- 1 Do Estates File FBAR?
- 2 Who has to File the FBAR?
- 3 Deceased Person & Estate FBAR Filing
- 4 Do Estates File FBAR?
- 5 Did the Decedent File FBAR in Prior Years?
- 6 Personal Accounts Transferred into Estate Name
- 7 Is the Estate Administrator Listed on the Account?
- 8 Was the Decedent’s Final Tax Return already filed?
- 9 Does the Beneficiary Now have to file FBAR?
- 10 Golding & Golding: International Tax Law Specialist Firm
Do Estates File FBAR?
Do Estates File FBAR: Yes, estates do file FBAR (if they meet the requirement). When it comes to international tax and foreign account compliance, one of the most crucial aspects of the annual filing requirements is the FBAR. The FBAR is an electronic foreign bank and financial account form otherwise known as FinCEN Form 114. Nearly all U.S. persons with foreign accounts must file the FBAR, and there are not many exceptions to the requirements for filing. The FBAR form can be very intimidating, if for no other reason than because the penalties associated with not filing the form timely or correctly can be staggering.
Who has to File the FBAR?
If you are a U.S. person with foreign accounts, you will most likely have an FBAR reporting requirement. For example, minor children are required to file the form. For Foreign Nationals who are now U.S. persons but opened a foreign account before (or after) becoming a U.S. person, they also have to report the accounts that pre-date U.S. person status. Even employees who have signature authority over accounts must also file the FBAR.
Deceased Person & Estate FBAR Filing
Estate and FBAR filing has several components to it. For example, let’s say Rachel was a U.S. person who recently passed away. Common questions Rachel’s estate may have, include:
- Did Rachel have to file the FBAR in prior years?
- If so, did she file it in prior years?
- Are there now estate accounts that need to be reported on the FBAR?
- Is the current estate administrator also a beneficiary on the account?
- Was the beneficiary knowingly placed on the account in prior years?
- Was the decedent’s final tax return filed?
- Does the beneficiary have to file FBAR?
Let’s go through these Estate FBAR questions:
Do Estates File FBAR?
Yes, estates file an annual FBAR if the threshold requirement for reporting is met. As provided by the IRS:
“A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR…”
Did the Decedent File FBAR in Prior Years?
The first question to consider is whether the decedent had an FBAR requirement in prior years. If the decedent had FBAR requirement in prior years, then the administrator must determine whether or not FBARs were properly filed. If the FBARs were filed, then that is good news and the administrator can file the decedent’s last tax return, along with any subsequent estate FBAR. If the decedent did not file the FBAR in prior years (and was previously required to file the form), then the administrator should pause before moving forward with filing additional tax returns for the estate — or the decedents’ final tax return.
Personal Accounts Transferred into Estate Name
After a person passes away — depending on how the probate works in the particular state at issue — the accounts will transfer into the name of the estate. As a result, the accounts that were previously held in the name of the decedent are now held in the name of the estate — and must be reported on the FBAR (and possibly 8938) by the estate. It is important that the administrator files the forms correctly, since the IRS has issued penalties (which courts have confirmed) against the administrator of the estate when the administrator is also a beneficiary — such as a child of the decedent.
Is the Estate Administrator Listed on the Account?
Here is a very common situation: A parent passes away and leaves all of their money and assets to their children. A few years before the decedent passed away, they listed one of their children as a joint owner or signatory on the account. This is usually done when an elderly person or a terminally ill person is concerned about having someone they trust being able to access the money. In these types of situations, it is not uncommon that the decedent does not tell their adult child that they have been placed on the parent’s account, out of fear that the child may access the money for their own use. Therefore, it is not until after the parent passes away that the child learns that they have been listed on the account for the past several years. *This will usually result in the child needing to submit their own amnesty disclosure to the IRS.
Was the Decedent’s Final Tax Return already filed?
If the decedent’s final tax return has not been filed at the time the administrator learns of the foreign accounts (and presuming they were not correctly disclosed in prior years), the administrator should wait before filing the decedent’s last tax return and/or any estate tax returns (if time allows). Rather, the administrator should apply for an extension and take the time to get their ducks in a row first. This way, the estate can properly disclose all of the accounts and assets through one of the offshore amnesty programs.
Does the Beneficiary Now have to file FBAR?
When a U.S. person beneficiary inherits a foreign account, the beneficiary may now have their own personal FBAR filing requirement as well. The most important thing for taxpayers to keep in mind is – simply because a person passes away does not absolve that person’s FBAR filing requirement and may create an FBAR reporting requirement for the estate and/or beneficiaries.
Golding & Golding: International Tax Law Specialist Firm
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure. We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR. Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
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No matter where in the world you reside, our international tax team can get you IRS offshore compliant. Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.