By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)
Legal and Tax Implications for Israeli Citizens
Inheriting Money or Property in the United States
Modern families often have members living in different countries.
Indeed, many Israelis have family living in the United States.
Invariably, as generations pass on, their estates are left to family members, some of whom may not reside in the same country. Israeli citizens that are beneficiaries of an estate in the U.S. will need to consider and address several issues before obtaining their inheritance.
For example, in addition to the laws specific to state where the estate is located, Israeli citizens will need to consider tax consequences in both the U.S. and Israel.
I am an Israeli citizen living in Israel and have an inheritance in the U.S.
How do I get it?
When faced with the loss of a loved one, it’s understandable that the last thing on anyone’s mind is the allocation of the estate. However, inheritance can pose a variety of issues that must be addressed carefully to avoid adverse legal, tax and personal consequences. It is especially important for a non-resident alien (i.e. non-U.S. citizen that is not living in the U.S.) to have the benefit of professional guidance to assist them through the process.
At the most basic level the following will need to be considered:
Is the estate subject to a will, trust or some other some other writing that memorialized the intentions of the deceased?
Is the estate subject to probate – the legal process of settling an estate during which the will is verified, the deceased's assets are accounted for, debts and taxes are paid, and remaining probate estate assets are sold (if relevant) and distributed.
Identification and coordination between the beneficiaries, heirs, executors and/or trustees
Categorization of the estate assets and determination of what needs to be done in each asset class. Estate assets are often varied. They can include cash, bank accounts, retirement accounts, business interests, real property, and insurance benefits among others. Each of these asset classes may raise additional considerations. For example, if real-property is inherited by multiple beneficiaries, will it be sold before the distribution, and if not in what manner will it be subsequently held.
Tax Consequences: There may be both state and federal tax consequences in dealing with an estate. Possible taxes include inheritance tax, estate tax, and capital gain tax.
The U.S. estate and gift tax system presents many complexities, and the penalties for mistakes are costly. Inheritance may also impose tax implications in Israel. It is wise to seek professional assistance regarding these matters.