US Estate Tax for British Expats and Non-US Persons: The 60k Rule Explained

A general educational guide for British nationals and other non-U.S. persons who hold U.S.-situs assets, including U.S. real estate, U.S. shares, or U.S. investment accounts.

NON-UK RESIDENTS ONLY: This article is intended for persons resident outside the United Kingdom. It is not addressed to UK residents.

Audience note: This guide is intended for British nationals and other non-U.S. persons who may have U.S. estate tax exposure because they hold U.S.-situs assets. It is not intended as a general U.S. expat estate planning guide for U.S. citizens, U.S. domiciliaries, or U.S. residents living abroad. Information only. Nothing on this page constitutes financial, tax, legal, accounting, investment, or estate planning advice. Always consult a suitably qualified professional for advice specific to your circumstances.

Non-US persons who own US assets face an unfamiliar problem: US estate tax. If you are a British national, European resident, or other non-American holding US real estate, securities, or funds, the Internal Revenue Service claims a right to tax those assets at your death, potentially taking 40% of their value.

This applies even if you have never lived in America, never worked in America, and consider yourself entirely outside the US tax system. The rule is stark: if your US-situs assets exceed $60,000 at death, your estate must file Form 706-NA and settle the tax bill with the IRS. There is no option to ignore it.

The good news is that this exposure is predictable, quantifiable, and often manageable. Treaty relief may be available depending on your country of domicile, the US-UK estate tax treaty is one example. Certain structural approaches exist that may reduce exposure in some circumstances, this is a question to explore with a qualified cross-border adviser. Understanding the threshold and filing requirement now means your heirs avoid costly delays and penalties later.

This general guide explains the threshold, the assets that trigger it, the Form 706-NA process, and the questions you should raise with your adviser before purchasing US property or restructuring your wealth.

Who this guide is for

This general guide is for British nationals and other non-U.S. persons who may hold U.S.-situs assets, such as:

• U.S. real estate

• U.S. shares

• U.S.-domiciled funds or investment holdings

• U.S. brokerage or investment accounts

• tangible property physically located in the United States

• other assets that may have a U.S. estate tax connection
  

For the purposes of this article, a “non-U.S. person” means someone who is not a U.S. citizen and is not domiciled in the United States for U.S. estate tax purposes. Domicile can be fact-specific, so anyone with a substantial U.S. connection should take specialist advice before assuming their position.

Why US estate tax can matter to non-us persons

A common misunderstanding is that U.S. estate tax only matters to Americans. For non-U.S. persons, U.S. estate tax can still be relevant if the estate includes U.S.-situated assets.

The practical risk is not only tax. Families may also face filing requirements, delays releasing U.S. assets, valuation questions, treaty claims, or the need to coordinate advisers across more than one jurisdiction.

This can become especially important where a person’s estate plan has been built around the law of their country of residence, but part of the estate sits in the United States.

What are U.S.-situs assets?

The term “U.S.-situs assets” generally refers to assets treated as located in the United States for U.S. estate tax purposes.

Examples can include U.S. real estate and tangible personal property physically located in the United States. Stock in corporations organised under U.S. law is also generally treated as U.S.-located, regardless of where the share certificates or account platform are held.

This means a non-U.S. person may need to review U.S. shares or U.S. investment holdings even if they are held through a non-U.S. brokerage account.

Some assets are subject to special rules. For example, life insurance proceeds on the decedent’s life are generally treated differently, and certain deposits or debt obligations may need separate review. The important point is not to assume that the account location alone determines the estate tax outcome.

The $60,000 filing threshold

For estates of non-resident decedents who were not U.S. citizens, Form 706-NA may be required if the date-of-death value of U.S.-situated assets, together with certain adjusted taxable gifts and exemption amounts, exceeds the filing threshold of $60,000.

That threshold is much lower than the estate tax filing threshold generally discussed for U.S. citizens or U.S. residents. This is why a relatively modest holding of U.S. shares or a single U.S. property can create a point for review.

