Introduction
Passing significant wealth from one generation to the next is never a simple exercise. When that wealth spans two of the world’s most demanding tax systems — and when family members on both sides of the Atlantic hold different nationalities, different domiciles, and different relationships to the assets involved — the complexity multiplies rapidly. For an HNW family with roots in both the United Kingdom and the United States, the question of how to transfer a Belgravia property, a Manhattan apartment, an investment portfolio, or a family business to the next generation without triggering avoidable tax on both sides of the Atlantic is one of the most consequential planning challenges they face. Specialist US and UK tax advisors who understand both systems — and crucially, the interaction between them — are essential to getting this right. This guide explains the specific US and UK tax rules that govern generational wealth transfers, the trust structures available in both jurisdictions, and the most common planning mistakes made by families who rely on advisers with only one side of the picture. For specialist guidance, contact our US-UK cross-border tax advisory team at Jungle Tax.
What Are US and UK Tax Advisors?
The Definition in the Context of Generational Planning
US and UK tax advisors who specialize in generational wealth planning are dual-qualified practitioners capable of advising on the full spectrum of transfer taxes, trust structures, and reporting obligations that apply when an HNW family with connections to both countries plans to pass assets to the next generation. On the UK side, this means expertise in inheritance tax, the nil-rate band, the residence nil-rate band, the excluded property rules for non-UK-domiciled individuals, and the UK trust regime. On the US side, it means expertise in the federal gift tax, the federal estate tax, the generation-skipping transfer tax, the annual gift exclusion, the marital deduction, the charitable deduction, and the specific rules that apply to gifts and bequests involving non-US-citizen spouses and non-US beneficiaries. The IRS publishes a comprehensive overview of the US gift and estate tax system at:
https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes
Why Generational Planning Demands Dual-Jurisdiction Expertise
A UK-only adviser planning an inheritance tax strategy for a family with US connections will typically focus on the UK tools available: potentially exempt transfers, the seven-year gifting clock, the use of trusts, and the excluded property rules for foreign assets held by non-UK-domiciled individuals. What that adviser will not consider — because it falls outside their expertise — is whether any of those transfers triggers a US gift tax filing obligation, whether the trust structure chosen is transparent or opaque for US tax purposes, whether the trust is a grantor trust under US rules, or whether the assets transferred include US-situs property that is subject to US estate and gift tax regardless of the transferor’s nationality. Each of these questions is as important as the UK analysis, and getting either wrong can result in double taxation, exposure to penalties, or a structure that achieves its UK objective while creating an unforeseen US liability.
The Family Profiles That Need This Advice Most Urgently
The families who most urgently need specialist US and UK tax advisors for generational planning are those where: one or more family members is a US citizen or permanent resident; the family holds US-situs assets — including Manhattan property, US securities, or interests in US businesses — that are subject to US estate and gift tax regardless of who owns them; the family has established trusts under UK law that may have US reporting obligations; or the family is planning a significant intergenerational transfer and has advisers on only one side of the Atlantic. In any of these situations, the risk of an uncoordinated approach is acute.
Why US and UK Tax Advisors for Generational Planning Matter More Than Ever in 2026
The TCJA Sunset Is Imminent
The Tax Cuts and Jobs Act of 2017 temporarily doubled the federal estate and gift tax exemption to approximately $13.61 million per individual in 2024. This enhanced exemption is scheduled to revert to approximately $7 million after inflation adjustment at the end of 2025, unless Congress acts to extend it. For an HNW family with a combined US estate — including US-situs assets held by UK-resident members — that currently falls below the enhanced exemption, the sunset could bring a significant portion of that estate into taxable territory for the first time. The window to make large gifts that are sheltered by the current exemption closes at the end of 2025. Specialist US and UK tax advisors are working with HNW families right now to accelerate gifting strategies before the sunset takes effect.
