Is cash in IBKR Singapore account subjected to U.S estate tax?

learner88 · Feb 19, 2021

IBKR recently opened a Singapore office with a subsidiary registered in Singapore and regulated by Singapore financial regulator.

My question is ... Is the cash in IBKR SG (Singapore) account subjected to U.S estate tax for Singaporean clients of IBKR?

This is a matter of grave concern for clients with at least 7-digit sum in their IBKR SG account. I assume that the cash shouldn't be subjected to U.S estate tax since the cash is deposited with a Singapore-registered subsidiary. Can IB representatives confirm my assumption?

Can an IB representative answer this important question?

External tax consultants cannot answer this question because they do not know how IBKR structure the SG account.

HobbyTrading · Feb 19, 2021

Are you a US citizen?

learner88 · Feb 19, 2021

HobbyTrading said:
Are you a US citizen?

No. Singaporean.
For U.S citizens, I'm sure they have to pay estate tax regardless of whatever account wherever they are unless they quit U.S which many are unwilling to do. It's a great country.

HobbyTrading · Feb 19, 2021

learner88 said:
No. Singaporean.
For U.S citizens, I'm sure they have to pay estate tax regardless of whatever account wherever they are unless they quit U.S which many are unwilling to do. It's a great country.

Indeed, the IRS will follow US citizens independently of where they are.
You are not a US citizen. Why would you be worried about paying US estate tax?

learner88 · Feb 19, 2021

HobbyTrading said:
Indeed, the IRS will follow US citizens independently of where they are.
You are not a US citizen. Why would you be worried about paying US estate tax?

Because IBKR is a US broker and is subjected to U.S law. If your IRAS says tax foreigners' estate, then US companies have to follow the law.

This doesn't affect only IBKR but ALL U.S brokerages. This is something that foreigners need to be aware.

HobbyTrading · Feb 19, 2021

learner88 said:
Because IBKR is a US broker and is subjected to U.S law. If your IRAS says tax foreigners' estate, then US companies have to follow the law.

This doesn't affect only IBKR but ALL U.S brokerages. This is something that foreigners need to be aware.

If the US government will adopt such a law in the future then yes, that will apply to foreigners. But currently there is no such law. I am not a US citizen and have an account with IB US for a number of years. Other than US tax on dividend is IB not taking any US taxes from my account. There is no such thing as estate tax for foreigners at IB US.

learner88 · Feb 19, 2021

HobbyTrading said:
If the US government will adopt such a law in the future then yes, that will apply to foreigners. But currently there is no such law. I am not a US citizen and have an account with IB US for a number of years. Other than US tax on dividend is IB not taking any US taxes from my account. There is no such thing as estate tax for foreigners at IB US.

Bad news for you. A google search will tell you such a law does exit. Better make arrangements accordingly before you pass away.

ph1l · Feb 19, 2021

learner88 said:
My question is ... Is the cash in IBKR SG (Singapore) account subjected to U.S estate tax for Singaporean clients of IBKR?

For cash, no. For other, U.S. assets, yes because Singapore and the U.S. have no tax treaty between the two countries.
https://www.irs.gov/individuals/int...s-with-us-assets-must-file-estate-tax-returns

Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.-situated assets.

U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies. A nonresident’s stock holdings in American companies are subject to estate taxation even though the nonresident held the certificates abroad or registered the certificates in the name of a nominee.

Exceptions: Assets that are exempt from U.S. estate tax include securities that generate portfolio interest, bank accounts not used in connection with a trade or business in the U.S., and insurance proceeds.

Estate tax treaties between the U.S. and other countries often provide more favorable tax treatment to nonresidents by limiting the type of asset considered situated in the U.S. and subject to U.S. estate taxation. Executors for nonresident estates should consult such treaties where applicable.

learner88 · Feb 20, 2021

ph1l said:
For cash, no. For other, U.S. assets, yes because Singapore and the U.S. have no tax treaty between the two countries.
https://www.irs.gov/individuals/int...s-with-us-assets-must-file-estate-tax-returns

The link you provided doesn't explicitly say cash in U.S brokerage owned by foreigners is not subjected to estate tax. For U.S stocks, that is clear. U.S stocks owned by foreigners are subjected to estate tax.

ph1l · Feb 20, 2021

learner88 said:
The link you provided doesn't explicitly say cash in U.S brokerage owned by foreigners is not subjected to estate tax. For U.S stocks, that is clear. U.S stocks owned by foreigners are subjected to estate tax.

The link has

Exceptions: Assets that are exempt from U.S. estate tax include securities that generate portfolio interest, bank accounts not used in connection with a trade or business in the U.S

And securities that generate portfolio interest include:
https://international.schwab.com/us... that are exempt,or offshore mutual funds are

However, assets that are exempt for U.S. estate tax generally include securities that generate portfolio interest (e.g., U.S. treasury and U.S. government agency securities and certain U.S. corporate bonds and U.S. commercial paper), and dividend income from certain foreign corporations or offshore mutual funds are generally not subject to U.S. estate taxes.

So you could hold the cash in one of those. But a better solution is to avoid dying.