Inheritance and Estate Tax in Bermuda

Does Bermuda have an inheritance or estate tax?

Bermuda imposes neither an inheritance tax nor a conventional estate duty. Heirs receive inherited assets without a separate levy on the bequest itself, and Bermuda imposes no capital gains tax on assets received through an estate. [1] What Bermuda does impose is a stamp duty on the affidavit of value filed with the Supreme Court as part of every probate or letters-of-administration application. This duty, set out in the Stamp Duties Act 1976 (as amended), is calculated on the net value of Bermuda-situs assets in the deceased's estate and functions, in practice, as a quasi-estate duty. Estate representatives and heirs seeking jurisdiction-specific guidance should consult a qualified tax professional and can locate Bermuda-credentialed practitioners via the Bermuda country overview.

How is the estate stamp duty calculated?

Stamp duty is assessed on Bermuda property only -- defined as Bermuda-dollar-denominated assets and real estate physically situated in Bermuda. [2] Foreign-currency assets, overseas investments, and property held outside Bermuda are entirely excluded from the duty base regardless of the deceased's domicile, nationality, or residency. The duty applies on the net estate (gross Bermuda assets less applicable deductions) above a B$100,000 exemption threshold. Current rates under the Stamp Duties Act 1976 are:

For example, a net Bermuda estate of B$500,000 attracts nil duty on the first B$100,000, 5.25% on the next B$100,000 (B$5,250), and 10.5% on the remaining B$300,000 (B$31,500) -- a combined liability of B$36,750 before any exemptions. [2]

What exemptions reduce or eliminate the duty?

Three principal exemptions can reduce or eliminate the estate stamp duty:

Surviving-spouse exemption. Assets passing to a surviving spouse on death are fully exempt from the duty. [2] This exemption applies irrespective of nationality; however, a non-Bermudian surviving spouse who receives Bermuda real property must still obtain a licence under the Bermuda Immigration and Protection Act 1956 to hold that property, even though no stamp duty is payable on the bequest itself. [3]

Family homestead exemption. A Bermudian-status holder may designate one residential property as a "family homestead" under section 47A of the Stamp Duties Act 1976. Property carrying that designation is excluded from the stamp-duty computation on death, effectively passing to heirs free of estate stamp duty. [2] Only one property qualifies; if the deceased owned multiple residential properties and none was designated, the least valuable qualifies automatically to minimise the duty. Non-Bermudians do not qualify for the family homestead designation.

Charitable and foreign-currency exemptions. Bequests to charities registered under the Charities Act 2014, or to bodies the Minister of Finance designates as charitable, attract no duty. All foreign-currency-denominated assets and assets situated outside Bermuda are also fully excluded from the taxable base. [1]

How does probate work in Bermuda?

The Supreme Court of Bermuda (Probate Division, Dame Lois Browne Evans Building, Hamilton) administers all grants of probate and letters of administration. [4] The estate representative -- the named executor under a will, or, absent a will, the person with statutory priority (surviving spouse, then children, then parents) -- must:

1. Compile an inventory of all Bermuda assets and liabilities to determine the net estate value.
2. File an application with the Supreme Court Registry, accompanied by an Oath and an Affidavit of Value sworn to the gross and net estate figures.
3. Submit the original will and death certificate (plus Official Gazette notices for intestate estates).
4. Pay the court's filing revenue stamps (B$25 to B$250 based on gross estate size, plus a B$15 oath fee and a B$15 affidavit fee).
5. On receipt of a Stamp Duty Certificate from the Office of the Tax Commissioner, remit the estate stamp duty -- generally within 90 days of the certificate's issue. [4]

Foreign grants of probate obtained in another common-law jurisdiction may be resealed in Bermuda rather than re-litigated from scratch, simplifying administration for estates with assets in multiple countries. The Supreme Court has cautioned that estate settlement "can take a long time," particularly where minor beneficiaries are involved or disputes arise.

What are the rules for non-Bermudian heirs?

Non-Bermudians face two distinct issues when inheriting Bermuda assets. First, the estate stamp duty applies regardless of the beneficiary's nationality -- "irrespective of the deceased's nationality, residence or domicile" -- whenever Bermuda property forms part of the estate. [2] Second, Bermuda real estate cannot vest in a non-Bermudian (or in a trust that may benefit a non-Bermudian) without a licence under the Bermuda Immigration and Protection Act 1956. Non-Bermudian heirs who receive residential property have the option to apply for a deferral certificate, which postpones the licensing requirement for three years (renewable), giving the estate time to arrange a compliant holding structure or sale. Non-Bermudian spouses of Bermudians are permitted to acquire real estate without a licence, making the practical impact of the surviving-spouse stamp-duty exemption broader in scope. [3]

On the cross-border dimension, Bermudian residents who are US citizens or green-card holders remain subject to US worldwide taxation. The US federal estate tax (rates up to 40% above the applicable exemption) applies to their worldwide assets at death regardless of Bermuda's own tax position. [5] Conversely, non-US-citizen Bermudian residents who hold US-situs assets -- including US real estate, tangible property physically in the US, and stock in US-incorporated entities -- face US estate tax as non-resident aliens with only a US$60,000 exemption (not inflation-adjusted). The estate representative must file IRS Form 706-NA if US-situs assets exceed that threshold. [5] Bermuda and the United States have no bilateral estate-tax treaty. A qualified tax professional with cross-border expertise is essential for any estate straddling both jurisdictions.

How do trusts support succession in Bermuda?

Bermuda is one of the world's established trust jurisdictions. The Trusts (Special Provisions) Act 1989 provides the primary framework, supporting discretionary trusts, fixed interest trusts, charitable trusts, purpose trusts, and reserved-powers trusts under which a settlor may retain defined powers without compromising the trust's integrity. [2] Bermuda trust law contains explicit "firewall" provisions that exclude foreign forced-heirship rules and community-property claims from affecting the validity or administration of a Bermuda trust, making the jurisdiction attractive for international families. Trusts governed by Bermuda law face no statutory perpetuity period, allowing multi-generational structures. The Bermuda Monetary Authority (BMA) supervises trust-company licensees under the Trusts (Regulation of Trust Business) Act 2001.

For succession purposes, an appropriately structured Bermuda trust can hold real property or other Bermuda assets in a way that avoids repeated probate on each generational transfer, and -- depending on the specific structure -- may also moderate the estate stamp-duty exposure on death. Estate planning through trust structures is a specialist area; anyone considering this route should engage a qualified tax professional with Bermuda trust expertise. Additional practitioner resources are available through the Bermuda country overview.