To claim an inheritance from overseas, you work two systems at once: the foreign country’s probate or succession process that decides what you get, and the U.S. reporting rules that the IRS applies once the money or property reaches you. The foreign side usually takes months, sometimes years. The U.S. side does not tax the inheritance itself, but it imposes informational filings whose penalties can eat a quarter of what you receive if you miss them.
Which Country’s Law Decides Who Inherits
Start with two questions: what assets exist abroad, and whose law governs how they pass. For bank accounts, investments, and personal property, most countries look to where the deceased was legally domiciled at death. Domicile is not just where someone was living; it is the place they treated as their permanent home. For real estate, the country where the property physically sits almost always controls.
Civil law countries — most of continental Europe, much of Latin America, parts of Asia and the Middle East — often apply forced heirship. A fixed share of the estate, frequently half or more, has to go to children, a surviving spouse, or parents regardless of what the will says. An American-style will that disinherits a child will not be honored in full in those jurisdictions.
Within the European Union, Regulation 650/2012 (Brussels IV) lets a person state in their will that the law of their nationality, rather than the law of their country of residence, should govern the whole estate.1EUR-Lex. EU Succession Regulation 650/2012 The election has to be explicit in the will. Brussels IV covers succession only; foreign inheritance taxes still follow local rules.
Before hiring anyone, gather what you can: the deceased’s papers for a will, records from foreign banks, and anything from the local property registry if real estate is involved. If you do not speak the language or know the local system, this is the point where local counsel becomes necessary.
Documents You Will Need and How to Authenticate Them
Foreign courts and agencies want proof of who died, who you are, and why you have a claim. Expect to produce:
- An official death certificate from the government where the death occurred.
- A valid passport or national ID.
- Birth, marriage, or adoption records tying you to the deceased.
- The original will or a certified copy from the court holding it.
- Bank statements, deeds, share certificates, or account records for the foreign assets.
Most of these documents need official authentication before a foreign authority will accept them. For the 129 countries in the Hague Apostille Convention, that means an apostille, which is a single certificate that replaces the older, longer consular legalization process.2HCCH. Apostille Section In the U.S., federal documents are apostilled by the State Department; state-issued documents like birth certificates go through the relevant Secretary of State’s office.3U.S. Department of State. Preparing a Document for an Apostille Certificate
If the country is not a party to the Apostille Convention, you go through consular legalization instead, typically at that country’s embassy or consulate in the U.S. Any document not already in the foreign country’s official language will also need a certified translation.
Using the wrong authentication is one of the most common ways claims get sent back to the start. An apostille handed to a non-Hague country, or consular legalization presented to a Hague country that wants an apostille, will be rejected.
Working Through Foreign Probate
You need a lawyer licensed in the foreign country, preferably one who handles cross-border succession regularly. That lawyer knows which court or administrative body has jurisdiction, what to file, and what the local deadlines are. Some countries route estates through courts; others handle everything through notaries with quasi-judicial authority.
Your foreign attorney submits the authenticated documents and a formal application. The goal is the local equivalent of a grant of probate, certificate of succession, or letters of administration — the official confirmation that you have the right to inherit. Some jurisdictions require a hearing; others process everything on paper.
If you cannot travel, most countries let you grant a power of attorney to your foreign lawyer so they can appear, sign, and manage transfers on your behalf. The power of attorney itself normally needs an apostille or consular legalization plus a certified translation before it will be recognized abroad.
Timelines vary sharply. An uncontested estate with a clear will and cooperative banks can wrap up in a few months. Contested estates, real property in slow court systems, and forced heirship disputes can run for years.
Moving the Assets to the United States
Once the foreign authority confirms your rights, you can start transferring. For cash, that usually means an international wire. The sending bank needs your U.S. bank’s name, address, account number, and SWIFT/BIC code, and often an IBAN for the account it is drawing on.
For inherited real estate, you have two choices: sell in the foreign country and transfer the proceeds, or hold the property and manage it from the U.S. Holding creates ongoing U.S. reporting obligations and often means keeping a foreign bank account to cover property taxes, upkeep, and any rental income.
