What's the best way for a U.K. citizen to inherit property from a U.S. citizen, with the least tax penalties?

Question

I'm leaving a large part of my estate to a U.K. friend and would like to make it as hassle-free and inexpensive as possible. The estate contains both real estate and cash. I have an attorney here, but would like some input from the U.K. as well. Thanks for your help.

Answer 1

I have found from recent experience that wills can be complicated. It's worth paying a good solicitor to make a "tax efficient" will because everything over the threshhold in the UK (£285,000) is subject to 40% inheritance tax.
The easy way out of it is if you are married !

Answer 2

From your question it is apparent that you are a U.S. person and the recipient is to be a U.K. person.
From the U.K. standpoint, there is no tax liability on the receipt of an inheritance. Tax liability falls on the estate of the deceased.
U.K. death duties do not come into it as you are a U.S. person and your estate will be taxed by the IRS where applicable - so look at the U.S. laws. You have an attorney, so be guided by them.

Answer 3

Billybean is almost correct. In fact, he may be totally accurate, but you do have to consider if you have any UK property, including stocks and unit or investment trusts (= mutual funds). Have you lived in the UK at any time? If you have, you will actually have to consider Inheritance Tax. I suggest contacting a UK Chartered Accountant. You would be able to do that via the Big Four or, if their fees are not to your liking, search online for UK200 Group. This is a trade group of the larger accountants in the UK, outside of the international firms. They will be able to point you in the direction of someone who can assist.

Answer 4

do it under the table, the government here is all fuct up and they will try to get ALOT of the money unless you are a special friend of big wig government types.