1. Introduction: US Assets and Hong Kong Families

The United States is the world's largest economy and a major destination for international investment. Many Hong Kong families hold US assets — from brokerage accounts with US-listed stocks, to real property in California or New York, bank accounts, retirement plans accumulated during years of work or study, and life insurance policies. When a Hong Kong resident dies with US-situated assets, the estate administration process is complicated by the fact that the US has no single, unified probate system. Instead, each of the 50 states (plus the District of Columbia) has its own probate laws, its own courts, and potentially its own estate or inheritance taxes — layered on top of the federal estate tax.

This complexity makes the US one of the most challenging jurisdictions for cross-border estate recovery. This guide provides Hong Kong families with a comprehensive roadmap to navigate every aspect of recovering US assets after death.

2. The US Probate System (State-by-State)

Unlike Hong Kong's centralised probate system, the US has 51 separate probate jurisdictions (50 states plus DC). Probate is the court-supervised process of validating a will, appointing a personal representative (executor or administrator), identifying and valuing assets, paying debts and taxes, and distributing the remaining estate to beneficiaries.

2.1 Types of Probate

• Formal probate: Full court supervision, required for contested estates or complex situations.
• Informal probate: Simplified process available in many states for uncontested estates, with minimal court involvement.
• Small estate procedures: Most states allow simplified or summary administration for estates below a certain value (typically $50,000 to $200,000, varying by state). Some allow a simple affidavit process for very small estates.
• Ancillary probate: When the deceased was domiciled outside the state (or outside the US), a separate probate proceeding may be needed in each state where they owned real property. This is called ancillary probate and is especially relevant for Hong Kong families.

2.2 The Uniform Probate Code

Some US states have adopted the Uniform Probate Code (UPC), which provides a standardised, simplified probate framework. States that have adopted the UPC in whole or in part include Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Dakota, South Carolina, South Dakota, and Utah. However, many major states (California, New York, Texas, Florida) have not adopted the UPC and maintain their own distinct probate systems.

2.3 Probate vs. Non-Probate Assets

A critical distinction in US estate law is between probate and non-probate assets:

3. Federal Estate Tax

The federal estate tax is imposed by the Internal Revenue Service (IRS) on the transfer of assets at death. It applies to both US citizens/residents and non-resident aliens, but with very different exemption amounts.

3.1 Exemption Amounts (2025–2026)

3.2 Tax Rate

The federal estate tax rate is a graduated rate that ranges from 18% to 40%, with the highest rate applying to taxable estates above $1 million (after the exemption). In practice, because of the high exemption for US citizens, most US estates are effectively taxed at 40%. For non-resident aliens with the $60,000 exemption, the graduated rates apply but quickly reach 40%.

3.3 What Are "US-Situated Assets" for NRAs?

• Included: US real property, tangible personal property located in the US, shares of US domestic corporations (including US-listed stocks), and certain US debt obligations.
• Excluded: Bank deposits (if not effectively connected with a US trade or business), life insurance proceeds, and shares of foreign corporations (even if the company has US operations).
• Important: US-listed stocks held through a Hong Kong brokerage account are still US-situated assets for estate tax purposes.

3.4 Filing Requirements

• Form 706-NA: Non-resident aliens with US-situated assets exceeding $60,000 must file Form 706-NA (United States Estate Tax Return for Non-Resident Aliens) with the IRS.
• Deadline: The return is due 9 months after the date of death. A 6-month extension can be requested using Form 4768.
• Tax payment: Federal estate tax must be paid when the return is filed. Interest and penalties apply to late payments.

3.5 The One Big Beautiful Bill Act (2025)

In 2025, the US Congress passed the One Big Beautiful Bill Act, which permanently extended the higher estate tax exemption (originally set to expire in 2026 under the Tax Cuts and Jobs Act). The exemption was raised to $15 million per individual for 2026 and will continue to increase with inflation. However, this increase applies only to US citizens and residents — the $60,000 NRA exemption remains unchanged.

4. State Estate and Inheritance Taxes

In addition to the federal estate tax, some US states impose their own estate or inheritance taxes with much lower exemption thresholds.

4.1 States with Estate Taxes (2026)

4.2 States with Inheritance Taxes

Five states impose an inheritance tax, where the tax is paid by the recipient of the inheritance (rather than by the estate):

• Kentucky: 0–16% (spouse and close relatives exempt)
• Maryland: 0–10% (also has estate tax — the only state with both)
• Nebraska: 1–15%
• New Jersey: 0–16% (spouse, children, and grandchildren exempt)
• Pennsylvania: 0–15% (spouse exempt; children pay 4.5%)

5. IRA, 401(k), and Retirement Account Rules

Retirement accounts are among the most common US financial assets and have specific rules governing what happens at the account holder's death. The SECURE Act (2019) and SECURE Act 2.0 (2022) significantly changed these rules.

