A Primer for Settling the Estate of Non-Residents with U.S. Assets

IRS Forms 706-NA and 5173 work together to settle the U.S. estate taxes of a deceased non-resident alien and unlock their American assets. Form 706-NA calculates the tax owed, while Form 5173 (the official IRS-issued Transfer Certificate) allows financial institutions to legally release the frozen assets.

How The Process Works

1. When a non-U.S. citizen passes away owning U.S. assets (like real estate or stocks), these assest are frozen and cannot be released to their heirs without IRS approval.
2. Therefore an executor must file Form 706-NA to report and calculate estate taxes owed on those assets.
3. Then once the IRS verifys that all U.S. estate taxes are paid (or that no tax is owed), they can issue Form 5173 which allows for the release of those funds and avoids future tax liability.

Other Facts

• The executor must file Form 706-NA if the value of the decedent’s total U.S. assets exceeds $60K.
• Assets include physical real estate in the U.S. and stock in U.S. companies, but U.S. bank accounts are usually exempt.
• Receiving the Form 5173 Transfer Certificate can take more than a year to attain.

WATAX can help navigate through the steps and make sure this sticky and stressful process is handled as smoothly as possible.