm the current threshold with counsel). Failure to file Form 3520 carries significant penalties. If the inheritance comes through a foreign trust rather than directly from an estate, the analysis is more complex — trust distributions may be subject to income tax under the throwback rules.
[FR] My foreign relative died owning a U.S. bank account and U.S. real estate. What happens now?
[FR] Several things happen simultaneously — and they must be coordinated carefully. First, U.S. financial institutions will freeze the accounts of a deceased non-resident alien until they receive an IRS transfer certificate confirming that U.S. estate taxes have been paid or are secured. Second, a U.S. estate tax return (Form 706-NA) may be required if the gross value of U.S.-situs assets exceeds $60,000. Third, U.S. real property held in the decedent’s name will generally need to pass through the U.S. probate process in the state where the property is located before it can be transferred to heirs, though the applicable procedure depends on the facts and the state. Fourth, if the heirs intend to sell the real property, FIRPTA withholding analysis will be required. The IRS transfer certificate process and probate proceeding can run in parallel, but both require prompt attention — delays increase the cost and complexity of administration.
[FR] Does a U.S. estate tax treaty help non-resident alien decedents?
[FR] Potentially yes — but U.S. estate tax treaties are far fewer in number than income tax treaties, and their terms vary significantly. The U.S. has estate tax treaties with a limited number of countries, including France, Germany, the UK, the Netherlands, Sweden, Switzerland, Japan, and a handful of others. These treaties can provide meaningful relief — including a higher exemption amount, a marital deduction for transfers to a surviving spouse, or a credit for foreign estate taxes paid — that substantially reduces or eliminates U.S. estate tax on assets held by a decedent who was a citizen or resident of the treaty country. If the decedent was a citizen or resident of a non-treaty country, the default $60,000 exemption applies and the estate is subject to U.S. estate tax at rates up to 40% on U.S.-situs assets above that threshold.
[FR] What is Form 3520 and what are the penalties for not filing it?
[FR] Form 3520 is the Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts — filed by U.S. persons who have certain transactions with foreign trusts, receive foreign gifts or inheritances above the applicable thresholds, or are treated as owners of a foreign trust. It is a reporting form, not a tax payment form — there is generally no tax due with the filing itself. However, the penalties for failure to file are significant: for foreign trust transactions, penalties begin at $10,000 and can reach 35% of the gross value of the assets involved. For foreign gifts and inheritances, the penalty is 5% of the amount of the gift or bequest per month, up to 25%. The IRS has consistently asserted these penalties, and courts have generally upheld them. Many U.S. persons are unaware of this obligation — it is often missed even by experienced accountants who lack international tax expertise.
[FR] Cross-Border Inheritance Planning Checklist
[FR] A practical guide for U.S. persons receiving foreign inheritances and for families navigating U.S. estate tax compliance when a non-resident alien decedent held U.S.-situs assets.
[FR] This checklist is provided for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by use of this resource. Every client’s situation is unique — this checklist does not substitute for a comprehensive analysis by qualified counsel. All engagements are subject to a conflicts check and execution of an engagement letter.