Welcome information for VTS and VEU came in the mail yesterday. The packs didn’t include W-BEN8 forms, but there was the site address for a Computershare page for these forms. The page led me through entering my HIN, selecting the share holding I wanted to lodge a W-BEN8 for (Buttons appeared for both VTS and VEU).
I used buttons to answer a few simple questions. At the end of this I could download the pre-filled forms and print off for signature. I then scanned them and emailed them to an email address that was shown by Computershare. All pretty easy and I was thinking doing this every three years won’t be much of a chore.
Then poking around elsewhere I came across this :-
If I’m understanding this correctly, if I die holding VTS, VEU or any US domiciled ETF, 40% of the total value will go to US Treasury as a death tax. This could well catch me, as I may not know of my impending demise, and even if I was able to sell before my death, I would be up for Australian tax on capital gains. This doesn’t fit with my strategy of using ETFs to build wealth and then be part of estate planning.
I’m now thinking going with VTS and VEU was a mistake and I should have gone the Australian domiciled IVV or VGS.
As I mentioned previously, I’m DCAing into ETFs, so I will probably switch to IVV or VGS for the next parcels I buy. I don’t want the complication of owning too many different ETFs, so I will probably offload the VTS and VEU after I have held them for 12 months, assuming they are showing a capital gain.
This US death tax issue is obviously something that doesn’t trouble LIC holdings too.
