Situs Assets Explained: Inheritance Tax and Estate Planning

For high-net-worth individuals with assets across multiple jurisdictions, understanding situs is an important part of international inheritance and estate planning. Property, company shares, bank accounts and investment bonds can each be subject to different rules, potentially creating inheritance tax exposure in more than one country.

This article explains how the situs of different assets is determined, its relevance under the UK’s long-term residence (LTR) inheritance tax regime, and the considerations involved in structuring a cross-border estate.

What Is Asset Situs?

An asset’s legal situs does not necessarily correspond to its physical location or the owner’s country of residence. The distinction is especially relevant to intangible assets, such as shares, bank deposits and investment bonds, whose situs may depend on where legal rights are registered or enforceable.

You may hold assets in jurisdictions where you have never lived or been resident.

Different countries may therefore claim taxing rights over the same asset, potentially resulting in double or even triple taxation because each country applies different tax criteria.

Consider the estate of a US citizen who owns UK-situs assets that pass to a French resident. In this scenario, all three countries may have taxation rights:

• The US can tax the estate due to the deceased’s citizenship.
• The UK can claim tax on UK-situs assets, subject to applicable exemptions and treaty provisions.
• France can impose inheritance tax on the beneficiary, depending on their residence history and the applicable French rules.

Such conflicts may be addressed through estate and inheritance tax treaties, although the outcome can vary depending on specific treaty provisions, residency details and available relief mechanisms. Where no relevant treaty applies, domestic double taxation relief may still be available.

Situs is therefore an important consideration in international estate planning, but it does not determine every tax or succession outcome on its own. The deceased’s personal tax status, the beneficiary’s circumstances and the laws of the countries involved can all affect the result.

How Is Asset Situs Determined?

Although countries determine asset situs differently, some general principles are shared across jurisdictions, particularly for real estate and tangible property. The rules for intangible assets are less consistent and may depend on domestic legislation and applicable tax treaties.

The rules differ according to the type of asset. The following table summarises the general considerations for commonly held assets.

Asset Situs by Asset Type

Real Estate

The situs of real estate is generally determined by the physical location of the land or property.

This principle is known as lex situs, and it means that the jurisdiction where property is located will generally have the right to levy applicable:

• Property taxes
• Transfer taxes
• Estate or inheritance taxes

To manage potential tax exposure on property, some individuals hold real estate through offshore structures. However, the effectiveness of this strategy can vary greatly between jurisdictions.

The UK and the US are representative examples of countries where offshore ownership requires careful consideration. In the UK, specific look-through rules can bring interests in overseas structures holding UK residential property within the scope of IHT. In the US, estate tax treatment depends on how the property is owned and the legal classification of the holding structure.

If you plan to utilise offshore vehicles, you must therefore examine the tax rules of the countries where the real estate they hold is located, rather than assuming that a wrapper exempts you from taxation.

Tangible Movable Property

In contrast to real estate, tangible movable property (vehicles, antiques, art, etc.) does not have a fixed geographical location. Rather, situs is generally determined according to where such property is physically located at the time of death. Its origin typically does not determine situs, which matters where valuable movable assets are regularly transferred between countries.

For instance, UK-situs chattels are generally within the scope of IHT, but certain assets temporarily present in the UK may qualify for excluded-property treatment if the relevant statutory conditions are satisfied.

This may be relevant if you bring an item to the UK for activities such as:

• Repair
• Restoration
• Exhibition

Such activities do not automatically establish an exemption. The treatment depends on the asset’s circumstances and the applicable legislation.

Given the specific nature of these rules, it may be prudent to consult a professional if you have substantial movable property that tends to change jurisdictions.

Shares in UK and Overseas Companies

Determining the situs of shares can be complex, particularly in international portfolios. In the UK, situs is generally determined by the location of the share register through which ownership is legally established or transferred, although it may be impacted by factors such as:

• The existence of a branch register
• Overseas branch registers
• The register’s legal effectiveness

For US federal estate tax purposes, shares issued by US domestic corporations are generally treated as US-situs assets, regardless of where the share register is kept.