UK Inheritance Tax Reform Affecting Non-Domiciled Families
From April 2025, individuals who have been UK residents for 10 or more years will pay UK inheritance tax on their worldwide assets — including US property — rather than only on UK-situs assets. For non-UK-domiciled family members who previously held their Manhattan apartment outside the UK IHT net, this change is material. Combined with the TCJA sunset on the US side, it creates a genuine risk that the same asset — a Manhattan apartment owned by a long-term UK resident US citizen — could be subject to both US estate tax and UK inheritance tax, with only partial treaty relief available. Our related guidance for HNW families with homes in both countries provides further detail on the property dimension of this exposure.
The Annual Gift Exclusion Opportunity Is Underused
The US annual gift tax exclusion allows a US person to give up to $18,000 per recipient per year in 2024 without using any of their lifetime exemption or filing a gift tax return. For a married couple, this doubles to $36,000 per recipient per year through gift-splitting. A family with three adult children and two grandchildren in the UK can transfer up to $180,000 per year completely free of US gift tax and without any filing obligation. Over ten years, this amounts to $1.8 million — a meaningful contribution to a generational transfer strategy. Yet this exclusion is consistently underused by UK-resident US families, most commonly because their UK advisers are not aware of it and their US advisers do not know enough about the family’s UK connections to recommend it proactively.
The US and UK Transfer Tax Rules Every HNW Family Must Understand
US Gift Tax — The Filing Obligation Even When No Tax Is Due
The US federal gift tax applies to transfers of property by a US person to another individual — including UK-resident family members — where the value of the gift exceeds the annual exclusion amount. Gifts exceeding $18,000 per recipient in 2024 must be reported on Form 709, even if no tax is ultimately due, because the lifetime exemption shelters the excess. Gifts to non-US-citizen spouses are subject to a separate annual exclusion of $185,000 in 2024 — significantly higher than the standard exclusion, but not unlimited. Many HNW families make substantial gifts to UK-based family members without filing Form 709, either because they are unaware of the obligation or because their UK adviser did not raise it. The IRS publishes annual updates to the gift tax exclusion amounts at:
https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes
The Generation-Skipping Transfer Tax
The generation-skipping transfer tax — commonly known as the GST tax — applies to transfers of property to beneficiaries who are two or more generations below the transferor, such as grandchildren. The GST tax rate is a flat 40 percent and applies in addition to any gift or estate tax on the same transfer. Each US person has a GST exemption equal to the federal estate tax exemption — currently $13.61 million in 2024 — that can be allocated to transfers to grandchildren and more remote descendants to shelter them from the GST tax. For an HNW family planning to pass wealth directly to UK-based grandchildren, the GST analysis is as important as the gift and estate tax analysis, and the two must be planned together.
UK Inheritance Tax and the Seven-Year Clock
Under UK inheritance tax rules, outright gifts from a UK-domiciled individual to another individual are potentially exempt transfers. If the donor survives for seven years from the date of the gift, the transfer falls entirely outside the UK estate. Gifts made within seven years of death are tapered — the IHT charge reduces progressively from the full 40 percent rate for gifts made in the three years before death to zero for gifts made between six and seven years before death. For an HNW family coordinating a gifting strategy across both the UK and US tax systems, the seven-year clock must be considered alongside the US gift tax annual exclusion and the lifetime exemption. A gift that is optimal from a UK perspective may trigger US gift tax reporting obligations, requiring careful management. The HMRC guidance on inheritance tax and gifts is published at:
https://www.gov.uk/inheritance-tax/gifts
How Specialist US and UK Tax Advisors Structure a Generational Wealth Transfer Plan
A properly coordinated generational transfer plan for an HNW family with US and UK connections follows a structured sequence. Each step must be completed with full visibility of both jurisdictions.
Step one — Family and asset mapping.
The adviser maps every family member — their nationality, residence, domicile, and relationship to the assets — alongside every asset and its situs in both jurisdictions. This establishes the starting point for both the UK IHT analysis and the US gift, estate, and GST analysis.
Step two — Exposure modeling.
Both the existing regulations and the post-TCJA sunset scenario are used to model the combined UK and US transfer tax exposure. This gives the family a clear picture of the cost of inaction — what the combined tax bill would be if no planning is undertaken — against which the cost of planning strategies can be evaluated.
Step three — Annual gifting strategy.
