Trusts, gifts and estates, read by two very different systems.
Nothing diverges across the Atlantic like inheritance. The US taxes the estate above a high threshold; the UK taxes above a low one. A structure that is ordinary planning in one country can be a reporting nightmare in the other.
Figures relate to tax year 2025 (US) · 2025-26 (UK)
A UK trust is a foreign trust to the IRS
A US beneficiary or grantor of a UK trust files Forms 3520 and 3520-A, with penalties starting at $10,000 for silence — even when no tax is due. Distributions carry throwback rules that tax accumulated income at punishing rates.
We identify what each authority sees in the structure, file the returns it triggers, and where possible restructure so ordinary family planning stops generating extraordinary paperwork.
- Forms 3520 / 3520-A for foreign trust connections
- Gift reporting — Form 709 and IHT interaction
- Estate planning across both thresholds
- Inheritances from abroad, reported correctly
The estate treaty is older than you'd like
The US-UK estate tax treaty dates from 1979 and resolves less than people hope. Domicile, situs of assets and the order of deaths in a marriage all change the bill, and planning while both spouses are alive is what preserves the options.
For trustees: the annual reporting calendar
A trust with any US connection runs on a fixed reporting rhythm: Form 3520-A by mid-March, beneficiary statements alongside it, Form 3520 with each US person's return, and UK trust registration and tax returns on HMRC's own cycle.
We run that calendar for trustees year after year, and when a distribution is planned we model the throwback consequences first — because once paid, the character of a distribution cannot be undone.
- 3520 / 3520-A cycle managed annually
- UK trust registration and returns alongside
- Distributions modelled before they are made
Primary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
Questions, Answered.
What clients ask about trusts & estates
What reporting does a foreign trust create?
Generally Forms 3520 and 3520-A, covering the trust itself and any distributions to US beneficiaries.
The penalties for missing these are calculated on the value involved rather than on tax due, which makes them disproportionate to the oversight.
Can I be a beneficiary without knowing it?
It happens more often than people expect, particularly with family trusts set up by an older generation.
Reporting can be triggered by a distribution you did not request, so it is worth establishing your position rather than waiting.
How do the nil-rate band and US exemption interact?
They are separate allowances under separate systems, and one does not shelter you from the other.
The estate and gift tax treaty allocates between them, but relying on it requires the estate to be structured with both in view.
Do US estate tax and UK inheritance tax both apply?
They can both have a claim on the same estate, and they work on different bases - one largely on domicile, the other on citizenship and situs.
There is an estate and gift tax treaty that allocates between them, but it has to be applied deliberately.
Are foreign trusts a problem for US persons?
They frequently are. US reporting on foreign trusts is heavy, and distributions can be taxed harshly where the trust has accumulated income.
Structures that are entirely ordinary in the UK can read very differently to the IRS.
Do I have to report an inheritance from abroad?
Receiving it is generally not taxable to you as a US person, but large foreign gifts and inheritances do carry a reporting requirement.
The penalty for missing that report is significant relative to a filing that raises no tax at all.
Next Step.
Tell us what you hold — the scope and a fixed fee follow in writing.