Other jurisdictions may use different criteria, including a company’s place of incorporation, registered seat or other legal characteristics.

For example, an individual living in the UAE might own shares in a UK company, a US corporation and an Irish investment fund. Each holding may have a different situs for inheritance or estate tax purposes, despite being held through the same investment platform.

The distinction also matters for collective investment funds, ETFs and depositary receipts. Their situs cannot necessarily be determined by the location of the underlying investments or the exchange on which they are traded.

For collective investment funds and ETFs, the fund’s domicile and legal structure may be relevant to determining situs. A fund domiciled in one jurisdiction can hold investments in several others, but the situs of the investor’s holding does not necessarily follow the location of those underlying assets. The applicable rules must be considered for the specific fund or investment vehicle.

If you hold shares in multiple jurisdictions, specialist advice can help establish the relevant tax obligations. Financial advisers at Titan Wealth International can review your portfolio to help identify the relevant asset situs rules, outline your obligations and provide personal recommendations for tax-efficient planning.

Cash and Bank Accounts

The situs of physical cash is generally determined by where the money is physically located. However, bank accounts introduce a certain degree of complexity because a deposit is legally a debt owed by the bank to the depositor.

In the UK, a bank account’s situs generally depends on where the debt is legally recoverable. The location of the relevant branch can be important, although the account terms and banking arrangements may affect the outcome.

The US applies different rules for estate tax purposes and generally excludes certain qualifying bank deposits held by non-resident non-citizens from US federal estate tax. This treatment does not necessarily extend to brokerage balances, money-market investments or other cash-like assets.

Other countries may apply different rules based on the financial institution, the account arrangement or the location where the debt is enforceable.

For internationally mobile investors, the location of an account, the currency in which it is denominated and the legal situs of the deposit should not be assumed to be the same.

Life Assurance Policies and Investment Bonds

The situs of life policies and investment bonds depends on the legal rights established under the policy and the rules of the relevant jurisdiction.

Factors such as where the proceeds are expressed to be paid, the insurer’s legal identity and where the contractual obligations are enforceable may affect the determination.

If you invest in offshore bonds or an international wrapper to hold assets, the policyholder generally owns contractual rights under the insurance policy rather than directly owning the underlying investments.

HNW investors may therefore consider policies issued in jurisdictions such as:

• Isle of Man
• Jersey
• Ireland

An offshore policy may have a different situs from the investments held within it. However, the policy’s foreign situs does not automatically remove it from inheritance tax or other tax liabilities. The policyholder’s residence status and the applicable tax rules remain relevant.

Although look-through rules do not apply uniformly across insurance structures, the policy’s design and the rights available to the policyholder can affect its tax treatment.

For instance, a policy that allows the policyholder to select specific individual investments may be classified as a personal portfolio bond under UK tax rules and become subject to significant income tax charges, regardless of its foreign situs.

Partnership Interests

The situs of a partnership interest depends on its legal structure and the rules of the relevant jurisdiction. Factors that may affect its treatment include:

• Domicile or residence of partners
• Jurisdiction of the business involved in a partnership
• Location where the business is primarily carried out

The partnership’s legal form and the nature of the partner’s ownership rights may also affect the outcome.

Look-through approaches may also apply in certain circumstances. These involve examining the underlying partnership assets rather than treating the partnership interest as a wholly separate intangible asset.

However, this treatment should not be assumed for every partnership. The legal ownership structure and applicable tax legislation must be considered before determining the situs of the interest.

How Does Asset Situs Affect UK Inheritance Tax?

The interaction between asset situs and UK inheritance tax depends on three considerations: long-term residence status, the post-departure IHT tail period and the treatment of UK-situs assets.

Long-Term Residence and Worldwide IHT Exposure

In April 2025, the UK replaced the domicile-based IHT framework with a system based on long-term residence (LTR). The reform changed the scope of UK IHT on foreign assets.

