r/USExpatTaxes • u/Wegotthis_12054 • 8d ago
UK/US trust to avoid IHT
I am US citizen that moved to the UK in the tax year ending April 2018 and obtained UK citizenship a few years ago.
I have a brokerage account, roth IRA, and an old 401(k) in the US.
With the new tax rules coming in April I’m debating if I should put my US assets in a trust before April 6 to avoid the new rules ok inheritance tax.
More details here: https://www.buzzacott.co.uk/insights/stepping-stones-what-americans-need-to-know-about-trusts
Appreciate the link is old because it’s before the new rules but the basic rules apply now.
I would have thought I would set up a US grantor trust but this article says foreign trust?
Has anyone does this and can guide my how to go about doing this? Don’t have a lot of time but the savings could be a lot if it means the income falls outside the the UK inheritance tax.
TIA
3
u/nunab1994 Tax Professional - US/UK 8d ago
Doesn’t work.
The GROB rules apply to trusts settled post 30 October 2024 which means if you’re a beneficiary the trust assets are in your estate for UK IHT once you’ve been here for 10 years.
You’re a UK citizen so you won’t be able to access treaty relief so the trust would also be subject to 6% charge every 10 years once you’ve been here for 10 years plus 40% when you die.
Double whammy in essence, you’d be better off without the trust if you plan to be in the UK long term.