Paying beneficiaries

Meg231

My nephew is a beneficiary of my late father's estate. He lives in Texas. He does not want me to send his payment to Texas but doesn't have a UK bank account.  He is asking me (the only executor) to pay it into his father's account as he lives in the UK, is that legal? 
Thanks in advance

Brie

Legal here or in Texas?  I would have thought that you could be asked to pay the money into any account the beneficiary wishes - as long as it wasn't to deceive.  As in hiding savings so that benefits aren't affected.  

US law may well be different and they've got both federal and state laws as well.  So possibly complicated.

Has he given a reason for not wanting it being paid to Texas?  My first thoughts would be to avoid "issues" with income related benefits or going through a divorce but there may be tax implications as well.  

Meg231

Legal here for me to do it.  He works in the US and has a green card. He is not on benefits and his wife knows all about it so he isn't hiding anything from her. He said it was to do with the IRS wanting a cut of it if it went there as he is not a US citizen 

ebc

Depending on how much is involved, and the age of the parties, do you need to consider potential inheritance tax issues if the father of the nephew were to die? Is there a risk that the money would be deemed to have been part of the father's estate if he were to die within 7 years of passing it on to the nephew ?

Voyager2002

I did something similar when I served as an executor. I simply informed all beneficiaries of what I was doing and why, then made the payment in the most convenient way. No issues.

poseidon1

Meg231 said:

Legal here for me to do it.  He works in the US and has a green card. He is not on benefits and his wife knows all about it so he isn't hiding anything from her. He said it was to do with the IRS wanting a cut of it if it went there as he is not a US citizen 

That sounds distinctly odd. The IRS do not tax US citizens or resident aliens on inheritances received from overseas.

Now of course once he invests the proceeds or simply looks to earn bank interest, the resulting income/gains are taxable in the US. Green card holders are potentially taxable world wide ( whether resident or not)  so is your nephew ( via his father) planning to invest outside US and not declare?

If I am correct about the above scenario, then I can tell you that a professional executor would have to say no to your Nephew's request, due to the  FATCA regulations.  I won't bore everyone about what FATCA is ( google it ), but fortunately in your position as a non professional executor you are not caught by FATCA so are under no duty to help protect America's tax base.

That said, if you had been a trustee of a continuing Will trust from your father's estate, that trust would be subject to annual FATCA compliance by reason of its  American situs beneficiaries and you would be required to report trust payments to American based beneficiary whether or not such payments are actually remitted there. 

I am sure as a green card holder your nephew is perfectly aware of his responsibilities for as long as he retains the green card. The article below is therefore for your information. Whether you feel minded to question your Nephew further as to his motives is entirely up to you, as I said you owe no duty  to the IRS.

https://www.greenbacktaxservices.com/blog/filing-taxes-abroad-green-card-holders/

Meg231

Thank you for your help, i told my nephew i had to send the money to an account in his name either in the US or in UK to see what he would do and miraculously my nephew has somehow now managed to open a UK bank account, which now means I can send his money to that and then it's out of my hands and up to him what he does as regards to any taxes he needs to pay.  Problem solved!