If an individual gives up his or her domicile without acquiring a domicile of choice, for inheritance tax purposes the domicile of origin would be revived. If, for example, Juliet temporarily moved to France after Arthur's death-giving up her U.S. domicile of choice while she considers what she wants to do-her U.K. domicile of origin automatically would get revived until she acquires a new domicile of choice.

As it is a question of fact as to where the decedent was domiciled, it may be possible to argue the best possible domicile position for U.K. inheritance tax and U.S. federal estate taxes purposes.  But remember:
Do not claim a domicile that is inconsistent with the domicile status the decedent claimed in his lifetime income tax returns (both U.K. and U.S.).
The law of the decedent's place of domicile will determine the correct law of succession.
If a decedent dies non-U.K. domiciled, a claim cannot be brought against his estate in the U.K. under the Inheritance (Provision for Family and Dependants) Act 1975.  So, if Arthur dies leaving nothing to Juliet, she would not be able to claim against his estate in the U.K.

Normally, an Inland Revenue Account Form IHT400 (the U.K. equivalent of IRS Form 706) will need to be filed with Her Majesty's Revenue and Customs (HMRC).  Included in this will be:
Detailed valuations of the decedent's taxable estate.
Detailed information concerning domicile status if the decedent had a general law domicile outside the U.K.
Claims for any relief, exclusions or credits.

The deadline for filing Form IHT400 is the first anniversary of the decedent's death and there is no provision for extending this date. In practice, the IHT400 will need to be submitted earlier to enable an application for the grant of representation.

IHT207 is a much simpler form and may be used, broadly, where the decedent was not U.K. domiciled and never lived in the U.K., and the only assets situated in the U.K. were cash and/or quoted stocks and shares with gross value of less than £150,000.

Inheritance tax is due six months after the end of the month in which death occurs.  Interest will be charged on late payment.  However, if a grant is needed before this date, then the tax will be fully payable on the application for the grant-not including inheritance payable on certain property, such as real estate, where it is possible to pay in installments. This can create serious funding issues, with executors finding themselves unable to obtain a grant without paying the inheritance tax due on the death, but needing access to the assets to pay the tax.

As an example, Arthur's wealthy uncle, John Drummond, died owning £1 million in a U.K. quoted company. In a falling market his executors were desperate to sell the shares. This could not be done without a U.K. grant.  In turn, a U.K. grant could not be obtained without paying the inheritance tax due on the value of the company shares at the time of the application-about £400,000. In this situation, the only viable option may be to take out a loan for payment of the tax.

Double Taxation And Treaty Issues
It is beyond the scope of this article to consider U.S./U.K. estate and gift tax treaty issues, other than to note that even where it is very clear that the U.S. has the primary taxing rights, if the U.S. tax has not been paid and no valid receipt can be produced to HMRC by the time of the application for the U.K. grant, then the U.K. tax would still be payable up front, even though ultimately a refund would be obtained.  

The 'Credit Crunch' And Valuation Issues    
The U.S. and the U.K. use different rules for determining what is comprised in-and the value of-a decedent's estate for tax purposes. Rules governing the applicability of exemptions, relief and deductions, are also different. While tax rates are slightly less onerous in the U.K.-the inheritance tax is currently charged at a flat rate of 40%-the U.K. is less generous regarding the portion of an estate that can be transferred free of tax.  For the U.K. tax year 2009/10, the inheritance tax nil rate band threshold is set at £325,000. Valuation rules are different, too.  Unlike the U.S., the U.K. has no alternate valuation date. Value for inheritance tax purposes will be fixed at the date of death except in very limited circumstances, when it may be possible to substitute gross sale proceeds. This option only applies to quoted securities and real estate sold within a certain period after the death, but may provide an attractive planning opportunity for some estates.  

When Estate Planning Goes Wrong
There is a great deal of flexibility in the U.K. to achieve a desired tax result if the will or rules of intestacy do not provide the most beneficial result.