CEA International Estate Considerations 2

Question 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?

Accepted Answer

FinCEN 114 (FBAR)

Answer

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.

Question 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?

Accepted Answer

Included in the worldwide gross estate

Answer

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

Question 3

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

Accepted Answer

To shield assets from potential creditors while retaining some settlor benefits

Answer

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

Question 4

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

Accepted Answer

The situs (location) of the property

Answer

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

Question 5

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

Accepted Answer

Excluded from gross income under IRC Section 102

Answer

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

(CEA) Certified Estate Advisor Practice Test