© 2020 Thun Financial Advisors, a division of Creative Planning  |  All Rights Reserved   |, U.S. Citizen inside the U.S.? The applicability of an estate tax treaty between the U.S. and the country of residence, domicile and/or citizenship; The availability of tax credits in the relevant jurisdictions where overlapping taxes are levied. For instance, an asset can be non-U.S. situs for gift tax purposes but U.S. situs for estate tax purposes. Some experts on the subject of international estate planning suggest multiple “situs” wills, with each will governing the distribution of property in the country for which the will is executed. Thun Financial is also committed to safeguarding and protecting the privacy of all visitors to its website or interested persons whom communicate personal and financial information with Thun Financial, whether potential clients or otherwise. There may be extremely negative consequences (e.g., the trust may be separately taxed upon the grantor obtaining residency in the new country), and those consequences will vary depending on where the expat relocates and how long the expat and his or her family remain in their new country of residence. Please fill your name, email, check the consent box, and click subscribe. As with any estate plan, the specific family’s needs should be taken into account. If the investor resides in 1 of the 16 estate tax treaty countries, there may be significant relief, however. Michael Cirone is a Canadian and U.S. lawyer with 20 years of experience providing cross-border personal tax and estate planning services. We are committed to protecting and respecting your privacy. of the global family change, so will the tax implications and the available solutions. Will Todd is an independent lawyer who provides cross-border tax and estate planning advice to individuals and families from his downtown Vancouver office. Webinar: Cross-Border Estate Planning. We obtain this additional information only directly from you, not from any third-party service. Make sure your tax, estate planning, pensions and investment approach is tailor-made for you with specialist, personalised advice. If you are a U.S. citizen living in Ontario or a Canadian with U.S. connections, including owning property in the U.S., our estate planning lawyers will work with you to develop an appropriate estate plan to coordinate and integrate U.S.-Canada taxation. Our estate planning team, licensed in both Canada and the U.S., provide individuals, families and business clients with comprehensive advice customized to their specific needs to ensure the smooth transfer of assets to the next generation including … This new team of expert trusted advisors should possess a combination of cross-border legal, tax, and financial planning expertise in order to tailor a financial plan, an estate plan, and an investment strategy that is harmonious with the multijurisdictional taxation regimes to which the expat or multinational investor’s wealth is now subject. Estate Disputes: Keeping the Peace. Creative Planning, LLC (“Company”) is an SEC registered investment adviser located in Overland Park, Kansas. Estate planning can become complicated by the different tax, estate planning and estate administration laws and rules between Canada and the U.S. Please consult a licensed attorney or tax preparer regarding the suitability of any strategy, or the applicability of any rule or law, referenced herein, to your individual legal or financial circumstances. There may be real property in various jurisdictions, separately or jointly titled, personal property also spanning the globe, limited partnership interests (e.g., hedge fund, private equity, or structured products), joint brokerage accounts, individual brokerage accounts, pension funds, defined contribution plans, IRAs, Roth IRAs, and college savings or UTMA/UGMA accounts for the children. Cross border trust and estate planning . Estate tax treaty “tiebreakers” and the new/old situs rules: Another key effect of tax treaties is that they establish tie-breaker rules. * Applicable Membership or Subscription discounts will be added in your shopping cart Description: . There are many factors that will make the transfer tax planning puzzle exponentially more complex for this model global family than for the aforementioned multistate family. What do … Estateslawyertoronto.ca skilled lawyers can help with all cross-border estate family and estate litigation services with experience. For that reason, standard traditional estate planning tools will not work in those situations. A United States expat family, a U.S. person married to a non-citizen spouse, a non-U.S. person investing in the United States, and other cross-border families will need to have an investment plan that is correctly in sync with a tailored cross-border estate plan. can also help with transfer taxes. • Internal activities to satisfy our compliance, security and regulatory obligations; From a tax perspective, the impact on the 2020 U.S. Presidential election will stretch well beyond U.S. borders. Here are the general situs guidelines for non-resident aliens and their U.S. estate tax exposure: The U.S. situs rules are particularly instructive for expat families that include non-U.S. persons (e.g., an American abroad married to a foreign spouse), or to non-U.S. persons with investments in the United States. Only clients and prospective clients that engage in direct, confidential communications with us provide additional information. Accordingly, in addition to the federal estate, gift and generation-skipping transfer (GST) tax regimes, the transfer tax regimes of multiple states may also factor in the distribution of wealth (during lifetime and after death) to the surviving spouse, the children, and future generations. January 20, 2017. Now imagine that typical affluent American family in a modern, global setting: A husband that is a United States citizen living in Germany, married to a citizen of France (a “non-U.S. person”), with two children from a prior marriage living in the