my husband will be inheriting a large sum of money from france, we reside in U.S. What are tax issues?

Question

My husband's father will be giving him a large sum of money before his death. We live in the U.S. How is the best way to receive the money? Will we be taxed in the U.S?

Answer 1

It would be best if his father left this to him in his will, or set up a trust. If it passes to your husband through inheritance or the proper kind of trust, it will not be taxable to your husband.

Although gifts are not subject to Gift Tax by the recipient, there's an exception if the gift is from a foreign donor who fails to file a US Gift Tax return and pay the US Gift Tax. In that case, the recipient IS required to pay the tax. There may be a tax treaty that will avoid that IF the French gift taxes were paid. I don't know if France and the US have such a treaty, but the US and UK do.

Your father should check with a French tax advisor on that and you might want to contact a US advisor to see if there is a treaty with France that will protect you from the US Gift Tax.

Answer 2

There is no tax levied on inheritance, or gifts, from outside the US.

Once the money is in your possession, any interest or dividends it earns is considered income and, of course, tax must be paid on THAT amount, but not on the gift or inheritance itself.