Skip to content
Home Link Logo
US Insights

US Insights

Key considerations for lifetime and testamentary transfers

Key considerations for lifetime and testamentary transfers

Americans living in the UK need to be aware of some of the intricacies of gift and estate planning in both jurisdictions, as arrangements put in place in the US may fall foul of the UK rules and vice versa.

US Insights lifetime and testamentary transfers

Lifetime transfers

The US has substantial annual exclusion amounts which mean US citizens can transfer US$18,000 a year (2024 figure, indexed for inflation) to an unlimited number of recipients. These US annual exclusion gifts can be used in conjunction with the UK’s surplus income rules which allow regular transfers out of surplus income.

For much larger gifts, the US has a very generous lifetime and testamentary exemption of US$13.61 million (2024 figure, indexed for inflation). This is the amount that a US citizen can give away US Gift and Estate Tax free. This is considerably larger than the UK’s Inheritance Tax exemption of £325,000 per person. Accordingly, for US-connected/UK domiciled individuals it is vital to think about how the UK will treat transfers during life and at death.

Transfers between spouses

Under the US rules, transfers between US citizen spouses are unlimited in life and at death. However, this is not the case for transfers to non-citizen spouses, including transfers to or between US green-card holders, which are much smaller. A good rule of thumb is that the US system wants to keep as much within the US tax net as possible, so be extra careful in the event of spouses with differing citizenships.

Trusts

Trusts can be a useful planning tool when a donor is not ready to give away full control of assets, for example where there are minor children, complex family situations or perhaps a beneficiary with special needs.

Reporting

It is important to note that regardless of whether a transfer is taxable, it may be reportable. It is often the case that issues with lifetime transfers crop up many years later upon someone’s death. As such, it is vital to ensure that reporting requirements are fulfilled correctly. This should also start the statute of limitations running.

Tax treaties

There is a transfer tax treaty in place between the US and the UK which will determine the correct taxing rights in the event of a conflict. The treaty was put in place in the 1970s but it is still very much in force.

How we can help

Our Trust and Family Wealth team can review your situation and advise on what could work best to achieve your goals. We are experienced in working collaboratively with other advisors across multiple jurisdictions and are able to handle complex and sensitive situations. We can coordinate tax compliance requirements and ensure that you have peace of mind regarding your arrangements.
The key takeaway is do not assume that any estate planning that you’ve put in place will work for both jurisdictions. Take advice early and regularly review your arrangements.

Would you like to know more?

If you have any questions about the above, please get in touch with your usual Blick Rothenberg contact or one of the team using the form below.

Personal tax is one of the most complex areas of wealth management and can significantly erode your wealth over time

Blick Rothenberg is considered to be market leaders in the taxation of non-UK domiciled individuals and offshore trusts, as well as cross-border personal taxation.

We have a strong base of clients in the UK and a broad and longstanding international focus too, acting for a large number of non-UK domiciled individuals and international families. So, we understand the complexities that US citizens face when living, working and operating businesses in the UK.

Whether you are a start-up entrepreneur, a wealthy family with complex affairs, or a business executive, our dual-qualified team of tax advisers will look after your US UK personal tax affairs as well as those of your business.

If you wish us to contact you or want to discuss your situation please complete the form on this page and one of our team will be in touch.

Contact our team