Whether tax is ultimately due depends on the facts, including asset type, value, deductions, treaty position, credits, ownership structure, and the wider estate-tax computation.

US Citizen/Resident vs Non-Resident Non-Citizen comparison table

	US Citizen/Resident	Non-Resident Non-Citizen
Estate tax exemption	$15,000,000 (2026)	$60,000
Treaty may increase exemption	N/A	Yes (UK-US treaty)
Filing form	Form 706	Form 706-NA
Filing deadline	9 months from death	9 months from death
Tax rate on excess	Up to 40%	Up to 40%

Worked examples: how the $60,000 rule can apply

Example 1 - British national, Florida apartment: James is a British national living in Dubai. He holds no US citizenship and has never been US-domiciled. He owns a holiday apartment in Miami valued at $280,000 and holds $45,000 in US-listed ETFs through a US brokerage. His total US-situs assets are $325,000 — well above the $60,000 threshold. At death, his estate may be required to file Form 706-NA, and the estate may face a US estate tax liability on the taxable portion. The UK-US estate tax treaty may increase his effective exemption depending on his domicile at death. In many cases, US-situs property such as real estate cannot be transferred to heirs until the IRS issues a transfer certificate, which typically requires the form to be filed and any tax liability to be resolved.

Note: Individual circumstances vary. This is a general illustration only and does not constitute tax or legal advice. Anyone in a similar situation should seek guidance from a qualified cross-border tax adviser.

Example 2 - Portuguese national, US ETFs held through a European brokerage Ana is a Portuguese national living in Lisbon. She is not a US citizen, has never been US-domiciled, and does not own US real estate. However, her investment portfolio includes $180,000 in US-domiciled ETFs and US-listed shares held through a European brokerage platform.

Although the account itself is outside the United States, the underlying US-domiciled securities may still be treated as US-situs assets for US estate tax purposes. Her total US-situs exposure is therefore above the $60,000 filing threshold. At death, her executor may be required to file Form 706-NA before those assets can be released or transferred.

Portugal is not listed by the IRS as having a US estate or gift tax treaty, so the estate may not have the same treaty route to an increased exemption that may be available in some UK cases. The position should be reviewed with a qualified cross-border tax adviser because the answer can depend on asset type, custody arrangements, domicile, and changes in law. Note: Individual circumstances vary. This is a general illustration only and does not constitute tax or legal advice. Anyone in a similar situation should seek guidance from a qualified cross-border tax adviser.

What happens after a death - a guide for executors and family members

For families, US estate tax often becomes visible only after a death. A surviving spouse, child, executor, or professional representative may discover that US assets cannot simply be transferred in the same way as local bank accounts or domestic investments. If the person who died was not a US citizen and was not US-domiciled, the first question is whether their US-situs assets exceeded the $60,000 filing threshold.

If they did, the estate may need to file Form 706-NA with the Internal Revenue Service. This is the US estate tax return used for the estate of a nonresident who was not a US citizen. It reports the US-situs assets, calculates any US estate tax exposure, and provides the IRS with the information needed to review the estate's US position.

The Form 706-NA deadline

Form 706-NA is generally due nine months after the date of death. Executors can apply for an automatic six-month extension of time to file by submitting Form 4768 by the original filing deadline.

It is important to understand what that extension does and does not do. A filing extension gives the executor more time to submit the return. It does not automatically extend the time to pay any US estate tax that may be due. Interest may apply where tax is not paid by the original due date, even if an extension to file has been granted.

Where an executor is outside the United States, additional extension rules may be available in some circumstances. This is a specialist area where guidance from a qualified cross-border tax adviser or attorney may be needed.

Why the transfer certificate matters

In many estates, the practical problem is not only the tax calculation. It is access to the asset.

US custodians, transfer agents, or other institutions may require an IRS transfer certificate before releasing or transferring certain US assets to heirs. A transfer certificate is the IRS confirmation that any US estate tax has been paid, provided for, or that no filing requirement applies.