United States and one from the present marriage living with her parents in Germany. Gifting strategies (e.g. Registration: Registration fee is $720.00 plus GST $36.00 totalling $756.00 covering your access to the live webinar and electronic materials. No matter how complex your needs may be, our Toronto Estate Lawyers are adept at identifying and implementing out-of-the-box solutions that deliver excellent results. However, the United States has not extended the investor-friendly income and estate tax rules to foreign investment in U.S. real estate. We are also able to provide advice and assistance with respect to multi-jurisdictional estate planning. • During the client onboarding and account opening process; Ultimately, competent financial planning and investment management must recognize and design an investment plan that takes full consideration of the cross-border tax issues. Estate and Tax Planning for Cross-Border Families. You may have a serious estate tax issue if you are a US citizen and have used a typical Canadian estate … However, the American taxpayer needs to be mindful that special disclosure rules apply to gifts or bequests received from foreign persons (or entities). These topics also include cross-border issues that complicate estate planning: transfer tax rules, treaties, and credits. Info Here > We make it … These experts should also understand the myriad techniques that can mitigate the punitive effect of transfer taxes. Home | Cross-Border and Multijurisdictional Estate Matters | U.S.-Canada Cross-Border Will and Estate Planning. Recent estate tax law changes have significantly increased the federal estate and gift tax lifetime exclusion amount to very high thresholds: Accordingly, with a $22.4 million-per-couple exemption, most Americans feel that the estate tax is something that can be ignored. Canadian parents are no strangers to losing their kids to the US – some may leave Canada to study in the US never to return, while others are recruited by US companies and sponsored by them for immigration purposes. Box 68 Toronto, ON M5K 1E7, Toll Free: 888-365-6235Phone: 416-363-3336Fax: 416-363-9570, U.S.-Canada Cross-Border Will and Estate Planning, Cross-Border and Multijurisdictional Estate Matters, Contact Us – Estate and Trust Administration, Multijurisdictional Estate Administration, Multijurisdictional and Cross-Border Will and Estate Planning, Cross-border incapacity planning including use of a power of attorney in U.S. jurisdictions, Cross-border will planning and separate situs wills, Cross-border trust planning including Canadian trusts to hold U.S. situs asset. Cross-Border Estate Planning You may need cross-border estate planning if you: Own a Canadian company with a U.S. subsidiary or that earns a significant amount of income in the U.S. Want to retire in the U.S. or spend a significant amount of time in the U.S. in retirement Be wary of trust structures when moving abroad If your estate plan includes trusts, we do not recommend moving abroad with your old domestic estate … The following article addresses U.S. estate tax consequences of a family comprised of Canadian In contrast with many succession/heirship-based transfer tax systems abroad, gifts and inheritances in the United States are not taxed to the beneficiary of the gift or bequest, because we have a transfer tax system that taxes these transfers at the source of transfer (i.e., the donor, grantor, or the estate). Estate planning opportunities include keeping the non-U.S. Person’s WWE below the exemption amount or reducing U.S. situs assets to under $60,000, simply by making alternative investment decisions, selling assets or considering a different ownership structure for U.S. real property. Unfortunately, the tax complications and challenges facing American expats also extend to the circumstance of marrying a foreigner. Americans living abroad may accumulate more than income and assets while living and working abroad, they may also find love! However, families with multiple nationalities are in particular need of a cross-border estate plan … Section 529 college savings plans (see Thun Financial’s research article on 529 Plans for ex-pats) have grown substantially in popularity over recent years, as parents begin to realize the tremendous long-term advantages to saving larger amounts for college in earlier years for their children, and 529 accounts allow substantial deposits (as much as $150,000 in a one-time gift from joint filers covering a five-year period) and provide Roth IRA-style tax-free growth of the investment account, provided that the 529 plan assets are withdrawn for qualified educational expenses. The solutions or tools of estate planning and wealth management that could be utilized in any given situation may include (but by no means are limited to): Most of these tools are very familiar and frequently utilized by domestic financial planners and estate planning attorneys to assist single and multistate U.S. families. This is already a complex situation, requiring the assistance of legal and financial professionals. Estate Planning Advisor. For example, the situs rules discussed earlier illustrate that investments in U.S. publicly traded fixed-income (bonds) will not subject the foreign investor to estate taxes (nor income taxes). Info Here > US ESTATE AND GIFT PLANNING. Cross-Border Estate Planning Articles. Cross-Border Issues that Amplify the Complexity of Estate Tax Planning U.S. Estate Tax Basics. Read Article. Cheyenne Reese , Principal, Legacy Tax + Trust Lawyers, Vancouver, BC. In civil law/forced heirship regimes, a fundamental problem exists when examining distributions to heirs through such a trust: the beneficiary is receiving the property from the trust, rather than a lineal relative (parent, grandparent, etc.). U.S. Courts have looked at a number of factors in determining the domicile of a decedent. The domiciliary country may tax all transfers of property within the entire estate, while the non-domiciliary country may only tax real property and business property