Hong Kong has zero estate tax. However, if a Singaporean buys Hong Kong stocks through Interactive Brokers, is the Hong Kong stock portfolio subjected to U.S estate tax given that Interactive Brokers is a U.S broker?
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The general consensus seems to be that U.S. equities, mutual funds, ETFs, bonds ... and any cash balance (in any currency) in your IB account are part of the calculation toward the U.S. estate tax exemption (US$60,000 for non-U.S. resident foreigners). Non-U.S. securities, such as Vanguard's Ireland domiciled ETFs, do not count.
Also, the general consensus is that the U.S. fair market value for estate tax purposes is based on the day you die, not on anything that happens to valuations and account balances thereafter. Even if your heir(s) liquidate your positions at IB then withdraw cash, that's fine -- unless one of your heirs dies after liquidation and before the cash is withdrawn!
To a Singaporean with no capital tax liability, that is the most clear cut method to ensure my non sgd assets are safely back to sgd and to Singapore without any tax liability.I don't agree with that advice, Orange. At least not the way you've written it.
If your heir(s) need cash urgently, IB is certainly not the place to put any of it. Make other provisions for their emergency needs. Anything in IB should be handled rationally, calmly, and "by the book." For example, it could very well make sense simply to transfer title to the account to an heir through probate, with the executor handling that in due course. Or it might make sense to transfer the securities themselves to an heir's brokerage account (at IB or at another firm), without liquidating the securities -- and without incurring trading costs.
Also, depending on where they live and/or their immigration statuses, some heirs might have inheritance tax, some might have capital gains tax, and some might have both. Liquidation could mean they have an immediate capital gains tax burden. In some cases an heir might want to pass some or all of the inheritance to a qualified charity, for tax and other reasons. All of these considerations ought to be considered in the fullness of time.
It means there's another forum where this issue was discussed, recently, and well and authoritatively answered. Using your favorite search engine will find it. It also means that you, the reader, are responsible for your own legal obligations, including tax obligations.Umm, what does general consensus? mean?
No, that's not correct. Tax is either legally owed or it is not. Transferring funds does not avoid tax liabilities. It might be a way to try to evade taxes illegally. Is that what you're recommending, tax evasion (an illegal act)?orange_sky said:To a Singaporean with no capital tax liability, that is the most clear cut method to ensure my non sgd assets are safely back to sgd and to Singapore without any tax liability.
I disagree. Firstly the transfer of assets should ideally be done by myself before my demise. If I can't do it, it should be done by my spouse before my demise. There will not be any estate tax as I haven't passed away yet.It means there's another forum where this issue was discussed, recently, and well and authoritatively answered. Using your favorite search engine will find it. It also means that you, the reader, are responsible for your own legal obligations, including tax obligations.
No, that's not correct. Tax is either legally owed or it is not. Transferring funds does not avoid tax liabilities. It might be a way to try to evade taxes illegally. Is that what you're recommending, tax evasion (an illegal act)?
But leave that aside. Liquidating assets, even if there are no tax consequences, might be a really dumb thing to do, financially speaking. There is a transaction cost to do so, and selling a whole portfolio at once at one random moment in time (shortly after the death of the owner) is likely to be perfectly awful timing.
I would also add that your suggestion is highly likely to cause family disputes between surviving heirs and has some security risks. It's also possible that the financial institutions involved will ask additional questions. That sort of liquidation and fund transfer would not be a typical pattern, to say the least. "I used my brother's password" (the truth) is not a great way to start a conversation with somebody from the fraud department.
Bad idea, really. This stuff ought to be done "by the book" if you care about your heirs.
That's hard to do if you're hit (hard) by a bus, for example. We're talking about how the U.S. estate tax works for non-U.S. persons.Firstly the transfer of assets should ideally be done by myself before my demise. If I can't do it, it should be done by my spouse before my demise.
Sure, that's fine. And you can leave those instructions behind in your will for your executor to carry out, legally and properly, without risk of fraud investigations, asset freezes, or other "inconveniences" to your heirs.Second liquidation of assets is the right choice for me as it's easier to divide the assets.
You're not understanding the point. Obviously it's very easy for somebody familiar with Web browsers and financial transactions to use a Web interface to execute a financial transaction. It may be easy for you, it may be easy for an heir, and it may be easy...for an unauthorized hacker. All easy.WHats so difficult ?
go and buy a term insurance plan, consider AVIVA SAFHong Kong has zero estate tax. However, if a Singaporean buys Hong Kong stocks through Interactive Brokers, is the Hong Kong stock portfolio subjected to U.S estate tax given that Interactive Brokers is a U.S broker?
And also privileged to enjoy U.S. regulatory protections and transparency, financial stability, SIPC account insurance, and extremely efficient markets with low management fees, incredible product diversity, and high liquidity. It is the world's largest economy, after all.that's all, after all, IB is US-based.
we would be slapped w US laws.
Ken Song said...
Below is a response I got from my broker.
Regarding US estate tax, there is a lot of misinformation on this subject being published on the Internet. US estate taxes are for US residents with assets in the United States. There is no estate tax for customers outside of the US. In fact, we don't even get involved in estate taxation for US customers either. The best way to describe this is to detail how we handle a customer's sudden passing:
If a customer either within and/or outside of the US passes suddenly, we ask for the next-of-kin in the family to provide a copy of the death certificate. We would also ask for any documents that could be from the Courts, which may inform us who is the rightful owner of the assets after the customer's death. After receiving the documents, we work with the appropriate person in your family to create an Estate account, and then we encourage them to either liquidate the holdings, and withdraw the funds. Or, they could also transfer the account contents to another broker, if simpler. Either way, there is no estate taxation, nor services related to estate taxes done by Interactive Brokers. We can unfortunately confirm that it happens frequently that a customer passes suddenly, including thousands of our Non-US customers, and our procedure is always exactly as described above.
We hope this helps to clarify.
Regards,
Melissa-Interactive Brokers
There was an interesting old discussion here:
http://forums.hardwarezone.com.sg/95961584-post20.html
this is nice.. but well i rly wwish to hold at leasst 100K usd, to minimise the inactivity cost..