Sunila Bali, Esq.

At Seva Law, we proudly serve the vibrant and diverse communities of Northern Virginia, including many Indian-American families with financial and familial ties to both the United States and India. For those navigating cross-border estate planning, understanding the legal and tax implications is essential to protecting your legacy and easing the administrative burden on your heirs.

If you are a Virginia resident and U.S. citizen with assets in India—such as real estate, bank accounts, or business interests—this guide outlines the key considerations you should keep in mind when planning your estate.

1. India Does Not Impose an Estate or Inheritance Tax

India does not currently levy estate or inheritance taxes. The Indian Estate Duty Act was repealed in 1985, which means assets passed on to heirs in India are generally not taxed simply due to inheritance.

This can simplify matters for beneficiaries based in India, but it does not eliminate your own estate and tax obligations in the United States.

2. Your Worldwide Estate Is Subject to U.S. Federal Estate Tax

As a U.S. citizen or resident, your entire global estate is subject to federal estate tax. This includes:
– Real estate located in India
– Bank accounts, stocks, and mutual funds held in Indian institutions
– Ownership interests in Indian businesses

In 2025, the federal estate tax exemption is $13.99 (as of 2025) million per individual. If your estate exceeds this threshold, the excess may be taxed at a rate of up to 40%.

There is no estate or inheritance tax treaty between the U.S. and India, so estate planning involving Indian assets requires careful coordination.

3. No U.S.–India Estate or Inheritance Tax Treaty

India does not have a treaty with the U.S. covering estate or inheritance taxes. This means there is no mechanism in place to prevent potential double taxation or resolve conflicts about estate tax jurisdiction.

While India won’t tax inheritances, your estate must still comply with U.S. tax reporting and pay estate taxes on global assets where applicable.

4. Income Taxation and Coordination Between the U.S. and India

There is a U.S.–India Income Tax Treaty, which is a separate agreement that allows for coordination of income taxes between the two countries. This treaty is important if you have Indian assets that produce income, such as:

– Rental income from property
– Interest from Indian bank accounts
– Dividends from Indian companies

The treaty allows U.S. taxpayers to claim a foreign tax credit for taxes paid to India on that income, but you must still report this income on your U.S. tax return.

Be aware of foreign financial account reporting requirements:

– FBAR (FinCEN Form 114): Required if you have foreign accounts with an aggregate value over $10,000

– FATCA (Form 8938): Required for specified foreign assets if you meet certain thresholds

5. Virginia Does Not Impose Estate or Inheritance Tax

Virginia does not impose its own estate or inheritance tax. This makes it a more favorable jurisdiction for residents when planning their estates. However, that does not reduce your federal tax obligations or the complexities of handling overseas assets.

6. Dealing with Assets in India: Consider Planning During Your Lifetime

Even if your U.S. estate planning is in order, assets in India can pose a challenge for your heirs, especially if they are unfamiliar with Indian legal and financial systems.

Some common complications include:
– Difficulties navigating Indian property laws
– Delays in probate and title transfers
– Currency control restrictions on repatriating funds to the U.S.
– Limited access or understanding of local institutions

To minimize these challenges, consider:
– Selling or gifting property before death
– Adding joint holders or designated nominees
– Creating a Will in India, coordinated with your U.S. Will
– Consulting Indian counsel for transfer and inheritance issues

7. Estate Planning Tips for Cross-Border Families

If you are a Virginia resident with ties to India, take these steps to protect your legacy:
– Create a complete estate plan in the U.S.
– Incorporate foreign assets into your U.S. documents
– Ensure compliance with foreign reporting rules (FBAR, FATCA)
– Consult attorneys in both countries
– Consider creating separate Wills for U.S. and Indian assets, drafted to avoid conflict

Cross-border estate planning can be complex, especially when it involves foreign legal systems, U.S. tax rules, and differing inheritance customs. At Seva Law, we understand the nuances that come with international families and global assets, and we’re here to help you navigate them with confidence.

Contact Seva Law at www.sevalaw.org or call (571)-665-0002 to schedule a confidential consultation.

Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. For advice tailored to your individual situation, please contact a qualified estate planning attorney.