When a loved one passes away owning U.S. assets but living abroad, families often find themselves facing an unexpected roadblock: frozen accounts, unanswered emails from banks, and months of delay before funds can be released. The key to unlocking those accounts lies in one often-overlooked document—the Federal transfer certificate estate approval issued by the IRS.
This guide explains what a Federal Transfer Certificate is, why it’s required, and how New York families with international ties can avoid the costly mistakes that delay or derail estate settlements. Whether you’re an executor managing a cross-border estate or a family member trying to access assets, this article will help you understand the process and plan for a smoother transition.
What Is a Federal Transfer Certificate?
A Federal Transfer Certificate (IRS Form 5173) is an official document issued by the Internal Revenue Service confirming that all U.S. estate tax obligations have been satisfied for a deceased nonresident or non–U.S. citizen who owned U.S. assets.
Without this certificate, U.S. financial institutions—including banks, investment firms, and brokers—cannot legally release or transfer funds held in the decedent’s name. Even if the estate owes no tax, institutions often require the certificate to protect themselves from potential IRS liability.
In short: no certificate, no access. For families dealing with assets like New York real estate, brokerage accounts, or U.S. stock holdings, the certificate serves as the IRS’s “green light” to distribute funds safely and legally.
What Happens Without a Federal Transfer Certificate?
Mistakes and omissions during this process can cause months—or even years—of unnecessary delay. Here are some of the most common issues:
1. Frozen U.S. Accounts
If the decedent held U.S. brokerage accounts or stocks, custodians must confirm that estate taxes have been cleared before releasing assets. Without a Federal Transfer Certificate, these accounts stay frozen, preventing heirs from selling, transferring, or even accessing dividends.
2. Missed or Misfiled Estate Tax Returns
The IRS won’t issue the certificate until it receives and processes Form 706-NA (U.S. Estate Tax Return for Nonresidents). Families frequently make these mistakes:
- Assuming the estate is too small to require a filing.
- Misreporting where assets are located (“U.S. situs”)—a common problem with global investment platforms.
- Skipping appraisals or documentation, leading to review delays.
3. Double Taxation Between Countries
When U.S. and foreign filings aren’t coordinated, executors may pay taxes twice. The transfer certificate process helps prevent this by aligning how each country defines taxable property and applying any relevant treaty protections.
4. Ownership Confusion
Joint accounts and nominee-held assets are often flagged during IRS review. Without clear records, institutions may classify them as fully taxable, blocking asset transfers until ownership is proven.
How Long Does It Take to Get a Federal Transfer Certificate?
The timeline depends on the accuracy and completeness of your submission.
| Step | Typical Timeline | Notes |
| File Form 706-NA (U.S. Estate Tax Return) | 0–9 months after death | Must be complete before the certificate can be requested. |
| IRS Review Period | 6–12 months | Delays are common if documents or valuations are missing. |
| Issuance of Federal Transfer Certificate (Form 5173) | 9–18 months total | Faster for smaller, well-documented estates. |
Pro tip: The IRS will not start reviewing your file until all required forms, appraisals, and tax payments are received. Missing a single document can restart the entire clock.
Can Families Avoid or Speed Up the Process?
1. Plan Ahead for Global Estates
For international families with U.S. assets, advance planning makes all the difference.
- Consider holding U.S. securities through a non-U.S. entity or trust to minimize U.S.-situs exposure.
- Keep organized records of ownership and valuations.
- Designate a U.S.-based executor who can communicate directly with the IRS.
This kind of cross-border planning is especially important for families living abroad but maintaining investments or property in New York.
2. File Early and Completely
Submitting Form 706-NA within six to nine months of death helps shorten the timeline. To avoid rejections or restarts, include:
- Certified appraisals for real estate and securities.
- Proof of domicile outside the U.S.
- Any relevant tax-treaty certificates of residence.
Incomplete filings are the most common reason for lengthy delays—something that can be avoided with an experienced estate planning attorney.
3. Use Tax Treaty Benefits
The U.S. has estate tax treaties with countries such as Canada, the U.K., France, Germany, and Japan, which may:
- Reduce or eliminate estate taxes for smaller estates.
- Offer credits to prevent double taxation.
- Clarify whether certain financial assets count as U.S.-situs property.
Properly citing these treaty benefits in the estate return often expedites the IRS review.
4. Consider “De-Situs” Structuring
For clients who are still living, one way to bypass this process entirely is to structure ownership so assets are not technically U.S.-situs. This might mean holding stocks through a non-U.S. holding company or using a properly structured trust—both strategies that can eliminate the need for a Federal Transfer Certificate in the future.
How The Village Law Firm Helps Global Families
At The Village Law Firm, we regularly help NYC families and international clients navigate the complex requirements surrounding U.S. and foreign estate administration. Our team coordinates with accountants, appraisers, and global counsel to ensure filings are complete and compliant, helping avoid frozen accounts, tax overpayments, and unnecessary stress during already difficult times.
If you’re managing a cross-border estate, this may also be a good time to revisit your own estate plan. For example, our blog on Estate Planning When Family Ties Cross Borders explains how proactive planning can prevent the same issues for future generations.
FAQs About Federal Transfer Certificates
1. Does every estate with U.S. assets need a Federal Transfer Certificate?
No. Only estates of nonresident aliens or non-U.S. citizens with U.S.-situs assets require it. However, many banks will still request one to protect themselves, even if the estate is below the tax threshold.
2. What counts as a U.S.-situs asset?
Generally, real property located in the U.S., shares of U.S. corporations, and tangible assets physically in the U.S. are considered U.S.-situs. Some exceptions apply under tax treaties.
3. Can an executor outside the U.S. apply for the certificate?
Yes, but it’s often faster to appoint or work with a U.S.-based executor or co-executor who can interact directly with the IRS and submit documentation without international mailing delays.
Take the Next Step
If your loved one’s estate includes U.S. assets or you’re concerned about future cross-border complications, reach out to The Village Law Firm. We’ll help you understand your reporting obligations, avoid costly delays, and ensure your family’s legacy transitions smoothly.
Schedule a consultation at thevillagelawfirm.com to start the process today.
