Beneficiary in UK citizen's will

If you are a US citizen and a named beneficiary in the will of a UK citizen and resident and expect to inherit over $100k do you need to file 8938 and FBAR while the person who made the will is still alive, when the will goes into probate or none of the above?

Having read the instructions for form 8938 I can see no indication anywhere that you should report that you are a beneficiary in someone's will.  It would seem to be an impossible requirement to expect folks to know details of the inheritances they may get in the future.

Similarly, you do not know the value of an estate after the person dies until it has gone through probate and/or you have received distributions from the estate.   

That seems like common sense, I wonder if anyone will disagree.

That seems like common sense, I wonder if anyone will contradict it.

Yes, I'm also interested in the responses.  Our parents died a few years ago so we have no more inheritances that we aware of, except a well-heeled uncle who has no children and no siblings.  I mention this because about 10 years ago a maiden aunt of my wife's died and she received a very unexpected inheritance.

Yeah, I know I'm a beneficiary of my mum's will, but I don't know how much I'll inherit. So do I have an interest in a foreign estate now, or when the estate is all placed in probate or only after it comes out of probate and I put my inheritance in a UK financial account?

What about this reasoning.

1) I don't know the value of my mum's estate. The 8938 instructions say

Value of an interest in a foreign estate, foreign pension plan, and foreign deferred compensation plan. If you do not know or have reason to know based on readily accessible information the fair market value of your interest in a foreign estate, foreign pension plan, or foreign deferred compensation plan during the tax year, the value to be included in determining the total value of your specified foreign financial assets during the tax year is the fair market value, determined as of the last day of the tax year, of the currency and other property distributed during the tax year to you. If you received no distributions during the tax year and do not know or have reason to know based on readily accessible information the fair market value of your interest, use a value of zero for the interest.

I have no other SFFAs so while my mum is alive I receive no distributions and hence zero value and FBAR and 8938 are not required.

2) When the estate goes into probate the critical thing then seems to be whether I know the value of the estate and whether I have been deemed to receive the distribution prior to it coming out of probate.

I've seen people recommend 8939 and FBAR while the estate is in probate, but is that a prophylactic recommendation rather than one based on the application of the tax code and probate law? The reasoning in 1) seems to be equally valid for 2). Once the money is out of probate whether 3250, 8938 or FBAR are required will depend on where you put the money and the size of the inheritance.

Yeah, I know I'm a beneficiary of my mum's will, but I don't know how much I'll inherit. So do I have an interest in a foreign estate now, or when the estate is all placed in probate or only after it comes out of probate and I put my inheritance in a UK financial account?

What about this reasoning.

1) I don't know the value of my mum's estate. The 8938 instructions say

I have no other SFFAs so while my mum is alive I receive no distributions and hence zero value and FBAR and 8938 are not required.

2) When the estate goes into probate the critical thing then seems to be whether I know the value of the estate and whether I have been deemed to receive the distribution prior to it coming out of probate.

I've seen people recommend 8939 and FBAR while the estate is in probate, but is that a prophylactic recommendation rather than one based on the application of the tax code and probate law? The reasoning in 1) seems to be equally valid for 2). Once the money is out of probate whether 3250, 8938 or FBAR are required will depend on where you put the money and the size of the inheritance.

I agree, and I don't think it is necessary to file the forms while probate is in progress since the value of the estate is not determined until probate is complete and the balance of the estate distributed to the beneficiaries.

 

If you received no distributions during the tax year and do not know or have reason to know based on readily accessible information the fair market value of your interest, use a value of zero for the interest.

This section tells me that I don't have to try and find out a value for the UK private pension I will not start receiving for another 4 years.  There is no cash buyout or payout available so the only information I know is an estimate of the monthly payout I can expect at age 62.

You’re just listed as a beneficiary of the estate; you receive no distribution until that person dies.
Fbar, only if you have signature authority over that persons accounts as of now. It’ll be the usual 10k threshold on the distribution though.
8938, again it’s not your money yet, (people change their wills without telling the so called beneficiaries’ all the time). On distribution depending on your circumstances for threshold amounts this would be listed.
3520, this is the one you’ll definitely need to file. Part four from memory. Again, only once you receive the monies.

On distribution depending on your circumstances for threshold amounts this would be listed.
3520, this is the one you’ll definitely need to file. Part four from memory. Again, only once you receive the monies.

You nailed it  

Form 3520, Part Four (applies to bequests > $100k)

You are a U.S. person who, during the current tax year, received certain gifts or bequests from a foreign person. Complete all applicable identifying information requested below and Part IV of the form and see the instructions for Part IV.

Fbar, only if you have signature authority over that persons accounts as of now.

FBAR is required if the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. So you don't have to have signature authority over an account to have to file FBAR.

I'm concentrating on the financial interest part of this and how that is interpreted wrt my mother's estate while she is alive and while it is in probate. I tend to agree with the conclusions so far, but as I said I've seen other opinions on this and other forums.

FBAR is required if the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. So you don't have to have signature authority over an account to have to file FBAR.

I'm concentrating on the financial interest part of this and how that is interpreted wrt my mother's estate while she is alive and while it is in probate. I tend to agree with the conclusions so far, but as I said I've seen other opinions on this and other forums.

I think you are worrying unnecessarily.  Do you think Uncle Sam is going to investigate your living foreign relatives to see if they have a large enough estate with few enough beneficiaries to come after you for not reporting a future bequest of >$100k?

Exactly a financial interest. You have none until you receive monies.

I think you are worrying unnecessarily.  Do you think Uncle Sam is going to investigate your living foreign relatives to see if they have a large enough estate with few enough beneficiaries to come after you for not reporting a future bequest of >$100k?

I'm more curious than worried. People far more knowledgeable than me have recommended that beneficiaries file FBAR and 8938 for a will in probate. I don't get the logic behind that, but if it's recommended for a will in probate why not before that as well?

Taken from the 8938. I just filled yesterday and remember reading this:

"Interests in foreign estates and foreign trusts. An interest in a foreign trust or a foreign estate is not a specified foreign financial asset unless you know or have reason to know based on readily accessible information of the interest. If you receive a distribution from the foreign trust or foreign estate, you are considered to know of the interest."

Exactly a financial interest. You have none until you receive monies.

I know that I am a beneficiary in my mum's will so the estate would seem to be a SFFA. But I don't know it's value and can't find it out without a great deal of effort and I don't get any distributions.....so it has zero value for FBAR and 8938 purposes.

We aren't disagreeing about whether 8938 or FBAR are required, only the exact reason why. I'm more interested in the reasons why FBAR or 8938 would be recommended other than the "cover your ass" one.

one reason might be that you actually don't know whether you have such an 'interest' until the will is proven and that won't be until after she dies. At any given moment before that, including the one when you file your FBAR, your mother might be demented or deceiving you, might have a later will, might have told her lawyer about changed intentions, and there might be others who contest the conditions of her making the will, etc. In it's current state, it's not much more than a promise that's not legally binding (unless you've given her something for it). Have you checked out their definition of 'interest'.