That’s tax season all over and done with. The IRS have acknowledged receipt of form 3520 and federal refund received.
I’ll update the process on being an Executor of my parent’s home and also afterwards as a beneficiary.
So, I’m very pleased that I had a pro do this, although I have some understanding of the U.S. tax system, I was well and truly out of my depth. There were many things that I simply didn’t think about, which would have caused issues down the line. Although prep on the face of it was somewhat pricey, over all it was a low cost.
One thing that had taken me by surprise was when the property was transferred to me as an Executor. It was at that time of being an Executor I was deemed to have had the property ‘distributed’ to me. This in itself was a trigger for form 3520. Fortunately transfer to me as Executor and the ultimate home sale had been completed within the same tax year. I would not have not reported in the previous 2024 year as receiving the property as an Executor, as I, as in myself did not have the benefit, or receive the proceeds of sale. There is also special wording entered into the description field of the 3520, I’d never in a million years come close to describing an inheritance as my pro did.
There was long term CGT from date of death until date the property was actually sold. Although the GBP value had not changed, the fx rate did, so the USD value was a lot higher at sale. There were multiple forms with regard LT CGT. I was rather lucky, as it was taxed at 0%, but the gain was added to income, so a change in marginal rate and additional income tax to pay.
I always thought pension income went on line 5b, 1040 (non-U.S.), I was wrong. (just an unrelated aspect I had noted).
I’m sure many U.S. Persons would not think about reporting as an Executor, especially, if that person was not an ultimate beneficiary later on.
Even the FBAR for the reporting of an Executor account is far from straightforward. I decided to have that completed for me as well. The wording and description, again is something I would not have thought about, or actually completed a such.
This whole episode has really revealed how complex estate planning can be for U.S. Persons of a foreign estate. It’s a forgone conclusion that as an American/GC Holder we will become an Executor of a Will for a family member or friend in the U.K, but perhaps an unwilling participant given the extent of the onerous reporting this necessitates and costs involved. There will be times also, where as U.S. Persons, we won’t be aware of our Executorship until after the fact, again complicating matters further.
