6 tips for how to transfer inheritance to USA
Here’s how to transfer your inheritance to the USA:
- Don’t use your bank. Banks may charge margins on the exchange rate of up to 5% in addition to hefty fees.
- If the estate has not been formally settled yet, consider using a Forward Contract to lock in an exchange rate for up to 12 months, so your inheritance isn’t at the mercy of the foreign exchange markets.
- Create an account with OFX to save up to 75% when moving your money overseas.* OFX charges no transaction fees on transactions over $10,000, and we use local banking networks to process your transfer, so you may get your money faster.
If you receive an inheritance from someone who was residing overseas, there are a few things you should know before transferring your inheritance to the USA from another country
How to transfer your inheritance to the USA online
Once the estate has been fully administered or settled, and you have the right to move the funds from the executor’s account, you can use an online service like OFX to transfer your money into the United States and into your own bank account.
When you use an online transfer service, rather than your bank, you could save money because banks often charge high fees and margins of up to5% above the real exchange rate.
If you need to transfer proceeds from the sale of items like inherited property, jewellery, or collectibles, or if you have inherited an investment, a savings account, or a pension, you can still transfer your money online using OFX.
How to protect your inheritance from exchange rate fluctuations
If your estate has not yet been settled, you can set up a Forward Contract to lock in your preferred exchange rate for up to 12 months, just in case you can’t transfer your money right away but want to hold onto that great rate.
Alternatively, using a Limit Order allows you to transfer funds automatically when the market reaches your target exchange rate. That way, you can get the rate you want even if the market moves suddenly while you’re out playing golf.
In the end, the right transfer strategy will help you keep as much of your inheritance as possible.
How to transfer your inheritance to the USA with OFX
- Create a free account with OFX today, so you’re ready to seize the rate when exchange rates move suddenly. Please be advised that the account you create with OFX must be in the same name as the name on your bank account. (So your mom will have to create her own account with OFX, if she received the inheritance from Grandma.)
- Log into your account to get a live quote based on the real exchange rate.
- Fill out a simple form that will guide you through the process of providing the necessary banking details. If you have any trouble, our customer service agents are available by phone 24/7.
- Send us your funds. You will be notified once your funds are received, and you can track your transfer from start to finish using the OFX mobile app.
The benefits of using OFX to transfer your inheritance to the USA
We believe you should keep as much of your inheritance money as possible, so OFX has a host of tools that you can use to make transferring your inheritance a snap:
- Use our currency converter to check exchange rates anytime.
- Create a Limit Order to set your preferred exchange rate and be notified when it’s triggered so you can make your transfer at the most opportune moment.
- Set up recurring transfers if you do not want to make a one-time transfer of your entire inheritance for any reason.
- Download the OFX mobile app to set up, complete, and track every transfer, even while you are on the go.
What to expect when it comes to inheritance taxes
While every effort is made to ensure this content is up to date and accurate, this information provided by OFX does not take into account your specific financial objectives and requirements. Beneficiaries of an inheritance from abroad must seek specific advice from tax professionals in the local jurisdictions to ensure that all applicable taxes are paid in a timely manner. OFX does not provide tax or financial advice.
Inheritance taxes can be confusing because they vary from one country to the next. Also, many times, the executor will be responsible for paying the tax on the estate, so the beneficiary might not be required to pay any inheritance taxes after all (unless the beneficiary is also the executor). To learn more about the inheritance tax rules in the U.S., it is recommended that you consult with an experienced financial advisor, as there might also be federal or state level estate taxes that may apply to your inheritance.
In the United States, whether or not you will need to pay taxes on your inheritance from overseas may depend upon where the deceased lived prior to his or her death, if any tax treaties are in place, and how much you are inheriting. Read here for more information on moving your inheritance to the USA.
Declaring tax payments
From what we’ve read on the IRA website, any assets, including inheritances in the form of cash, that you receive from another country will need to be declared if you are a resident of the United States.1 In other words, if you are going to be transferring money from another country into a local U.S. bank account, you will need to declare those assets on your tax return with your annual filing, but that doesn’t necessarily mean you will be liable for tax on those assets.
You may want to keep the following in mind as you work with your financial advisor to be sure you are properly declaring any assets that you are transferring to your name. Here are a few points to discuss:
- If you inherit assets that are located in another country, whether those assets are in the form of real estate, investments, or bank accounts, the U.S. federal estate tax is likely to apply, provided that the individual who left their inheritance to you was a U.S. citizen or legal resident. Even if they resided outside of the United States, their estate will usually be considered subject to U.S. taxes.2
- Your overseas inheritance may be subject to taxes applied by the foreign country, even if you transfer that money into your U.S. bank account. However, thanks to Double Taxation Treaties, if you receive and transfer an inheritance from overseas, you may be able to deduct any taxes that you were required to pay to the other country, if you can furnish proof that you have already paid elsewhere. To declare the amount of taxes that you paid to the foreign nation, you’ll most likely use Form 706-CE.
- If you receive an inheritance from overseas and the deceased had not been a citizen or legal resident of the United States, you may be exempt from the estate tax. This does not mean, however, that the estate will not have to pay taxes to the foreign country where the assets are held. In order to receive this exemption and avoid paying fines in the U.S., you may need to declare the inheritance transfer on Form 3520. This form is used to declare any transfer of property or gifts that are given by a foreign individual.
Inheritance taxes are complicated and that’s doubly true if you’re inheriting from overseas. It’s well worth the small price of a professional consultant who can ensure you’re paying the right amounts to the right jurisdictions
For more detailed information on how to transfer inheritance to USA from another country, check out our Guide to Repatriating an Overseas Inheritance.
*Average savings based on published rates of ANZ, Westpac, NAB and CBA on a single transfer of AUD$10,000 to USD between 21.2.17 and 2.3.17. Transaction costs excluded. Quoted savings are not indicative of future savings
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as OFX) and its affiliated entities make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.