The heirs of a non-resident of the United States who owns real estate in Florida are oftentimes burdened by the need to go through probate in the State of Florida either by probating a German or Florida will or by defaulting to the intestacy Statutes. Oftentimes, once the probate process is opened, other problems surface related to estate taxes.
Many times the deceased will not owe any U.S. Estate taxes by virtue of the Estate Tax Treaty between the U.S. and the home country of the decedent, if their worldwide assets do not exceed the U.S. Unified Credit amount (for 2015 this amount is $5.43 Million). However, the decedent will only receive the Unified Credit if the Estate files an Estate Tax return, affirmatively claiming treaty relief.
Failing to do so will result in the application of the standard non-resident Unified Credit amount of $60,000. This means that any estate of a non-domiciliary decedent that has U.S. Assets in excess of $60,000 must file an estate tax return before the personal representative can sign the Affidavit of No Estate Tax Due.
Failure to file the required returns means that the Personal Representative will remain personally liable for any taxes that should have been paid to the Federal Government and any transfer to the heirs is potentially subject to claw-back.
Disclaimer: This article is for general information only and is not intended as legal advice.