Inheritance Tax

Inheritance tax is charged on what you leave behind. Depending on the country it follows the residency of the deceased, the residency of the heirs or the location of the assets, and sometimes all 3.

Some countries tax the estate before it is distributed, like the United States, the United Kingdom and South Africa. Others tax each heir on what they receive, like Ireland or Japan. Real estate is almost always taxed where it is located, whoever owns it.

Leaving a country does not always end its claim. The United Kingdom taxes the worldwide estate of anyone who was UK resident in at least 10 of the last 20 tax years, and this status continues for 3 to 10 years after departure. The United States taxes the worldwide estates of its citizens wherever they live, and taxes non-residents on US assets above USD 60,000.

Many countries have no inheritance tax at all, among them Panama, Paraguay, Australia, Canada and New Zealand, and Portugal for close family. Some replace it with capital gains tax: Canada treats all assets as sold at death, and in Australia heirs pay capital gains tax when they later sell.

The lever is the same as with Gift Tax: residency of every party plus asset location. An estate planned across 3 countries can end up taxed 3 times or not at all.

Tools that work across borders: a Private Foundation, a holding company, life insurance wrappers, and simply the right residency for the heirs.

Under Flag Theory 3.0 succession is part of the wealth flag from day 1, because the best structure is useless if it falls apart at the first death in the family. What applies to your family is something we map with you in the free initial consultation.