Sole Beneficiary of a Family Trust- tax implications

Hello,

I am the sole beneficiary of a family trust ( california) which includes a property which brings rental income and also hold investment funds and savings. So when my mother passes away I become the head of the trust  I am a UK resident domiciled here but not a citizen.  I have Indefinite leave to remain.  I am still of course a US citizen.  What will be the inheritance tax implications for me here in the UK? 

What happens if I liquidate the trust?  And or if I continue to take rental income from the property but keep it in trust, does the trust have to pay taxes to the UK. 

Also a separate question, I registered my daughter for social security when she was born.  When she starts working in 10 years or so, will she have to file a US tax return even though she never filed one in the US before or worked or lived there. 

Many thanks for any ideas.  (Any if anyone knows of any UK tax specialists that would be a great tip)

The question of the trust is probably beyond the scope of this forum. You should talk to an accountant who specializes in US expats in the UK.


As a US citizen, your daughter must file a tax return for her worldwide income. It doesn't matter that she has never lived in this US.

The question of the trust is probably beyond the scope of this forum. You should talk to an accountant who specializes in US expats in the UK.

that's never stopped us before

IMHO, UK inheritance tax will not be an issue because the trust is in CA and any taxes due will be paid out of the estate to the US and CA. There is no tax due on the amounts you get as a beneficiary. The UK tax issues will begin after you inherit the trust.

You will need to look at how HMRC treats foreign trusts and income paid to UK residents and also get to grips with the US/UK tax treaty

http://www.hmrc.gov.uk/worksheets/sa904-notes.pdf

WRT your daughter, she has the same obligations as any US citizen. So she has to file US taxes and must comply with FBAR, FATCA and the usual rules relating to foreign pensions and investments etc.

Assuming the trust has not been imported into the UK and will never be imported it is presumably an excluded property trust. 

Doubtless the trustees have already obtained UK tax advice given their fidiciay obligations and that there are UK tax issues for the main beneficiary. You should ask the trustees.

Assuming the trust has not been imported into the UK and will never be imported it is presumably an excluded property trust. 

I was assuming that the property (house, income, investments and other assets) are all outside the US and the OP's mum is not domiciled in the UK, hence no UK inheritance tax issues.

Hello,

I am the sole beneficiary of a family trust ( california) which includes a property which brings rental income and also hold investment funds and savings. So when my mother passes away I become the head of the trust  I am a UK resident domiciled here but not a citizen.  I have Indefinite leave to remain.  I am still of course a US citizen.  What will be the inheritance tax implications for me here in the UK? 

Just an aside, what makes you say you are domiciled in the UK?