107. Wills & Estate Planning for US-UK Families: The Spouse, Trust and Tax Traps

Does your spouse inherit everything tax free? For US-UK couples, the answer may be no, even if your spouse has held a green card for 30 years. This week, Richard Taylor talks cross-border estate planning for Brits in America and Americans in the UK with Grace Barrett, a US-qualified private client and tax attorney at Withers in London. Grace helps expats and dual citizens get their affairs in order across both tax systems. They start with the misconceptions that trip people up, including why dying without a will leaves your wishes to the courts, why one worldwide will usually beats several, and why the revocable trust many US lawyers recommend by default can cause real problems for anyone with UK ties. Trusts are where things get messy, and Richard shares a recent LinkedIn post about a UK beneficiary landing a tax bill on years of past income because the US trust wasn’t invested in reporting funds. Grace then explains why citizenship, not residency, decides who gets the US marital deduction, how a QDOT works around it, and why every distribution of capital from one comes with a 40% charge. The numbers are eye-opening. Americans are used to a $15 million US estate tax exemption, but the UK’s nil rate band is only £325,000. Grace explains how that shock plays out for Americans moving to the UK, why UK property stays within UK inheritance tax even after you leave, and which US assets can catch non-US investors out (stocks and brokerage accounts do, bank deposits don’t). They also cover how life insurance can fund the tax bill. Grace’s advice on US-UK estate planning is to do it while everyone is calm and healthy, because the relief of having it done is worth the effort. And whatever you do, don’t go it alone, find a cross-border team that actually talks to each other. -- Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management. https://planfirstwealth.com/ -- Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas. ABOUT RICHARD: Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office. As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA). Connect with Richard on LinkedIn