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Expat Tip 19: Inheritance, Estate & Gift Taxes – Cross-Border Rules for Expats

Estate planning doesn’t pause when you become an expat — and gifts you make before or after moving abroad can trigger tax liabilities on both sides of the border.

 

💡 How Inheritance, Estate & Gift Taxes Work

  • Inheritance / Estate Taxes: Levied on the estate of the deceased before assets are distributed to heirs.

  • Gift Taxes: Levied on the donor when transferring assets (often above a threshold).

  • Some countries tax only estates, some only gifts, and some tax both — rules depend on residency, domicile, and source of property.

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🌍 Cross-Border Traps for Expats

  • U.S. citizens & Green Card holders may still face U.S. estate tax, even when living abroad.

  • In UK, inheritance tax depends on domicile, not residence.

  • Australia & Canada don’t have inheritance tax, but capital gains tax can apply on asset transfer.

  • Gift removals or family transfers may be taxed in either home or host country under certain rules.

  • Multiple jurisdictions = conflicting laws; treaties may not cover gifts/inheritances.

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✅ How to Protect Global Assets

         Use a will valid in your country of residence and your home country.

         Review double tax treaties to see if they address inheritance/gift tax.

  • When gifting abroad, monitor thresholds and exemptions.
  • Track cost basis & valuations for each asset transferred.
  • For high-value estates, explore using trusts, lifetime gifting, or stepped basis provisions.
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🦊 Felix’s Quick Tips

  • Don’t assume no tax in your host country because your home country doesn’t have inheritance tax.

  • Document everything: asset valuations at time of gifting, exchange rates, recipient data.

  • For gifts to children abroad, check the recipient’s country’s gift tax rules.

  • Revisit your estate plan after relocating — local law may override parts of your old will.

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🦊 Information on specific countries

  • Australia (ATO): Australia does not have a federal inheritance tax, but capital gains tax (CGT) may apply when beneficiaries dispose of inherited assets. ATO – Inherited Assets & CGT
  • Canada (CRA): Canada also has no estate or inheritance tax. Instead, there’s a deemed disposition at death — assets are treated as if sold at fair market value, creating possible capital gains tax. CRA – Tax Implications When Someone Dies
  • U.S. (IRS): The U.S. imposes an estate tax on worldwide assets of U.S. citizens and domiciliaries, and gift tax may apply during life. Thresholds are high, but reporting is strict. IRS – Estate Tax, IRS – Gift Tax
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👉 Tip: Always review whether your home country has an estate tax treaty with your host country. These treaties can sometimes prevent double taxation on inheritances.

 

🌐 External Resource: OECD – International tax principles and OECD – Tax Transparency.

 

 

 

 

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