Where Form 706-NA is required, the executor generally needs to file the return and then request the transfer certificate using the IRS process. Where Form 706-NA is not required, the executor may still need to provide supporting documents to the IRS to show why no return was required. These documents can include the will, death certificate, foreign inheritance tax return if one exists, and an affidavit listing the US assets and the decedent's citizenship and residence at death.

This is why families can face delays even where the taxable amount appears modest. The US institution may not release the asset until the IRS position has been documented.

What executors should gather early

A practical starting point is to identify every possible US connection in the estate. Useful documents may include:

• Brokerage statements showing US-listed shares, US-domiciled ETFs, mutual funds, or US accounts

• Property records for any US real estate

• Bank and custodian statements

• The death certificate

• The will and any codicils

• Evidence of citizenship, residence, and domicile

• Details of any gifts or prior US tax filings

• Any foreign probate, estate, inheritance tax, or succession documents
  

The key point is that the executor needs a complete picture before deciding whether Form 706-NA is required. The $60,000 threshold is based on the value of US-situs assets at death, not on whether the family expected US tax to be relevant.

Penalties and delays

Late filing and late payment can lead to penalties and interest unless the estate can show reasonable cause. Valuation errors may also create problems, especially where the reported value of US property or securities is materially understated.

The most expensive issue for families is often delay. If the filing position is not addressed, US assets may remain frozen, transfer paperwork may stall, and heirs may be unable to complete the estate administration efficiently.

For internationally mobile families, this exposure is usually easier to identify before death, while ownership structures, wills, beneficiary records, and liquidity can still be reviewed. After death, the executor's role is usually more procedural: identify the US-situs assets, establish whether Form 706-NA is required, meet the filing timetable, and obtain the documents needed to release the assets.

This section is a general guide only and does not constitute tax or legal advice. Executors and family members dealing with US assets may need guidance from a qualified cross-border tax adviser or attorney before filing forms, claiming treaty relief, or transferring assets.

Form 706-NA

Form 706-NA is the U.S. estate tax return used for estates of nonresident decedents who were not U.S. citizens.

The IRS instructions state that Form 706-NA is generally due within nine months after the date of death unless an extension of time to file is granted. An extension of time to file does not necessarily remove the need to address payment timing or interest issues.

Where U.S. assets are held through a financial institution, brokerage platform, or transfer agent, the estate may also need documentation before assets can be released or transferred. This is one reason families should identify U.S.-situs assets before there is an estate administration issue.

U.S. estate tax treaties

The United States has death tax treaties with a limited number of countries, including the United Kingdom.

A treaty may affect the estate tax position, but treaty benefits are not automatic. They must be reviewed and claimed correctly where relevant. Families should not assume that residence, nationality, or the existence of a treaty removes the need for filing or professional advice.

For British nationals, the U.S.-UK estate and gift tax treaty may be relevant, but the outcome depends on the facts. Advice should be taken from a suitably qualified tax professional who can consider the U.S. position alongside the individual’s country of residence, domicile position, succession planning, and any UK inheritance tax considerations.

Common situations that may need review

A review may be sensible where a British national or other non-U.S. person:

• owns U.S. real estate

• holds U.S. shares directly

• holds U.S.-domiciled funds or ETFs

• has U.S. investment accounts

• has inherited or may inherit U.S. assets

• has family members or executors in more than one country

• has wills or succession documents in multiple jurisdictions

• expects to return to the UK or move between countries

• has previously lived, worked, or invested in the United States
  

This does not mean that every case creates a tax liability. It means the position should be checked before assumptions are made.

Ownership structures and planning points

Some individuals use companies, trusts, joint ownership, life insurance, or other structures when holding international assets. These structures can have tax, succession, reporting, control, and administration consequences.

A structure that appears useful for one purpose may create problems for another. For example, an arrangement designed for succession planning in one country may not automatically solve U.S. estate tax exposure, and it may create other tax or reporting considerations.

