Assets in Two Countries,One Unified Strategy

The US taxes worldwide assets of citizens and residents at rates up to 40% above the exemption ($13.61M in 2024). India currently has no estate or inheritance tax, but capital gains tax may apply on deemed transfers. Without a US-India estate tax treaty, careful planning is needed to avoid double taxation. Tax credits for foreign taxes paid may partially offset double taxation, but gaps remain for large cross-border estates.

For Indian real estate, personal ownership is generally simpler because Indian law doesn't easily accommodate foreign trusts holding real property. However, your US estate plan should include provisions for managing Indian property through a Power of Attorney and a separate Indian will. For Indian financial assets (mutual funds, stocks, bank accounts), a US-based trust may be able to hold these, subject to FEMA regulations.

US persons must file: FBAR (FinCEN 114) if aggregate foreign accounts exceed $10,000 at any time during the year, Form 8938 (FATCA) if foreign financial assets exceed $50,000 ($200,000 for married filing jointly residing in the US), Form 3520 for gifts/inheritances from foreign persons exceeding $100,000, and Form 5471 if you own 10%+ of an Indian company. Penalties for non-filing are severe — $10,000+ per form.

After inheriting Indian assets, the process involves: obtaining a succession certificate or probate order from Indian courts, transferring the assets to your name, converting to US dollars through authorized dealer banks, and transferring to your US account. Under the Liberalised Remittance Scheme (LRS), Indian residents can remit up to $250,000/year. NRIs can repatriate up to $1 million per financial year. Tax implications exist in both countries.

Yes. Indian mutual funds are classified as PFICs (Passive Foreign Investment Companies) by the IRS and require Form 8621 filing. PFICs are subject to punitive US tax treatment unless you make a Mark-to-Market or QEF election. PPF (Public Provident Fund) accounts must be reported on FBAR and Form 8938. The interest earned is taxable in the US even though it's tax-free in India. Professional tax guidance is strongly recommended.