Why is my father's company being taxed twice after his death?
Because two separate events can capture the same value. At death there is a deemed disposition of the shares, which measures a gain in the deceased's hands. When the company later distributes its value to the estate, that distribution is taxed again in the estate's hands, without regard to the tax already borne on the shares. Nothing has gone wrong procedurally; the two rules simply meet in the middle. Post-mortem planning exists to relieve that double inclusion, and the routes for doing so operate within defined timeframes measured from the date of death. That is why the shares of a private company need attention early in an administration rather than at whichever filing deadline the executor meets first.
What is a pipeline and how soon does it have to be started?
A pipeline is one of the routes for relieving the double inclusion: broadly, the estate's high-cost shares are used so the company's value can reach the beneficiaries as a return of capital rather than as a second taxable distribution. Its viability depends on steps being taken in a particular order and within timeframes that run from the date of death, not from when the estate is ready. A redemption strategy is the main alternative and works differently, with different consequences where there is a foreign estate tax or a foreign beneficiary. Which one fits is a question about the company, the beneficiaries and the time still available, so the analysis belongs at the start of the administration.
Does a beneficiary in the US change which post-mortem route we use?
It can change the answer entirely. The two main routes deliver the company's value in different legal forms, and a foreign system characterises those forms on its own terms — one may be a capital receipt to that beneficiary and the other ordinary income, with different rates, different timing and different reporting. Where a foreign estate tax is also in play, the route chosen can affect whether the taxes the estate bears here are creditable against it. So a plan that is efficient for the resident beneficiaries can be the expensive one for the foreign beneficiary, and the executor has to choose knowing that. We analyse each beneficiary's position before the route is fixed.
Can the estate just redeem the shares instead?
A redemption is the other principal route and it is sometimes the right one, particularly where the company has the means to fund it and the beneficiaries are all within one system. It relieves the double inclusion by a different mechanism from a pipeline, and it produces a different character of receipt in the beneficiaries' hands, which matters where any of them is a foreign person. It also has its own timing constraints running from death. The choice between the two is made on the company's balance sheet, the mix of beneficiaries and the time remaining, and it should be made once, with the reasons recorded, rather than drifted into.
How soon after a death do we need advice on the company shares?
As early in the administration as the facts allow. The routes that relieve the double inclusion are bounded by timeframes measured from the date of death, so the set of options narrows on its own while the estate is still being gathered in. Before anything can be chosen, two things have to exist: a defensible valuation of the shares at death, and a clear picture of where the beneficiaries are resident. Both take time to establish. Executors who come to the question when the first filing falls due often still have choices; executors who come later sometimes have one, and occasionally none. Early advice is the part of this work that changes the outcome most.
How does a foreign estate tax interact with a pipeline?
They are computed on different things, which is why the interaction has to be worked out rather than assumed. A foreign estate tax typically attaches to assets by their situs and is measured on value at death; the routes that relieve the double inclusion here operate on what the company distributes afterwards and on the character of that distribution. Whether the tax borne on one side can be credited against the other depends on who is liable, on what, and in which period — and the route chosen can move all three. Where an estate has both a foreign exposure and a private company, the post-mortem route and the estate tax position are decided together.
Can an accountant in one country file my return in another?
Yes, where they are authorised to represent you with that tax authority and the filing is done electronically. What matters is not where the adviser sits but whether they can lawfully act for you and are competent in both systems — a return prepared with no knowledge of the other country is where the relief gets missed. We file on both sides, from offices in India, the USA, Canada and the UAE. See how we work.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
