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Tax and Reporting obligations on inherited money abroad
Asked Jul 20, 2009, 08:10 PM
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4 Answers My father (a foreign born US citizen) died intestate years ago and everything has long been distributed through probate. My family recently learned that father had a foreign bank account. The bank is prepared to release the funds (about $400k) to his 4 inheritors/beneficiaries (also US citizens) but we are wondering what the best way is to retrieve the funds. Should we each open foreign bank accounts and do a wire transfers? What other choices are there? Can one of us do the wire transfer and divvy up the $ stateside? What tax (gift, estate, customs) or reporting obligations can we expect? Does it matter if we leave the $$ in a foreign office of a US bank? |
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| Was an estate tax return ever prepared for your father's estate? I'm concerned that this $400K of "found money" may put the value of his estate above the threshhold for filing an estate tax return. You say he died "years ago" - the threshhold for estate taxes have changed significantly over the past 8 years, so it's important to review what the rules were in the year he died. If you used an attorney to help with probate I suggest contacting him/her to ask what the implications are. As for how to transfer money - your father's old bank account should be retitled into his estate, and then distributions made from there directly to the heirs. But first you (or whomever the executoir is) need to make sure that no estate taxes are due. | ||||
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My father died 10 years ago and a local attorney was hired to file basic federal and state estate tax returns with my mother as the executor. This lawyer was not an international tax expert as we didn't forseee any of this. Would the return have to be amended and would there be penalties given that we didn't know? If there are estate taxes due, should we hold of on distributions? The original estate was probated in NY state where my dad lived but none of the heirs now live there. Do we have to go back to NY to amend things or can this be resolved in a jurisdiction where we now live? Finally, if distributions are made before amending the estet return (assuming we need to file one), is the estate liable or are the heirs liable? Can all the tax filings wait until next april or is this something that would have to filed/ameded right away upon distribution? | ||||
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| I'm afraid you are way past my comfort zone with these questions - sorry. Call that NY lawyer and see what he thinks. In the mean time, do NOT distribute the $400K to the heirs until you understand the estate tax implications. There's nothing worse than having to go back to the heirs to recover distributions that should not have been made in the first place in order to pay estate taxes. | ||||
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