USA parent's will / implications for me living in the UK (for future prep)

Hello,

I am an American currently living in London with my British husband - I am on the spousal visa, but have not received ILR or become a citizen here yet.  My American parents have a will that divides their assets between myself and my sister.  I am just wondering the tax implications of how that works with me living here and also how easy it is to receive the funds if I do not have an American bank account. It is a current conversation we are having in our family (albeit not a nice one, but being realistic) so we are trying to be as best prepared as we can to understand the rules / regulations.  Is there is anything I should do or set up in advance? Or just be aware of?

Thank you so much.

There should be no HMRC tax implications on the inheritance from your parents when they die.  Even if they were living in the UK it is the estate of the deceased that is liable for taxes before the funds and/or property is distributed.  Since your parents are living in the USA their combined lifetime exemption from estate taxes on death is over $24 million so probably no taxes will be due anyway.

Once the funds are in the hands of the executor (s) of the wills there are some options including wiring the money directly to a UK bank, paying the appropriate fees and exchange rate.  They could also use a forex company such as Wise to send the money over or it could be paid into a US bank and it would up to the recipient to transfer over the money.  I have a Wise "borderless" bank account denominated in USD into which is paid money from the brokerage holding my IRA.  It has a US routing number and account number and I opened it online from the UK.  As soon as money arrives in my Wise account I transfer it to my bank in GBP.

What Durhamlad has said is 100% true.

BUT, have your parents consider her their assets are currently set up and if it’ll be tax favourable or not.  Especially as you have a sibling involved. For you, the easiest thing will be receiving cash. Your sibling may prefer to receive assets in their current form (such as an IRA).  Always a good idea to speak with specialists to have things in a tax favourable position for everyone involved.

BUT, have your parents consider her their assets are currently set up and if it’ll be tax favourable or not.  Especially as you have a sibling involved. For you, the easiest thing will be receiving cash. Your sibling may prefer to receive assets in their current form (such as an IRA).  Always a good idea to speak with specialists to have things in a tax favourable position for everyone involved.

Excellent points.

With a sibling living in the USA they will have some tax advantages.  If an IRA is involved then their portion can be rolled over into an IRA in their name and they will have 10 years to draw it down. If the OP has an existing brokerage account with her own IRA then I'm sure her portion could be rolled over in the same  way otherwise it would need to be cashed out and taxes paid.

Well worth a chat with a specialist on the best tax planning strategy.  For example, what my wife and I have done over the last 12 years is to convert our IRAs to Roth IRAs, paying taxes on them as we go to avoid higher taxes in later years so that when we die there will be no taxes at all due when cashing them out or drawing them down for our 2 children.

Thank you everyone - really helpful! I appreciate it a lot.