Under the previous regime, individuals who were neither domiciled nor deemed domiciled in the UK were generally only subject to IHT on UK-situs assets, subject to specific exceptions. By contrast, the current IHT rules bring worldwide assets within the scope of UK IHT where an individual is considered a long-term UK resident, subject to applicable exemptions and reliefs.

An individual is generally considered an LTR if they have been a UK tax resident for at least 10 of the previous 20 tax years. This includes individuals who have been resident for 10 consecutive tax years.

Specific exceptions and transitional provisions may apply, particularly to individuals whose residence and domicile circumstances span the April 2025 reforms.

Your UK residence history therefore needs to be considered alongside the situs of your assets when undertaking inheritance tax planning.

This approach is particularly relevant for internationally mobile families with frequent stays in the UK, who may inadvertently become UK tax resident in a given tax year under the statutory residence test (SRT).

How Long Does UK IHT Exposure Continue After Leaving?

Departure from the UK does not immediately remove foreign-situs assets from the scope of IHT. Rather, they may remain in scope for the duration of the post-departure “tail” period and may be taxed regardless of where you reside at the time of death.

The specific duration of the tail period depends on the number of years of UK residency within the relevant 20-year period. The minimum duration is three consecutive tax years of non-residence for individuals with 10–13 years of UK residency, after which it increases by one year for each additional year of residence, up to a maximum of 10 years.

For instance:

These are the standard statutory periods. Transitional provisions may produce a different outcome for certain individuals who left the UK around the introduction of the LTR regime.

If UK residency is resumed during the tail period, worldwide IHT exposure may be extended. The effect depends on the individual’s residence history and the applicable statutory rules, rather than an automatic reset of the original period.

If possible, managing your residency may be a more practical way to address worldwide IHT exposure than attempting to modify asset situs, although the wider tax consequences of relocating must also be considered.

For IHT on an individual’s estate at death, the deceased’s long-term residence status is generally more relevant than the beneficiaries’ residence. However, beneficiary circumstances may affect exemptions, treaty relief or inheritance taxes imposed by other countries.

Are UK-Situs Assets Taxable After Leaving the UK?

The LTR regime principally changes the treatment of foreign assets, while UK-situs assets generally remain within the scope of IHT regardless of your residency. This is a continuing feature of UK IHT regulations and should be considered separately from residency-based tax planning.

The distinction becomes particularly important once an individual’s worldwide IHT exposure under the LTR regime has ended. At that point, foreign-situs assets may fall outside UK IHT, while UK-situs assets can remain within scope.

Although you may be able to hold certain assets through offshore structures (preferably under professional guidance due to the related complications), depending on your circumstances, relevant reliefs and exemptions may include:

• Nil-rate bands (the standard £325,000 nil-rate band, with an additional residence nil-rate band of up to £175,000 where the qualifying conditions are met)
• Spousal exemptions (for both inheritance and lifetime gifts, subject to relevant cross-border restrictions)
• Excluded property (e.g., certain qualifying UK government securities held by eligible non-UK residents)

The residence nil-rate band generally requires a qualifying residence to pass to direct descendants and is reduced for estates exceeding £2 million. It should therefore not be treated as an automatic additional allowance.

Similarly, spouse or civil partner exemptions may be restricted where the parties have different long-term UK residence statuses.

How Does Asset Situs Affect Inheritance and Estate Taxes Overseas?

An estate may face inheritance or estate tax in more than one country when those countries apply different residence and situs rules. You need to consider how the relevant tax frameworks interact to understand your tax obligations and identify available reliefs.

For instance, if you are a UK resident with US connections, the US estate tax rules for non-residents who are not US citizens are particularly relevant.

For deaths in 2026, the US federal estate tax basic exclusion amount is $15 million for US citizens and US estate tax domiciliaries. Estates of non-residents who are not US citizens generally have a $60,000 US-situs asset filing threshold and a substantially more limited domestic estate tax credit, although applicable treaties may provide additional relief.

