If you have been appointed as Executor to the estate of a non-resident US citizen, you may encounter the need to obtain an IRS transfer certificate form 5173. This is a complicated process that requires the services of a qualified CPA and attorney. This blog covers the need-to-knows regarding this process and the required documentation.
Firstly, there is a need for this process when the USA assets of the deceased (which include any shares, but do not include bank accounts) had a value on date of death exceeding $60,000 USD (this amount may vary slightly from year to year). In this scenario, the Executors will have to prepare and file Form 706-NA with the US IRS in order to receive the Federal Transfer Certificate that the share registrars require in order to be able to sell or transfer shares into the names of the Executors.
The Form 706-NA filing process requires detailed supporting documentation – including the full UK Inheritance Tax return paperwork. The Federal Transfer Certificate will only be issued once the IRS has conducted their investigations and are satisfied that any tax owed on the estate has been paid or provided for.
This is a lengthy and time consuming process that often takes between 6-9 months. The processing times can be significantly longer if the estate is selected for an audit. Once the Federal Transfer Certificate is obtained, US banks and financial services companies will be able to release any assets which were held with the Deceased named as the account owner.
It should be noted that the need for a Federal Transfer Certificate does not apply if a Grant of Probate or Letters of Administration have been obtained in a state of the USA. Similarly, if the Deceased was not resident in the USA at the date of their death, and the worldwide assets were below the Unified Credit Amount (or Exclusion Equivalent Amount – this varies from year to year – for 2024 it is US$13,610,000) then an Affidavit in Lieu can be filed instead of Form 706-NA.
The executors of an international based estate will need the assistance of a qualified CPA and attorney to conduct a worldwide search of all of the assets that have been accumulated. This will include a review of all available financial documents to ensure that all assets have been found and valued correctly. Once the IRS has completed its investigation, they will issue the appropriate Federal Transfer Certificate which can then be used by the financial services company or bank to release any of the assets that were held in the name of the Deceased. For more information about obtaining a Federal Transfer Certificate, contact us today! Our team of qualified professionals can assist. We are experienced in working with the US Internal Revenue Service and can help you navigate this complex process. We are also able to provide our services on an affordable basis for families that have a high net worth.