5.1 Types of US Retirement Accounts

• Traditional IRA: Tax-deferred contributions; withdrawals taxed as ordinary income.
• Roth IRA: After-tax contributions; qualified withdrawals are tax-free.
• 401(k): Employer-sponsored retirement plan; similar tax treatment to Traditional IRA.
• 403(b) / 457(b): Retirement plans for non-profit and government employees.

5.2 Beneficiary Designation is Key

US retirement accounts pass to named beneficiaries, not through the will or probate. The beneficiary designation form on file with the financial institution controls who receives the funds. This is a critical point — if the deceased named a beneficiary, that person receives the account regardless of what the will says.

5.3 The 10-Year Rule (SECURE Act)

For account holders who died in 2020 or later, the SECURE Act introduced the 10-year rule for most non-spouse beneficiaries:

• The entire inherited IRA/401(k) must be fully withdrawn by the end of the 10th year following the account holder's death.
• Beginning in 2025, if the original owner had already begun taking Required Minimum Distributions (RMDs), non-spouse beneficiaries must take annual RMDs during the 10-year period (not just empty the account by year 10).
• If the original owner died before their RMD age, beneficiaries can withdraw in any pattern as long as the account is empty by year 10.

5.4 Eligible Designated Beneficiaries (EDBs)

Certain beneficiaries are exempt from the 10-year rule and can "stretch" distributions over their own life expectancy:

• Surviving spouse
• Minor children of the account owner (until they reach age of majority, then 10-year rule applies)
• Disabled individuals
• Chronically ill individuals
• Individuals not more than 10 years younger than the deceased

5.5 Spousal Options

A surviving spouse has the most flexible options:

• Treat as own IRA: Roll the inherited IRA into their own IRA and treat it as if they were the original owner.
• Remain as beneficiary: Keep it as an inherited IRA and take distributions based on their own life expectancy.
• Lump sum: Withdraw the entire amount (subject to income tax for Traditional IRAs).

6. Social Security Survivor Benefits

If the deceased worked in the United States and paid Social Security taxes, their surviving family members may be entitled to survivor benefits.

6.1 Eligibility

• Surviving spouse (age 60+): Must have been married for at least 9 months at time of death.
• Surviving spouse (age 50+): If disabled (disability within 7 years of spouse's death).
• Surviving spouse (any age): If caring for children of the deceased who are under 16 or disabled.
• Unmarried children (under 18): Or under 19 if full-time students, or any age if disabled before age 22.
• Dependent parents (age 62+): If they were receiving at least half their support from the deceased.

6.2 Benefit Amounts

The average Social Security survivor benefit was approximately $1,574 per month as of mid-2025.

6.3 One-Time Lump Sum Death Payment

A lump sum death payment of $255 may be paid to the surviving spouse or eligible children. This must be applied for within 2 years of the worker's death.

6.4 Applying from Overseas

Hong Kong residents can apply for US Social Security survivor benefits by contacting the nearest US Embassy or Consulate, or by contacting the Social Security Administration's Office of International Operations. The Federal Benefits Unit at the US Consulate General in Hong Kong can assist.

7. Recovering US Bank Accounts (FDIC)

US bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank, per ownership category. This insurance protects depositors if a bank fails, but the process for claiming a deceased person's bank accounts is governed by state law and individual bank policies.

7.1 General Process

7.2 Small Estate Affidavits

Many US states allow banks to release funds based on a small estate affidavit (without full probate) for estates below certain thresholds. Examples:

• California: Up to $184,500 (adjusted periodically)
• New York: Up to $50,000 (voluntary administration)
• Texas: Up to $75,000 (small estate affidavit)

8. Investments: SEC, FINRA, and Brokerage Accounts

If the deceased held US investment accounts (stocks, bonds, mutual funds, ETFs), these are typically held through brokerage firms regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

8.1 Claiming Brokerage Accounts

• Contact the brokerage firm's estate/bereavement department.
• Provide death certificate, Letters Testamentary/Administration, and executor identification.
• If the account had a TOD (Transfer on Death) registration, the named beneficiary can claim directly with a death certificate and identification.
• The firm will provide a date-of-death valuation for tax purposes.

8.2 SIPC Protection

The Securities Investor Protection Corporation (SIPC) protects investors if a brokerage firm fails. SIPC coverage is up to $500,000 per customer (including up to $250,000 in cash). This is separate from FDIC insurance.

8.3 Finding Unknown Accounts

If you suspect the deceased had US investment accounts but lack details:

• FINRA BrokerCheck: Search at brokercheck.finra.org to find any registered broker-dealers the deceased may have used.
• State Unclaimed Property: Each US state maintains an unclaimed property database. Search at missingmoney.com (a nationwide aggregator) or the individual state's unclaimed property website.
• SEC EDGAR: If the deceased was a company director or major shareholder, SEC filings may reveal holdings.

