US Federal Estate Tax 2026: OBBBA Raised Exemption to $15M
US federal estate tax applies to the worldwide estate of US citizens and US domiciliaries. 2026 exemption: $15,000,000 per individual (OBBBA — One Big Beautiful Bill Act — raised the exemption from the TCJA level and made it permanent; the TCJA sunset was repealed). Rate above exemption: 40% flat rate. Portability: a surviving spouse can 'port' the deceased spouse's unused exemption, effectively giving married couples a combined exemption of ~$30M. Non-resident aliens (NRAs) in the US: if you are not a US citizen or US domiciliary but own US-sited assets, a much lower $60,000 exemption applies. US real estate, US stocks, and US bank accounts held by NRAs are subject to US estate tax above this threshold. Estate tax treaties: the US has estate tax treaties with only ~15 countries (including UK, France, Germany, Australia, Japan, Canada, Netherlands) — these treaties may prevent double taxation and increase the NRA exemption.
UK Inheritance Tax 2026: Nil-Rate Band, RNRB, and Non-Dom Reform
UK Inheritance Tax (IHT) applies to the worldwide estate of UK-domiciled individuals and to UK-sited assets of non-domiciled individuals. Key rates and bands (2026): Nil-Rate Band (NRB): £325,000 — no IHT on estate up to this amount. Rate above NRB: 40%. Residence Nil-Rate Band (RNRB): additional £175,000 exemption for estates where the family home passes to direct descendants (children, grandchildren). Combined max exemption: £500,000 per person (NRB + RNRB). For married couples: up to £1,000,000 combined (with full portability). Reduced rate of 36%: if 10%+ of the estate (net of exemptions) is left to charity. Business Property Relief (BPR): 100% exemption for qualifying business property (AIM-listed shares, unquoted businesses, business assets used in trade). Agricultural Property Relief (APR): 100% exemption for qualifying agricultural property in use for agriculture. APR reform from April 2026: the 100% APR and BPR relief is capped at £1M combined per estate from April 2026 — a major change affecting agricultural landowners and business owners. UK non-dom IHT reform from April 2025 (see non-dom guide): long-term residents (10+ of prior 20 years) are now 'long-term residents' subject to worldwide IHT. Pre-April 2025 excluded property trusts: grandfathered — trust assets retain excluded property status even after the settlor becomes an LTR.
Countries with No Inheritance Tax: The Zero-IHT World
A growing list of developed economies have abolished inheritance or estate taxes — often citing double taxation concerns and capital flight. Countries with no IHT (as of 2026): Australia: abolished federal estate duty in 1979; no state-level inheritance taxes. Canada: no federal or provincial inheritance tax; estates pay capital gains tax at death (deemed disposition) but no separate death duty. Sweden: abolished Arvsskatt in 2005. Norway: abolished Arveavgift in 2014. Singapore: abolished estate duty in 2008. Hong Kong: abolished estate duty in 2006. New Zealand: no estate or gift duty. UAE: no inheritance tax (assets may be subject to Islamic succession rules under UAE law for Muslims). Portugal: no IHT between direct family members (spouses, children, parents) — Imposto do Selo 10% applies only to non-family beneficiaries. Most Middle Eastern countries: no inheritance tax on personal assets. Why this matters for estate planning: many wealthy individuals deliberately choose to be domiciled in zero-IHT jurisdictions at death (Australia, Canada, UAE, Singapore). For a UK domiciliary with a £10M estate: UK IHT at 40% = £3.7M on the amount above £1M. Changing domicile to Australia or Singapore eliminates this liability — but requires genuine domicile change (a complex legal concept distinct from tax residency).
European IHT: France, Germany, and Japan's High Rates
France (Droits de Succession): France has one of the world's most progressive inheritance tax systems based on the relationship between deceased and beneficiary. Between spouses / PACS partners: fully exempt (since 2007). Children and grandchildren: progressive rates — 5% (up to €8,072) to 45% (above €1,805,677) with a €100,000 per-child tax-free allowance per parent. Siblings: 35%/45% above a small exemption. Non-relatives: 60% flat rate (with minimal €1,594 exemption). Germany (Erbschaftsteuer): similar structure. Between spouses: €500,000 exemption; then 7%–30% progressive. Children: €400,000 exemption each; then 7%–30% progressive. Non-family: €20,000 exemption; 30%–50% rate. Business exemptions: 85% or 100% relief for qualifying business property transferred on death (Betriebsvermögen exemption) — subject to wage floor conditions maintained for 5 years. Japan (Sozoku-zei): Japan has one of the world's highest inheritance tax rates: top rate 55% on amounts above ¥600M (~$4M). Basic deduction: ¥30M + (¥6M × number of legal heirs). Spousal deduction: up to ¥160M or half the estate. Japan's IHT applies to worldwide assets of Japanese domiciliaries and to Japanese-sited assets of non-residents. Non-residents receive a lower exemption. The Japan exit from residency IHT tail: if you have been a Japanese resident for 10 of the prior 15 years, Japanese IHT applies to your worldwide assets for 3 years after leaving Japan.
Cross-Border Estate Planning: Double Taxation and Domicile
When a deceased person has assets in multiple countries, multiple countries may claim the right to tax the estate. Example: a UK citizen domiciled in the UK with US real estate and French bank accounts: UK IHT: applies to worldwide estate (UK domicile → worldwide scope). US estate tax: applies to US-sited assets (US real property, US stocks). France: may apply to French-sited assets. Without treaty protection: the same assets could be taxed by multiple countries simultaneously. Prevention: Estate tax treaties: the US has bilateral estate tax treaties with ~15 countries. The UK-US estate tax treaty provides relief through the credit method — whichever country taxes first gets the primary right; the other gives a credit. UK-France: no bilateral estate tax treaty — potential double taxation on French assets in a UK estate. Domicile planning: domicile (the legal concept of 'permanent home intention') determines which country has worldwide succession tax rights. Changing domicile is harder than changing tax residency — you must genuinely intend to remain in the new country permanently. Proper legal advice (a probate solicitor in both countries) is required for cross-border estates. EU Succession Regulation (Brussels IV): allows EU residents to elect their nationality's law to govern their estate succession — not the country of habitual residence. Relevant for estate distribution (who inherits what) but does not determine succession tax — that is still governed by each country's tax law and bilateral treaties.