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International Estate Considerations Flashcards

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  1. Which US tax form must an executor file when a US citizen decedent held foreign financial accounts exceeding $10,000 at any point during the year?

    Answer: FinCEN 114 (FBAR)

    FinCEN 114, known as the FBAR, must be filed when aggregate foreign financial account balances exceed $10,000 at any time during the calendar year.

  2. A Canadian citizen who is a US resident for tax purposes dies owning property in Canada. How is this property treated for US estate tax purposes?

    Answer: Included in the worldwide gross estate

    US residents for tax purposes are subject to US estate tax on their worldwide assets, including foreign real property.

  3. What is the primary purpose of a foreign asset protection trust (FAPT) in estate planning?

    Answer: To shield assets from potential creditors while retaining some settlor benefits

    FAPTs are established in favorable offshore jurisdictions to protect assets from creditors while potentially allowing the settlor limited access.

  4. Under the US-UK estate tax treaty, which principle generally determines which country has primary taxing rights over real property?

    Answer: The situs (location) of the property

    Under most US estate tax treaties, real property is taxed primarily by the country where it is physically located (situs rule).

  5. A US citizen client inherits €500,000 from a German relative. What is the US income tax treatment of this inheritance?

    Answer: Excluded from gross income under IRC Section 102

    Under IRC Section 102, inheritances received by US persons are generally excluded from gross income, regardless of the country of origin.

  6. Which document is used to report ownership interests in a foreign trust or receipt of gifts/bequests from foreign persons exceeding applicable thresholds?

    Answer: Form 3520

    Form 3520 is used to report transactions with foreign trusts and large gifts or bequests received from foreign persons.

  7. A non-resident alien decedent owned US stocks worth $1.5 million at death. Which form is used to report the US estate tax liability?

    Answer: Form 706-NA

    Form 706-NA (United States Estate Tax Return for Nonresident Not a Citizen) is filed for non-resident alien decedents with US-situs assets.