The Transfer Certificate: When a US Custodian May Release a Nonresident Decedent’s Assets
Treas. Reg. § 20.6325-1, the USD 60,000 filing threshold, and why a convention that removes the tax leaves the clearance requirement in place.
By Caroline Esche Ashford, PhD, JD · Law stated as of October 15, 2026
In brief.
- The transfer certificate is a document the IRS issues; it is not a return the estate files.
- A holder of US-situs property of a nonresident decedent avoids liability for the estate tax only by obtaining the certificate before the transfer, unless an exception applies.
- A certificate is required where Form 706-NA must be filed: where the US-situs gross estate, increased by adjusted taxable gifts, exceeds USD 60,000. The threshold has not been adjusted since 1988.
- The threshold is measured under the situs rules of the Code, not under the allocation of a convention.
- A convention that eliminates the tax does not eliminate the return or the certificate.
Part I. What the certificate is
The regulation is addressed to corporations and their transfer agents, banks, trust companies and other custodians that hold property of a nonresident decedent. They can avoid liability for taxes and penalties only by demanding and receiving a transfer certificate before they transfer that property.1 The liability is personal: a person who receives or holds property of the estate is liable for unpaid estate tax up to the value of that property.2
Part II. When it is required
A certificate is required where the estate must file Form 706-NA. The return is required where the value of the US-situs gross estate at death, increased by adjusted taxable gifts and the specific exemption used for gifts in late 1976, exceeds USD 60,000.3 The figure dates from 1988 and is not indexed.
The test uses the situs rules of the Code. Shares of US corporations count, including shares of US mutual funds and exchange-traded funds, wherever the account is kept;4 so does cash held with a broker, which is not a bank deposit. Deposits with US banks that are not connected with a US trade or business do not count.5
| Account of a nonresident decedent | Form 706-NA | Certificate | US estate tax |
|---|---|---|---|
| US shares of USD 200,000; decedent domiciled in a domicile-type treaty country | Required | Required | Often none under the convention |
| US bank deposits of USD 500,000 only | Not required | Not required | None |
| US shares of USD 50,000; no lifetime gifts | Not required | Statement of facts | None |
| Cash of USD 70,000 held with a broker | Required | Required | Depends on the convention |
Part III. A convention reduces the tax, not the procedure
A convention can reduce the US tax, often to zero, but the treaty position is claimed on the return and disclosed,6 and the custodian waits for the certificate in the same way. US shares of USD 200,000 owned by a decedent domiciled in a domicile-type treaty country therefore require a Form 706-NA, although the convention eliminates the tax on them.
Part IV. The two routes to the release
Where a return is required, the estate files Form 706-NA, pays any tax and then requests the certificate; the IRS issues it once it is satisfied that the tax has been fully discharged or provided for.7 The return is due nine months after death, and an extension of the time to file does not extend the time to pay.8 Where no return is required, the regulation dispenses with the certificate, and a custodian that has no information to the contrary may rely on a statement of facts from the executor showing that none is required.
Part V. The release file
The custodian’s file shows the decedent’s status, the situs schedule, the proof of authority with its authentication and translation, the letter of direction, the tax forms of the estate and the recipients, and either the certificate or the statement of facts.
- Determine the status
Citizen, domiciliary or nonresident who was not a citizen.
- Prepare the situs schedule
Position by position, under the Code’s rules.
- Apply the threshold
USD 60,000, increased by adjusted taxable gifts.
- Choose the route
Certificate after the return, or statement of facts below the threshold.
- Release and document
Only to the persons entitled under the law of the decedent’s last domicile.
The firm is led by attorney Caroline Esche Ashford, PhD, JD. A graduate of Columbia University Law School, her practice focuses on international estate planning and the cross-border taxation and administration of estates and trusts, including the release of US-situs assets of nonresident decedents. Dr. Ashford is also licensed to practice law in Germany. She advises in French and German as well as English.
Notes
- Treas. Reg. § 20.6325-1(a). Return to text
- I.R.C. § 6324(a). Return to text
- I.R.C. § 6018(a)(2). Return to text
- I.R.C. § 2104(a). Return to text
- I.R.C. § 2105(b)(1). Return to text
- I.R.C. § 6114. Return to text
- Treas. Reg. § 20.6325-1(c). Return to text
- I.R.C. §§ 6075(a), 6081. Return to text
This article is general information as of the date stated and is not legal or tax advice. The application of the rules and conventions described depends on the facts of each case.
