UK Citizen With US Property: Ancillary Probate and State-by-State Rules

US Federal Estate Tax: The $60,000 Trap for Non-Citizens

The US federal estate tax applies to the US-sited assets of a person who was neither a US citizen nor domiciled in the US at death. The key shock for UK families is the exemption: while US citizens benefit from a federal estate tax exemption of over $13 million (as at 2024), a non-US domiciliary's exemption is only $60,000. Above that, the tax rate rises steeply to 40% at higher levels.

US-sited assets subject to the federal estate tax include:

• US real property (land and buildings physically located in the US)
• Shares in US corporations
• Debt obligations of US persons (such as US bonds)
• US bank deposits (except certain interest-bearing bank accounts)
• Other tangible personal property physically located in the US

Crucially, the federal estate tax is levied on the gross value before deducting debts on the US property. A mortgage on a US property does not reduce the taxable value unless specific treaty provisions apply.

The UK–US Estate Tax Convention: Treaty Relief

The UK–US Estate and Gift Tax Convention provides important relief for UK-domiciled persons with US assets. Under the treaty:

• The estate is entitled to a proportionate share of the full US citizen exemption (currently $13m+), calculated as: (US assets / worldwide assets) × full exemption. This can dramatically reduce or eliminate US federal estate tax for moderate estates
• Debts and liabilities can be deducted on a pro-rata basis, including mortgages on US property
• Credit is given for UK IHT paid against US federal estate tax on the same assets, further reducing the overall tax burden

Filing for treaty benefits requires submitting Form 706-NA (United States Estate Tax Return for Nonresident Not Citizen of United States) and claiming treaty relief, typically within 9 months of death (with extensions available). A US tax professional (CPA or tax attorney) is essential for this filing.

See our UK inheritance tax guide for current UK IHT rates.

Ancillary Probate: State-by-State Rules

Each US state has its own probate process. A UK Grant of Probate has no direct legal effect on US real property — the executor must open an ancillary probate administration in every state where the deceased owned real estate.

General points on ancillary probate:

• The UK executor typically petitions the local probate court to be appointed as the ancillary administrator for the state, supported by the UK grant and the UK will (if any)
• Many US states require a resident agent or co-administrator who is present in the state
• Ancillary probate timelines vary widely — from a few months in straightforward cases to over a year in complex ones
• Florida, California, New York, and Texas are the states where UK citizens most commonly hold property; each has its own procedural requirements and costs
• Some states (such as California) have a formal independent administration procedure; others are more court-supervised

A US attorney in the relevant state is essential. The UK executor cannot act without local authorisation and should not attempt to deal with US real estate using only the UK grant.

State Estate and Inheritance Taxes

In addition to federal estate tax, several US states levy their own estate tax or inheritance tax. States with estate taxes as at 2024 include Massachusetts, Oregon, Washington, Hawaii, Illinois, Maryland, Minnesota, New York, Oregon, and Vermont. Some have lower exemptions than the federal level.

Key points:

• State estate taxes apply to the value of property in that state
• State inheritance taxes (levied in a handful of states including Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) are charged on the beneficiary based on their relationship to the deceased
• There is generally no treaty relief for state-level taxes, though credit against UK IHT may still be available
• The US state attorney handling the ancillary probate will advise on state tax obligations

Dealing with US Financial Assets (Non-Property)

US bank accounts, brokerage accounts, and retirement accounts may be dealt with differently from real estate:

• Some US banks and brokerages will accept the UK Grant of Probate, particularly for accounts under a threshold, but this varies by institution
• US Individual Retirement Accounts (IRAs) and 401(k) plans typically pass to named beneficiaries outside the estate and have their own distribution rules under US law — UK beneficiaries should take US tax advice promptly
• US brokerage accounts with non-US residents may require FBAR and FATCA compliance disclosures in the US and HMRC reporting in the UK
• Shares in US companies quoted on US exchanges must be transferred through the US registrar and may require a US tax clearance letter (Transfer Certificate) from the IRS

Practical Steps for Executors

• Obtain multiple certified copies of the UK death certificate
• Locate all US asset documentation — deeds, account statements, share certificates
• Apply for UK Grant of Probate — see applying for probate
• Instruct a US attorney in each state where real property is held
• Instruct a US CPA or tax attorney to advise on federal estate tax and treaty filing
• Note the 9-month federal estate tax deadline and seek extensions if needed
• Include US assets in the UK IHT return at their USD value converted at date of death exchange rate
• Coordinate UK IHT and US federal estate tax credits to avoid overpaying

For the overall UK estate administration, see our estate administration checklist, complete UK probate guide, and our UK inheritance tax guide. For the documents needed, see what documents you need for probate. For cross-border estate planning, see our guide on multiple wills in different jurisdictions. For apostilling documents, see our guide on apostilling a foreign death certificate. For recognising a foreign grant in the UK, see our guide on how a foreign grant is recognised in the UK.

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