This is some information and spur to discussion about the tax issues that arise for US citizens who get foreign inheritances. This must be a fairly common situation for US citizens with foreign family members and it's been made more complicated by the introduction of FBAR, and the upcoming FATCA, and how they interact with estate and trust issues.
I began looking into this as my mother is ageing and getting ill and she wanted to talk about her will. She is a UK citizen, living in the UK and has no US assets. I am a US/UK dual citizen, I've lived in the US for 25 years and I have no assets in the UK. She had me as an executor and beneficiary of the will, but I became worried about the cross border trust tax implications of being a fiduciary on a foreign estate and the potential for having to file 1040NR, 3250-1, 3250 and TDF 90-22.1 and then deal with the beneficiary issues. Bottom line it got complicated and professional advice definitely became necessary. So I think it's best to avoid having foreign citizens as the executor of a will. Also it has practical implications as I don't live in the UK.
In the end I asked my mum to remove me as executor of the will, so now I'm just a beneficiary. This makes things far simpler. I was still worried that as I had "an interest" in my mum's estate I would have to file FBAR, but, it seems that as an heir to a foreign trust arising from a will I don't need to file FBAR, and as my mum's estate will be divided in 3 (I have 2 brothers), so I won't have more than 50% interest in the estate either. If my inheritance is over $100k I just have to file form 3250 filling out Part 4.
My next question is how FATCA will treat foreign wills.
