How Expats Can Claim Assets in U.S. Estates

Problem
It is very common to encounter heirs who reside outside the United States and inherit assets located in the United States, such as real estate or checking accounts. This is a fairly common situation that requires comprehensive legal advice in order to properly assist the heir wherever they may be located.

When an expat inherits assets from a U.S. estate, the process will be a lot different than dealing with a standard domestic inheritance. Whether the beneficiary is a U.S. citizen living abroad or a non-resident foreign heir, claiming U.S.-based assets involves probate requirements, tax filings, reporting obligations, and in some cases, exposure to U.S. estate tax. Because the American legal system treats foreign beneficiaries differently depending on their citizenship, residency, and the type of asset they inherit, expats must be prepared for documentation requests, authentication requirements, and potentially lengthy timelines.

Where to start and how to navigate probate

The starting point for claiming inherited U.S. assets is the probate process. The executor of the estate must obtain approval from a U.S. probate court before transferring any property to foreign heirs, which typically requires the will, a death certificate, and proof of identity from abroad. Many states require foreign documents—including IDs, affidavits, or translations—to be apostilled or certified by a U.S. consulate before they are accepted. Depending on the state and whether disputes arise, probate can take anywhere from 6 to 18 months, and foreign beneficiaries should expect occasional delays due to cross-border communication, bank compliance checks, and local court requirements.

Does the Inheritance Include Trusts?

For many expats, trusts can play a role in either simplifying or complicating the inheritance process. U.S. revocable trusts, for example, can help avoid probate entirely, allowing assets to transfer to foreign beneficiaries more efficiently. However, once a trust becomes irrevocable after death, foreign beneficiaries may face complex reporting obligations, including IRS Forms 3520 and 3520-A, especially if the trust is classified as a foreign trust when managed abroad. Some U.S. financial institutions are hesitant to maintain trust accounts for beneficiaries residing overseas due to regulatory restrictions, forcing trustees to liquidate or restructure assets. For non-resident heirs, a trust can also provide estate-tax protection by holding U.S. assets in a structure that avoids direct ownership. This is an important consideration given the $60,000 estate tax threshold for non-residents. Understanding how a trust is classified and taxed in both the U.S. and the beneficiary’s country of residence is essential to avoiding unexpected tax liabilities.

Tax Reporting and Obligations

Tax reporting is another key consideration for expats. U.S. citizens living overseas remain subject to U.S. tax on worldwide income, meaning that if they inherit income-producing assets, such as rental property or investment portfolios, they must report this income annually on Form 1040. Large inheritances (over $100,000) received from abroad must be reported on Form 3520, even though the inheritance itself is not taxed as income. Foreign financial assets may also trigger reporting obligations under Form 8938 (FATCA) or, when accounts exceed $10,000, under FBAR rules. For non-resident heirs, U.S. estate tax applies only to U.S.-situs assets such as real estate, certain investments, and business interests. Form 706-NA may allow tax treaty credits to reduce or eliminate double taxation where applicable.

Expats must also consider how they will receive or manage inherited funds once probate concludes. U.S. banks often require enhanced due-diligence checks before sending inheritance proceeds abroad, and transfers may require proof that U.S. estate tax obligations have been satisfied. Beneficiaries inheriting U.S. property or investment accounts may choose to liquidate these assets, transfer them into foreign accounts, or maintain them in the U.S., each of which carries separate tax and reporting implications. State-level inheritance or estate taxes can further affect the final amount a beneficiary receives.

If you inherit US assets and you are resident or domiciled outside the US, the process may seem daunting. With proper guidance from U.S. probate and estate tax advisers, however, heirs can navigate cross-border inheritance with more confidence, and receive the inheritance that is due to them without delays or penalties.