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Navigating Dual Citizenship and Estate Planning: Insights for Transnational US Families in the UK

In an increasingly interconnected world, families with dual citizenship often encounter complex challenges when it comes to estate planning and managing inheritance taxes across different countries. One common concern revolves around the implications of acquiring citizenship in a new country on long-term financial strategies, especially regarding inheritance taxes in both the US and the UK.


Understanding the intricacies of inheritance tax laws in both jurisdictions is crucial. Similar to the US, the UK imposes an inheritance tax (estate tax) on worldwide assets for UK-domiciled individuals, including assets held within and outside the UK. You should primarily work with the US-UK inheritance tax double taxation relief agreement, which most other countries don't enjoy. https://www.gov.uk/guidance/inheritance-tax-double-taxation-relief


Thereafter, as the UK has lower thresholds for inheritance tax, the next aspect to consider will be whether you have one of three primary determinants applying to you from a UK inheritance tax perspective: domicile of origin (a person’s domicile at birth), deemed domicile (not resident in-country, but considered domicile for inheritance tax purposes), and general domicile. While residency duration may trigger considerations under general domicile, acquiring citizenship in the UK does not automatically establish domicile status.


Tax authorities subjectively interpret individuals' intentions, adding further complexity as they tend to look at a wide variety of aspects in a holistic manner, potentially from where you spend your time, where your family resides and/or studies and perhaps even where you have a burial plot. Acquiring UK citizenship is a factor which may imply an inclination towards UK domicile, though it does not provide a definitive answer. It is important to consult a professional on these aspects in order to best prepare yourself with the estate plan most appropriate for your personal situation.


DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER AND ARE NOT ESTATE SPECIALISTS. 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.


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