When a large international wire lands, your U.S. bank’s compliance team will almost certainly ask questions. Banks have to check that the funds do not violate sanctions administered by the Treasury Department’s Office of Foreign Assets Control. If the money originates in a sanctioned country or touches a person or entity on the Specially Designated Nationals list, the transfer can be blocked, and releasing it requires a specific license from OFAC.4Office of Foreign Assets Control. FAQ 1113 – Decedents Estate and Russian Securities Even for wires from non-sanctioned countries, have your grant of probate, the death certificate, and proof of your relationship ready so the review goes quickly.
What You Have to Report to the IRS
The U.S. does not impose an inheritance tax on bequests from foreign persons. It does impose reporting, and the penalties for skipping the paperwork are harsh.
Form 3520 for the Inheritance Itself
If you receive more than $100,000 in a single year from a nonresident alien or foreign estate, you report it on Form 3520.5Internal Revenue Service. Gifts from Foreign Person It is informational and creates no tax by itself. The return is due on the same date as your income tax return, with extensions available.6Internal Revenue Service. Instructions for Form 3520
The penalty for late or missed filing is 5% of the unreported amount per month, capped at 25%.7Office of the Law Revision Counsel. 26 USC 6039F – Information on Beneficiaries of Foreign Trusts and Large Foreign Gifts On a $500,000 inheritance, the cap is $125,000. A reasonable cause exception exists, and the IRS applies it narrowly.
FBAR (FinCEN Form 114)
If you hold inherited money in foreign accounts and the combined value of all your foreign financial accounts exceeds $10,000 at any point in the year, you have to file an FBAR through the FinCEN BSA E-Filing system. It is not part of your tax return. The deadline is April 15 with an automatic extension to October 15, and no request is needed for the extension.8Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
The threshold looks at your foreign accounts in aggregate, not one at a time. Even brief control over a foreign account, such as while inherited funds sit there before being wired to the U.S., triggers the filing for that calendar year.
Form 8938
Under FATCA, Form 8938 is a separate filing that goes with your income tax return. For unmarried taxpayers living in the U.S., the trigger is $50,000 in specified foreign financial assets on the last day of the year or $75,000 at any time during the year. For married couples filing jointly, those figures are $100,000 and $150,000.9Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
Form 8938 and the FBAR are not substitutes. They go to different agencies, have different thresholds, and often both apply to the same accounts.
Cost Basis if You Later Sell
Property acquired from a decedent gets a stepped-up basis equal to its fair market value on the date of death, and this rule applies to foreign assets just as it does to domestic ones.10Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If you sell inherited foreign real estate later, U.S. capital gains apply only to appreciation after the date of death, not to whatever the deceased’s original purchase price was.
Get the date-of-death valuation done properly. For real estate, that usually means a professional appraisal in the foreign country. For financial accounts, the balance on the date of death is the value. Keep those records permanently; the IRS can ask for basis documentation years after you sell.
Foreign Taxes and Double Taxation
The country where the assets sit may charge its own inheritance, estate, or transfer tax. Several European countries do, at rates that vary with your relationship to the deceased. Paying tax abroad does not by itself reduce U.S. tax.
Two things can help. The U.S. has estate and gift tax treaties with a number of countries that allocate taxing rights and allow credits. And if you keep the assets and earn income from them (rent, dividends, interest), you can generally claim a foreign tax credit on Form 1116 for foreign income taxes paid, offsetting U.S. tax on that same income dollar for dollar up to the U.S. tax owed on it.
The interaction between foreign inheritance taxes, U.S. estate tax treaties, and income tax credits is complicated enough that a tax advisor with international experience is worth hiring for any estate of meaningful size.
Common Mistakes
- Assuming U.S. law controls. American wills and trusts do not override foreign forced heirship. Local heirs in civil law countries may have claims a U.S. document cannot defeat.
- Missing Form 3520. Penalties start immediately and reach 25% of the inheritance. The IRS does not send reminders, and lack of awareness is not reasonable cause.
- Ignoring the FBAR and Form 8938. Holding a foreign account for even a few weeks during the transfer triggers filings for that year.
- Skipping the date-of-death appraisal. Without it, you have no defensible basis when you sell, and reconstructing values later is expensive and unreliable.
- Using the wrong authentication. An apostille for a non-Hague country, or consular legalization for a Hague country, will be rejected.