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This presentation focuses on estate and inheritance tax planning under the U.S. – U.K. Estate Tax Treaty for U.S. – U.K. connected individuals. For many years, there was considerable focus when advising clients who might have U.K. domicile on ensuring a U.S. revocable trust was a bare trust for U.K. inheritance tax purposes. In light of the recent U.K. change (effective April 6, 2025) from a domicile-based to a long-term residency based inheritance tax regime, this presentation focuses on operation of the U.S. – U.K. Estate Tax Treaty, with particular emphasis on an important Treaty exclusion for non U.K. assets in a trust settlement created by a U.S. domiciliary who is not a U.K. national, which excludes the assets of the settlement from U.K. inheritance tax if the U.S. settlor later becomes a U.K. long-term resident and subject to U.K. inheritance tax after the date the trust is settled. The presentation also covers areas of potential double tax exposure where the Treaty may not assist, such as charitable gifts to organizations which are not both U.S. and U.K. qualified charities, further increasing the potential benefit of the Treaty’s settlement exclusion.
This presentation will be particularly relevant for attorneys advising U.S. individuals who reside or work extensively in the United Kingdom, as well as for legal practitioners who may be called upon to serve as trustees for trusts that are treated as settlements under U.K. law.
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