The adviser identifies the full annual exclusion capacity available to the family in both jurisdictions — including the US annual exclusion per recipient, the US marital exclusion for non-citizen spouses, and the UK annual exemption of £3,000 per donor — and designs a systematic gifting program that maximizes use of these exclusions without triggering unnecessary filing obligations.
Step four — Trust structure review.
Any existing trusts are reviewed for their treatment in both jurisdictions. A UK discretionary trust may be a grantor trust, a foreign grantor trust, or a non-grantor trust from a US perspective — and each classification has different US tax and reporting consequences. New trust structures are evaluated against both the UK and US rules before they are established.
Step five — Pre-sunset gifting plan.
Where the family has US-citizen members with significant estates, the adviser models the benefit of making large gifts before the TCJA sunset at the end of 2025. Gifts made under the current enhanced exemption are not clawed back if the exemption later reverts — the IRS has confirmed this through regulations. The HMRC Capital Gains Tax guidance on gifts is available at:
https://www.gov.uk/capital-gains-tax/gifts
Step six — Treaty claim planning.
The US-UK estate and gift tax treaty provides relief from double taxation on assets included in both the UK and US estates. The adviser ensures the treaty claim is correctly structured, documented, and filed in both jurisdictions so that the double taxation relief is fully obtained.
Step seven — Ongoing review.
The plan is reviewed annually against legislative changes in both jurisdictions and changes in the family’s circumstances — including births, marriages, relocations, and changes in asset values — that affect the transfer strategy.
Case Study — A Three-Generation HNW Family Planning Across Two Continents
The Hargreaves family spans three generations and has connections to both the UK and the United States. The patriarch, William, is a 74-year-old British national who has been UK-domiciled his entire life. His wife, Patricia, is a US citizen who moved to London forty years ago and has been a UK resident ever since. Their two adult children live in London; their three grandchildren include two who are dual US-British nationals. The family holds a Belgravia townhouse worth £9 million, a Manhattan apartment worth $5.5 million in Patricia’s name, a UK investment portfolio of £6 million, and interests in a family trading business worth approximately £4 million.
When the family approached Jungle Tax, their advisory arrangements were fragmented. William’s UK solicitor handled his will and the UK estate planning. Patricia’s New York attorney had prepared her will under New York law. No one had ever coordinated the two. Patricia had not filed a US return for twelve years. The Manhattan apartment had not been considered in any UK IHT planning. The grandchildren’s US citizenship had never been factored into the gifting strategy.
The review identified the following immediate priorities. Patricia’s US filing position required urgent attention — the Streamlined Foreign Offshore Procedures were available and appropriate for her non-wilful non-compliance. The Manhattan apartment was included in both Patricia’s US estate and William’s UK estate as an asset of a UK-domiciled individual through his interest in the matrimonial home. This position created double exposure requiring treaty relief planning. The two dual-national grandchildren created a GST planning dimension that had never been considered. And the family business raised UK business property relief questions that interacted with the US estate tax analysis.
Jungle Tax coordinated a full remediation and planning exercise: Patricia’s Streamlined submission was prepared and filed; a coordinated gifting program was established using the US annual exclusions, the enhanced lifetime exemption before the sunset, and the UK seven-year clock; the Manhattan apartment was reviewed for trust planning options; and the family business was structured to maximize both UK business property relief and US estate tax treatment. The combined planning exercise identified a potential reduction in the family’s aggregate UK and US transfer tax exposure of approximately £2.8 million, based on current asset values and tax rates. Contact our US and UK tax advisors at hello@jungletax.co.uk or 0333-8807974 if your family’s situation has similarities.
Common Mistakes to Avoid When Planning Across the US and UK Tax Systems
Treating the Seven-Year Clock as the Only Planning Tool
Many HNW families in the UK approach generational planning as a UK-only exercise focused on the seven-year potentially exempt transfer clock. For a family with US connections, this is insufficient. A gift that starts the seven-year clock in the UK may simultaneously trigger a US gift tax filing obligation on Form 709, use part of the donor’s US lifetime exemption, or — if the asset transferred is US-situs property — create a US gift tax liability regardless of the donor’s nationality. Planning the seven-year strategy without considering the US dimension can yield an optimal UK result but a costly US result.