Any structure involving U.S.-situs assets should be reviewed before acquisition, before major transactions, and as part of wider estate planning.

Questions to raise with your adviser

If you are a British national or other non-U.S. person with U.S. assets, useful questions may include:

• Which of my assets are treated as U.S.-situs assets?

• Could my estate have a Form 706-NA filing requirement?

• Does a U.S. estate tax treaty apply to my circumstances?

• Would my current will or succession plan work smoothly with U.S. assets?

• Are there asset-release or documentation issues my executors should know about?

• Should my ownership structure be reviewed before buying or selling U.S. assets?

• How does this interact with inheritance tax, estate tax, or succession law in my country of residence?
  

How Paratus Wealth can help

Paratus Wealth can help frame the financial planning questions surrounding US Estate Tax Planning, identify where specialist advice may be needed, and coordinate planning conversations with suitably qualified professional advisers.

If you are a British national or other non-U.S. person with U.S. assets, the key step is to identify the exposure early, before an estate administration issue arises. Speak with us today:

Book a Discovery Call

Frequently Asked Questions

What is the estate tax threshold for non-US persons with US assets?

The exemption threshold is $60,000 for non-residents who are not US citizens. Estates exceeding this amount are subject to federal estate tax of up to 40% on the excess. This threshold has not changed since 1976 and is significantly lower than the exemption available to US citizens and residents.

Do non-US nationals owning US real estate pay estate tax?

Yes. US-situs real estate is subject to US estate tax at death, regardless of the owner's citizenship or residency. This applies to all real estate located in the US, including residential property, investment land, and commercial holdings.

What is Form 706-NA and who must file it?

Form 706-NA (United States Estate Tax Return, Estate of a nonresident not a citizen) must be filed by the estate executor if US-situs assets exceed $60,000 at death. It must be filed within nine months of the date of death, with a possible six-month extension via Form 4768.

Can the UK-US estate tax treaty reduce my liability?

Yes. The UK-US estate tax treaty may increase your effective exemption threshold and provide proportionate relief against US estate tax, depending on your domicile and the nature of your assets. Treaty benefits must be actively claimed and documented - they are not applied automatically.

Are US stocks and ETFs held by non-residents subject to US estate tax?

Yes. US-domiciled stocks, ETFs, mutual funds, and publicly traded securities in US corporations are considered US-situs assets and are subject to US estate tax for non-residents. This applies even if the securities are held through a foreign brokerage account.

What assets are NOT subject to US estate tax for non-residents?

Common structures such as life insurance trusts, foreign corporations, or specific fund vehicles can be relevant to reducing US estate tax exposure for non-residents. The appropriateness of any structure depends on individual circumstances, asset types, and applicable treaties. A qualified adviser should be consulted before any restructuring.

What happens if Form 706-NA is not filed when required?

Failure to file Form 706-NA when required triggers penalties and interest on unpaid tax. A transfer certificate, required to release US assets to heirs, cannot be issued until the form is filed and any tax liability is resolved. This can delay estate settlement significantly.

Sources

• IRS Instructions for Form 706-NA: https://www.irs.gov/instructions/i706na

• IRS estate and gift tax updates: https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

• IRS estate tax FAQs: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes
  

Disclaimer

The information provided on this website is intended exclusively for individuals located outside the United Kingdom and must not be used or relied upon by persons within the United Kingdom. This article is intended specifically for British nationals and other non-U.S. persons who hold, or may acquire, U.S.-situs assets. It is not intended for U.S. citizens, U.S. domiciliaries, U.S. residents, or U.S. families living overseas, and should not be used as a U.S. expat estate planning guide.

This website is for informational purposes only and does not constitute, nor should it be relied upon as, financial, tax, legal, accounting, pension transfer, investment, or estate planning advice. You should consult a suitably regulated financial adviser in your country of residence or in the relevant jurisdiction to assess your personal circumstances and obtain advice tailored to your individual situation. If any content on this website may have tax, legal, or accounting implications, you should seek guidance from independent professional advisers in those areas.