There is a flat 15% inheritance tax on most assets that pass up to nieces, nephews, friends and other beneficiaries. By Margaret Atkins Munro, Kathryn A. Murphy . Here is a basic plan to consider. Countries with whom the US currently has gift and/or estate tax treaties. Residence in the transfer tax context is based on the individual’s "domicile." An heir's inheritance will be subject to a state inheritance tax only if two conditions are met: The deceased person lived in a state that collects a state inheritance tax or owned bequeathed property located there, and the heir is in a class that isn't exempt from paying the tax… The concept of domicile under English and Welsh law is complicated, but if you live in either the UK or France and own property in one or both countries, it will be important to your family and anyone who inherits from you. You should seek professional advice for domicile and inheritance tax-related problems. Domicile and residency usually go together but for certain taxation purposes (eg income tax or inheritance tax) your particular mix of residency, ordinary residency, domicile and domicile of origin will make a difference to what tax you have to pay. Domicile and inheritance tax planning. Another important concept is one of deemed domicile. Domicile is defined as living within a country with no definite present intent of leaving. Knowing where the decedent’s domicile (where the decedent had his or her primary residence) was at date of death is key when figuring out where you must probate the assets and what state you must pay taxes to (although real estate is subject to state estate or inheritance tax, if any, in the state in which it’s located). In general terms, an inheritance tax is a tax on the beneficiaries of an estate whereas an estate tax is a tax on the decedent’s estate. Inheritance Tax. There is a flat 12% inheritance tax on most assets that pass to a sibling (brother or sister). Due to this change, Washington no longer has an inheritance tax waiver. In certain cases, it may also be charged on large lifetime gifts (see below). The importance of domicile and inheritance tax – why it matters to your family where you are domiciled. Even if you are not domiciled in the UK under general law, the Revenue will treat you as domiciled in the UK for inheritance tax (“IHT”) if at the date of your death: You were domiciled in the UK within the three years immediately before death, or Inheritance Tax: domicile outside the United Kingdom (IHT401) Ref: IHT401 PDF , 120KB , 4 pages This file may not be suitable for users of assistive technology. Determining domicile for gift tax purposes is the same inquiry as for estate tax purposes described above in IRM 4.25.4.2.1, and is very fact specific. 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