Establishing a UK Trust Without a US Tax Analysis
A UK discretionary trust established for the benefit of US-person beneficiaries is a foreign trust from a US perspective. US beneficiaries have annual reporting obligations on Form 3520 when they receive distributions; the trust itself may have Form 3520-A obligations; and the trust’s income may be currently taxable to US beneficiaries under the throwback rules. A UK solicitor who establishes the trust without flagging these consequences — because they are outside the scope of their expertise — leaves the family with an ongoing US compliance burden that was entirely avoidable. The IRS guidance on foreign trusts with US beneficiaries is published at:
https://www.irs.gTCJA-enhanceds/international-taxpayers/fore,-trust-reporting-requirements-and-tax-conseq,uences
Missing the Pre-Sunset Gifting Window
The TCJA enhanced estate and gift tax exemption of approximately $13.61 million per individual expires at the end of 2025. Gifts made under the current enhanced exemption are not subject to clawback when the exemption reverts—for a US-citizen family member with a large estate, making substantial gifts before the sunset can permanently shelter assets from the reduced post-sunset exemption. Families who have not reviewed their gifting strategy in light of the sunset — and the vast majority of UK-resident US persons have not — are leaving a significant planning opportunity unused.
Ignoring the GST Tax on Gifts to Grandchildren
The generation-skipping transfer tax applies to transfers to grandchildren and more remote descendants at a flat rate of 40 percent, in addition to any gift or estate tax on the same transfer. Many HNW families who make gifts to grandchildren — including dual-national grandchildren in the UK — are unaware that the GST tax exists or that their annual exclusion gifts to grandchildren automatically carry GST exemption. Larger gifts to grandchildren require an explicit GST exemption allocation on Form 709, and a failure to allocate it correctly can result in a GST liability that would have been entirely avoidable with proper advice.
How Jungle Tax Can Help — Specialist US and UK Tax Advisors for Generational Planning
Jungle Tax is a specialist US-UK cross-border tax advisory firm with deep experience in generational wealth planning for HNW families with connections to both the United Kingdom and the United States. Our team includes IRS Enrolled Agents and UK-qualified tax practitioners with specific expertise in the US gift tax, the generation-skipping transfer tax, the US-UK estate and gift tax treaty, UK inheritance tax, and the trust structures available in both jurisdictions. We understand the interaction between these systems — not just one side of it.
Our generational planning engagements begin with the full family and asset mapping exercise described in this guide, followed by an exposure model that quantifies the combined UK and US transfer tax cost under both current and post-sunset scenarios. We then design a coordinated transfer strategy that uses the annual exclusions, the lifetime exemptions, the seven-year clock, and — where appropriate — trust structures that are correctly analyzed in both jurisdictions before they are established. We work closely with UK solicitors and US attorneys when specific legal documentation is required, ensuring that tax advice and legal implementation are fully aligned. You can find further information on our US expat tax advisory service page, or read our related guide on US and UK tax advisors for HNW families with dual-country property.
If your family has connections to both the UK and the United States and you have not reviewed your generational transfer strategy in light of the TCJA sunset and the UK non-domicile reform, please contact our US and UK tax advisors at hello@jungletax.co.uk or call 0333-8807974 today.
Conclusion
For HNW families with connections to both the United Kingdom and the United States, generational wealth planning requires specialist US and UK tax advisors who understand both the US gift, estate, and generation-skipping transfer tax system and the UK inheritance tax system — and, critically, their interaction. The three most important points from this guide are these: the TCJA enhanced exemption expires at the end of 2025 and the window to lock in large gifts under the current rules is closing; UK trusts with US beneficiaries create US reporting obligations that a UK-only solicitor will not flag; and the generation-skipping transfer tax on gifts to grandchildren is one of the most consistently overlooked transfer taxes in cross-border family planning. Acting now, with the right specialist advisers, protects generational wealth from avoidable erosion on both sides of the Atlantic.
Speak to a Jungle Tax adviser today — contact us at hello@jungletax.co.uk or visit our US-UK tax advisory service page to learn more.
