The three configurations that turn an estate into a sanctions matter

An OFAC license for inheritance is needed far less often than clients fear. There is no general embargo on dealings with Russia by US persons, and most cross-border estates close without a single filing in Washington. The procedural side of those files, like deadlines, powers of attorney, currency control, and bank compliance, is covered separately in “Inheritance from Russia to the US: How to Claim It and Get the Money to Your Account”.

Three configurations change the nature of the matter entirely:

• the decedent appeared on the Specially Designated Nationals and Blocked Persons List (SDN List);
• the estate includes an interest in an entity that is itself blocked either because the entity is named on the SDN List, or because blocked persons hold 50 percent or more of it in the aggregate, in which case the entity is named nowhere, and list screening does not surface it;
• the asset itself is blocked although neither the decedent nor any entity in the estate is designated: funds stopped at a US bank because a blocked party sat in the payment chain, or securities frozen in a US brokerage account.

In all three, accepting the inheritance unblocks nothing. The property passes to the heir with the block attached, and dealing with it requires authorization from the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury.

What blocking actually does, and what it does not

Every file that ends in an OFAC license for inheritance turns on one term. Blocking freezes; it does not confiscate. Title stays where it was, and what is prohibited is the exercise of the powers ordinarily attached to ownership: transferring, disposing, withdrawing, selling. The government does not take title to anything.

Two consequences follow for an estate. The reassuring one: the property still exists and is, in principle, recoverable. The sobering one: nothing can be done with it unilaterally, including steps that feel purely administrative: re-registering an interest, selling to a third party, moving funds between accounts.

One point regularly catches US counsel by surprise. The prohibition attaches to US persons, not merely to property sitting in the United States. A US citizen or green card holder may not deal in property in which a blocked person holds an interest even where the asset itself is in Russia. And property that comes within the possession or control of a US person becomes blocked in that person’s hands. An inheritance, in this sense, carries the block with it across the border.

Death does not lift the block

The death of a designated person does not remove the entry from the SDN List and does not unblock anything. The listing stays live until OFAC deletes it, and in practice that can take years: the batch OFAC removed in May 2026 included people who had died long before.

Nor does the passage of property to heirs cure the problem. OFAC does not recognize an unlicensed transfer of a blocked person’s interest, and the property remains blocked regardless of who now holds title or on what legal basis it passed. Succession by operation of law is treated no differently from a sale. It is not a mechanism for moving an asset out from under a block.

The heir’s own status matters too. Where it is the heir rather than the decedent who is designated, the structure mirrors itself: property passing to that heir is blocked by reason of the heir’s own listing.

The 50 percent rule blocks what the list does not name

An entity in an estate can be blocked on either of two grounds. The first is obvious: the entity is named on the SDN List, and ordinary screening catches it. The second is the subtle one, because screening does not surface it at all: an entity owned 50 percent or more, in the aggregate, by one or more blocked persons is itself blocked even though its name appears nowhere. An inherited interest in such an entity is blocked along with it.

One feature of the rule defeats the intuition heirs bring to it. Property that has already become blocked – property that reached the United States or came within the possession or control of a US person – stays blocked even after aggregate ownership by blocked persons drops below 50 percent, where the drop results from the blocked persons’ own actions rather than from an OFAC delisting.

The blocked persons are treated as retaining an interest in that property, and OFAC does not recognize an unlicensed transfer of that interest. For an heir the consequence is direct: restructuring after the fact unblocks nothing, and an inherited interest already blocked in the heir’s hands is released only by an OFAC license.

The mechanics are set out in a separate article, “OFAC 50 Percent Rule: When a Company Becomes Blocked”. For estate purposes, the operative point is narrower: closely held company interests require an ownership analysis, not a name check.

The obligation clients learn about last

Inheritance and US sanctions meet not only as a prohibition but as a reporting duty. Blocked property must be reported to OFAC within ten business days of becoming blocked, with periodic reporting thereafter for as long as the block remains in place.

The duty falls on whoever holds or controls the property. In a typical case, the U.S. bank that stops the payment applies the rule first, and the heir learns what happened only when the payment is stopped. Where the asset has come under the heir’s own control, however, the obligation is the heir’s, and failing it is a freestanding violation independent of whether the heir was entitled to take the property at all.

The practical lesson is unglamorous: silence in the hope that the situation resolves itself makes things worse along two tracks at once, the substantive and the procedural.

The specific license: drafting the ask

An OFAC license for inheritance is, in practice, an OFAC specific license – an individualized authorization issued on application under 31 C.F.R. § 501.801. It authorizes the transaction described in the application and nothing beyond it.

Hence the first rule of preparation: how the requested authorization is framed matters more than the volume of exhibits. An application asking OFAC to “unblock the inheritance” guarantees a second round, because disposing of an inherited asset is rarely a single act. The application usually needs to describe a sequence: unblock the funds, remit them to a named account of a named heir, and, where necessary, sell the asset and distribute proceeds among heirs, some of whom have no connection to the sanctions perimeter at all.

What the application has to establish:

• who the heirs are and which of them are unconnected to the blocked person – the central fact of the entire file;
• when and on what basis the interest passed, supported by the probate record;
• where the property sits and in whose possession or control;
• the precise sequence of transactions to be authorized, and in whose favor;
• what share, if any, is attributable to the blocked person, and what is proposed for it.

That last item decides more applications than any other. A submission that cleanly separates the unblocked heirs’ shares from the share that must stay blocked is read very differently from one that blurs the line or passes over it in silence.

The second route: delisting a decedent

There is a route that rarely comes up in estate matters, and that became materially more realistic in 2026. Where the blocked person has died but the SDN List entry survives, the objective can be removal of the entry itself through administrative reconsideration under 31 C.F.R. § 501.807, rather than authorization of a single transaction.

The difference between the two is structural. A license authorizes one described transaction and leaves the property blocked for every other purpose. Delisting removes the basis for the block altogether: the property ceases to be blocked, and the question of authorization for each subsequent step falls away.

Why this is now more practical. Since May 2026 OFAC has been running what Treasury calls a sanctions modernization effort, steadily clearing outdated entries. On 27 July 2026, the second round removed 84 entries, among them deceased individuals, defunct entities, and targets designated more than twenty years earlier. On 29 June 2026, OFAC opened a reconsideration portal through which petitions are submitted in structured form, including by an authorized representative.

Three mistakes that cost years

Three errors recur in matters that end in an application for an OFAC license for inheritance. The first is self-help: re-registering an interest, selling an asset, or moving funds before authorization issues. The transaction is not recognized, the property stays blocked, and a potential violation is added to what was previously just an estate matter.

The second is assuming the decedent’s death resolved everything. It did not: the entry stays live until deleted, and the block stays with it.

The third is approaching OFAC without having mapped the ownership. An application whose author has not worked out who owns what share of an inherited company invites questions and adds months to the review.

A working sequence

• Screen the decedent, every heir, and every entity in the estate by ownership structure, not by name alone.
• Establish what is blocked and in whose hands, and discharge the reporting obligation on time.
• Identify the shares held by heirs unconnected to the blocked person; the whole application is built from there.
• Compare the licensing route against delisting before filing, not after a denial.
• Take no action on the asset until authorization issues, including steps that look purely administrative.

Where an OFAC license for inheritance is the route, time works against the heir only through inaction. The property does not disappear and does not pass to the government, but it does not thaw on its own either. Until there is a license or a deletion from the list, it stays exactly where it landed.