9. US Real Property Recovery

US real property is one of the most complex asset types to recover for overseas families, as it requires ancillary probate in the state where the property is located and is subject to both federal and potentially state estate taxes.

9.1 Ancillary Probate

If the deceased was domiciled in Hong Kong but owned real property in the US, the Hong Kong executor must open an ancillary probate proceeding in the US state where the property is located. This is a separate proceeding from any Hong Kong probate and requires:

• Filing a petition in the local probate court
• Appointing a local personal representative (some states require a US-resident agent)
• Providing authenticated copies of the Hong Kong death certificate and probate grant
• Publishing notice to creditors (required in most states)

9.2 FIRPTA Withholding

When US real property owned by a foreign person is sold, the buyer is required to withhold 15% of the gross sale price under the Foreign Investment in Real Property Tax Act (FIRPTA). This withholding is remitted to the IRS and serves as a prepayment of the seller's (estate's) US tax liability. The estate can file for a refund of any excess withholding.

9.3 Transfer to Beneficiaries

Instead of selling, the executor can transfer the property directly to beneficiaries through a deed. This still requires probate and may trigger transfer taxes in some states. The beneficiaries receive a "stepped-up basis" in the property (fair market value at date of death), which reduces future capital gains tax if they later sell.

10. State-Specific Rules: CA, NY, TX & More

10.1 California

• Probate threshold: Estates under $184,500 can use a small estate affidavit (no court needed). Above that, full probate is required.
• Probate fees: California has statutory fees based on estate value — 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and 0.5% of the next $15 million. Both the executor and attorney receive this amount.
• Community property: California is a community property state — assets acquired during marriage are generally owned 50/50 by both spouses.
• No state estate tax: California does not impose a state estate or inheritance tax.
• Timeline: California probate typically takes 9 to 18 months.

10.2 New York

• Probate threshold: Estates under $50,000 can use voluntary administration. Above that, full probate is required.
• State estate tax: New York imposes an estate tax on estates exceeding $7.35 million (2026). The tax rate ranges from 3.06% to 16%. New York has a "cliff" provision — if the estate exceeds the exemption by more than 5%, the entire estate becomes taxable (not just the amount above the exemption).
• Surrogate's Court: Probate in New York is handled by the Surrogate's Court in the county where the deceased was domiciled (or where property is located for ancillary probate).
• Timeline: New York probate typically takes 7 to 12 months, but can be longer in contested cases.

10.3 Texas

• Probate threshold: Small estate affidavit available for estates under $75,000 (excluding homestead and exempt property).
• Independent administration: Texas allows "independent administration," where the executor can act with minimal court supervision — faster and cheaper than many other states.
• Community property: Texas is a community property state.
• No state estate tax: Texas does not impose a state estate or inheritance tax.
• Timeline: Texas probate can be as quick as 4 to 6 months for independent administration.

10.4 Florida

• Summary administration: Available for estates under $75,000, or when the deceased has been dead for more than 2 years.
• Homestead protection: Florida's homestead exemption provides strong protection for the family home from creditors and restricts how the homestead can be devised.
• No state estate or income tax: Florida has no state estate tax and no state income tax.

11. Cross-Border Tax Issues with Hong Kong

11.1 No US-HK Estate Tax Treaty

Unlike its treaties with the UK, Canada, Australia, and many other countries, the United States does not have an estate tax treaty with Hong Kong. This means:

• Hong Kong residents receive only the statutory $60,000 NRA exemption (not the $15 million citizen exemption).
• There is no reduced withholding rate on inherited IRA distributions.
• There is no credit or deduction for Hong Kong taxes paid (since Hong Kong does not impose estate tax).

11.2 No US-HK Income Tax Treaty

There is also no comprehensive income tax treaty between the US and Hong Kong. This affects:

• IRA/401(k) distributions: 30% withholding applies to distributions to Hong Kong beneficiaries.
• Dividends and interest: 30% withholding applies to US-source dividends and certain interest payments.
• Rental income: US rental income from inherited property is subject to US income tax, with 30% withholding on gross rents (or the option to file a US tax return and pay tax on net rental income).

11.3 Strategies to Minimise US Estate Tax Exposure

• Hold US stocks through a foreign corporation: Shares of foreign corporations are not US-situated assets, even if the foreign corporation's assets consist of US stocks. However, this strategy has limitations and potential Passive Foreign Investment Company (PFIC) implications.
• Use US bank deposits: Bank deposits are generally exempt from NRA estate tax. Holding cash rather than stocks can avoid the tax.
• Life insurance: US life insurance proceeds are not US-situated assets for NRAs.
• Joint ownership with right of survivorship: This avoids probate but does not avoid estate tax — 100% of joint assets are included in the first-to-die's estate unless the survivor can prove their contribution.

12. Timeline and Costs Summary

Typical Timeline

Costs Summary

13. Practical Tips for Hong Kong Executors

14. Official Resources and Contact Details