Inheritance tax and succession laws in the USA
We discuss inheritance tax and how it might affect you when you purchase property in the USA.
When you have a million and one jobs to tackle prior to your exciting move, it’s easy to forget issues like succession laws, inheritance tax, and how they can affect you once you’ve made the move or completed on a purchase.
How these issues will affect you depends upon your individual circumstances. As it’s vitally important that you know where you stand and that you take the right steps to protect the interests of your loved ones, we recommend consulting both an independent lawyer, and a financial advisor.
How these issues will affect you depends upon your individual circumstances.
UK Inheritance Tax
The amount of inheritance tax that will be charged on the assets will depend on where the deceased was domiciled. For tax purposes ‘domiciled’ means the country that you call home on a permanent basis. Therefore:
- If you’ve purchased property in the US but you only use it for holidays, you will be considered domiciled in the UK
- If you move to the US, but plan to return to the UK at some stage, you will remain domiciled in the UK
- If you are considered domiciled overseas, inheritance tax will only be charged on your UK assets
- If you are living abroad, but are considered ‘domiciled’ in the UK, UK inheritance tax will be charged on your worldwide assets
Download your free copy of the USA Property Guide for a more exhaustive guide of how things work today.
Inheritance Tax thresholds
Inheritance tax is charged at 40 percent on the amount you leave behind over the value £325,000 if you are single/divorced, and over £650,000 if you are married, in a civil partnership, or are widowed. This threshold will remain frozen until 2019.
Transfers between spouses
Should both spouses be considered domiciled in the UK, transfers between them are exempt from inheritance tax. If one partner is not domiciled in the UK, but the other is, there is a limit of £55,000 on the amount that can be transferred between the pair tax-free.
Ensuring your assets go to the right people
To ensure complete peace of mind that your assets will go to the right people should you pass away, you need to draw up a will in the United States. You should do this as soon as you arrive. Click here to be put in touch with our recommended lawyer.
There are certain steps that you can take to maximise the value of the estate that has been left to you.
Maximise the value of your estate through currency planning
Although there isn’t anything you can do to avoid being taxed on your inheritance, there are certain steps that you can take to maximise the value of the estate that has been left to you. A currency exchange specialist could secure you a favourable exchange rate, and help you avoid banking fees and charges on your international transfers. To learn more about how Smart Currency Exchange can help you save money on your inheritance, get in touch today.