US estate tax domicile is also distinct from income tax residence. An individual’s status must therefore be assessed under the relevant estate tax rules.

Meanwhile, the UK may also tax US-situs assets if the owner is an LTR. In such scenarios, double taxation may be reduced through applicable estate tax treaties or domestic relief provisions.

The UK has signed estate or inheritance tax treaties with several countries, including the US, Switzerland and Ireland. Depending on the treaty, these agreements may govern matters such as:

• Asset situs rules
• Domicile or residence rules relevant to estate taxation
• Estate and inheritance tax relief mechanisms

Treaty relief is not available in every case, and its scope differs between agreements, so you must familiarise yourself with the specific provisions of each treaty. Income tax treaties should not be assumed to provide equivalent protection for inheritance or estate taxes.

If no relevant treaty exists, unilateral relief may be available. This allows a credit against UK IHT in certain circumstances where qualifying foreign tax is also charged on the same property or transfer.

Unlike treaty relief, unilateral relief is provided under domestic legislation and is subject to limitations such as:

• Credit amount caps, generally preventing relief from exceeding the relevant UK IHT liability
• Requirements concerning the nature of the foreign tax
• Rules determining whether the foreign tax and UK IHT relate to the same property or transfer

Where jurisdictions apply different situs rules, specific apportionment provisions may affect the available credit.

Asset Situs and Cross-Border Estate Planning

A review of asset situs should form part of cross-border estate planning, especially once worldwide IHT exposure under the LTR regime has ended and foreign assets may fall outside the scope of UK IHT.

At this point, you should clearly separate UK-situs and foreign assets to assess the potential IHT liability. The review should be updated when residence status, ownership arrangements or the composition of the estate changes.

For example, an individual who has ceased to be an LTR might still hold UK company shares alongside overseas property, foreign bank accounts and offshore investment bonds. The UK shares may remain within the scope of IHT, while the foreign assets may no longer be exposed to UK IHT, depending on their legal situs and the applicable rules.

As other countries may also tax these assets, it is prudent to identify and review available bilateral treaties and domestic relief mechanisms.

Claiming available tax relief may be more practical than trying to directly change an asset’s legal situs, given that doing so is typically complex and depends on factors such as:

• Nature of the asset
• Ownership structure
• Applicable legislation

Changing ownership or restructuring an investment may also trigger other tax liabilities, including capital gains tax or transfer taxes. Such changes should therefore be considered in the context of the overall estate plan.

You should pay particular attention to structures that have historically been used in international estate planning, including offshore companies, insurance arrangements and trusts. Their treatment depends on the legal rights involved and the relevant tax rules, so the use of an overseas structure does not necessarily remove an asset from the scope of inheritance or estate taxes.

Do Trusts Change Asset Situs?

Trusts are another important consideration in cross-border estate planning, particularly for HNW individuals who hold assets in multiple jurisdictions.

However, placing an asset into a trust does not automatically change its situs. A UK property, for example, does not become a foreign-situs asset simply because it is held through an offshore trust.

The inheritance tax treatment of trusts depends on several factors, including:

• The situs and nature of the underlying assets
• The trust structure and ownership arrangements
• The settlor’s long-term UK residence status
• Applicable legislation and transitional provisions

Under the UK LTR regime, the settlor’s residence status can affect whether foreign assets held in trust qualify as excluded property. For relevant-property trusts, foreign assets may move into or out of the IHT regime as the settlor’s LTR status changes, subject to applicable transitional provisions.

Depending on the circumstances, trust assets may also be subject to entry charges, ten-year anniversary charges or exit charges.

Special transitional provisions may apply to certain trusts established before the April 2025 reforms, including protections relevant to the IHT treatment of assets on the settlor’s death.

As a result, a trust that was established when the settlor was not UK domiciled should not automatically be assumed to retain the same IHT treatment indefinitely.

Trusts can support succession planning, but their inheritance tax treatment must be assessed separately, taking account of the underlying assets, the settlor’s circumstances and the applicable rules in each relevant jurisdiction.