US Estate Tax
Estate or Gift Tax is only applicable where the total value of a deceased US citizen’s estate exceeds the lifetime exclusion amount. The lifetime exclusion is $11.58 million per US person in 2020 ($23.16 million for married couples). This also applies to US domiciliaries who might not be US citizens. Americans living in the UK who are not UK domiciled and have substantial wealth outside the UK may want to seriously consider setting up excluded property trusts as part of their estate planning to protect their estate from UK Inheritance Tax exposure in the future. Up to $23.16 million per couple could be gifted into trust and protected from future IHT exposure (saving up to $9 million).
Non-US citizens (who are non-US domiciliaries) could also be subject to Estate Tax where their US situs assets exceed $60,000. If the US/UK tax treaty applies, you might be able to claim the treaty to reduce the US tax exposure, depending on your citizenship status and circumstances surrounding your worldwide and US situs assets.
Individuals are subject to US Gift or Estate Tax on all transfers of property from one person to another either while they are alive (Gift Tax) or on death (Estate Tax). The current rate of US Estate/Gift tax is 40%. Transfers from a US citizen spouse to their US citizen spouse are exempt from Gift and Estate Tax. It is possible for the second spouse to use any lifetime allowance unused by the first spouse, meaning on the death of the second spouse there can be up to two lifetime allowances (currently $23.16 million). There is no spousal exemption for assets left by a US citizen spouse to a non-US citizen spouse.