Any complications for a UK/US dual citizen to inherit an IRA?
Client’s mother passed away this year, named her four adult children as equal beneficiaries of her IRA and equal beneficiaries of her investment account held in trust (CA resident). One of the beneficiaries is a UK resident and dual citizen of US and UK; she files taxes in both countries, even though she has no income from the US.
We’re wondering if it’s beneficial to the UK citizen to inherit the IRA, or if it would be better for her to disclaim her share and receive an equivalent share of the trust assets instead. Can a beneficiary disclaim their share of an IRA? I know they can do that with an estate. Is there a disadvantage for a UK citizen to inherit an IRA from her US-based mother? Mom’s entire estate is approximately $3 million, including the IRA.
TIA for any advice or help you can give me.
Permalink Submitted by Alan - IRA critic on Thu, 2024-09-12 00:13
As a dual citizen she is already filing taxes in both countries subject to the US/UK tax treaty. The IRA can be disclaimed and her share would probably go to the other beneficiaries in proportion. If the IRA is not disclaimed, there will be RMDs and likely a fairly high withholding rate (30%?) which would be credited toward her US tax liability. Otherwise, I cannot provide further info on the actual tax treaty other than it would avoid double taxation.