with situs in that country. KeatsConnelly can assist in your cross border tax planning needs. The U.S. husband’s portfolios might be over-weighted in certain asset classes including U.S. stocks or ETFs, while his wife’s portfolio might be overweight bonds, international equities, or non-U.S. ETFs). Info Here > We make it our business to ensure the success of yours. Citizenship/domicile/residency, location and character of investments (situs of assets), applicable tax treaties and/or the availability of foreign tax credits, and the existing or proposed estate plan are some of the critical variables that must be factored into a financial plan and in the design of a comprehensive portfolio that is optimized for income as well as transfer tax efficiency. Will provides tax and estate planning solutions for Canadian-resident U.S. citizens and their family members and Canadians owning or acquiring U.S. real property, among others with exposure to Canadian and US taxation. Cross-Border Estate Planning March 23, 2017. • During the initial or any ongoing financial planning process with a client; Alternative college savings or generational gifting strategies (including having U.S. based relatives open the 529 account) may work better for expats. While the global income taxation of U.S. citizens gets far greater attention, U.S. transfer taxes apply no matter where a U.S. citizen lives, gifts property, or dies. Chair. Visit Creative Planning, Join Our Mailing List And Get Our Latest News, Thun Financial Advisors, a division of Creative Planning, 2018 Guide to International Estate Planning for Cross-Border Families, Thun Financial’s research article on 529 Plans for ex-pats, A Brief General Overview of Contrasting International Tax Regimes, Concepts of Citizenship, Residency and Domicile, Understanding the Role of Situs in International Transfer Taxation, The Interplay of Tax Treaties and Foreign Tax Credits, Examples of Tools that May Not Travel Well, Estate Planning for Families that Include a Non-U.S. Citizen Spouse, Non-U.S. Join our mailing list to receive the latest news and updates on cross-border investing issues. Cheyenne assists clients with tax, estate and trust planning. While different states have specific legal requirements for executing a will with legal effect, generally the requirements are straightforward: In addition to testamentary wills, living wills (powers of attorney) are also utilized to direct who can make decisions for the individual in the event of physical or mental incapacity. 529s) to reduce your tax-able estate: Lifetime gifting strategies are a common method for reducing a taxable estate in the United States. through the probate system. CROSS BORDER TRUST AND ESTATE PLANNING. Obtaining Personal Data You are a U.S. citizen residing in Canada. This approach can allow for superior after-tax returns to help achieve important lifetime goals and greater wealth transfer to heirs. The utilization of offshore PICs is generally no longer utilized for U.S. clients, because Passive Foreign Investment Company (PFIC) rules and the Foreign Account Tax Compliance Act prior will. Whether you are transitioning residency between Canada and U.S. or you have already made the move but continue to hold investment assets or financial interests in both Canada and the United States, proper cross-border financial planning can integrate and coordinate the asset management of your investments, reduce taxes and maximize your estate. Moreover, civil law succession regimes tend to prefer to impose tax upon inheritance (i.e., upon the heirs) at the time of distribution of the decedent’s estate rather than impose tax upon the estate of the decedent prior to the distribution of the decedent’s estate. (For more information, please see the relevant portions of the U.S. Tax Code including 26 U.S. Code § 2014 “Credit for foreign death taxes”). Wills are the common method of establishing a blue-print of specific instructions for passing (bequeathing) wealth to others (spouses, descendants, friends, charities, etc.) cROSS BORDER TRUSTS. The older treaties (including Australia, Finland, Greece, Ireland, Italy, Japan, Norway, South Africa and Switzerland) follow the more elaborate nature/character situs rules described above for non-resident alien property in the United States. For example, to return to the aforementioned global family from earlier (U.S. husband, French wife, and child living in Germany, with two U.S. children from husband’s prior marriage living in the U.S.), the tax-conscious financial plan can go beyond the routine suggestion of a QDOT, and actually design investment portfolios that will minimize potential income and transfer taxes in a comprehensive wealth management strategy. Correctly tailoring that cross-border estate plan will require legal and tax experts with a deeper understanding of the relevant estate/ succession/gift/generation-skipping transfer (collectively Correctly tailoring that cross-border estate plan will require legal and tax experts with a deeper understanding of the relevant estate/succession/gift/generation-skipping transfer (collectively referred to herein as “transfer”) tax laws in each of the relevant countries that may factor in the distribution of property prior to and upon death. have resulted in changed circumstances, but the importance increases with a relocation overseas, or a move from one foreign country to another. On the other hand, the $11.4 million (2019) lifetime exclusion applies to bequests left to anyone, including a non-citizen spouse. Even modest foreign investments in the U.S. may raise transfer tax issues: When non-U.S. persons own U.S. situs assets, including real estate, U.S. corporation stocks, and tangible personal property (e.g., collectibles) that remain in the United States, they are generating a U.S. estate – one with a considerably miniscule exemption of only $60,000. He adds, “Maybe have it in a cross-border trust or a partnership, or a vehicle that doesn’t die.” The goal is to bring the value of the estate below the amount that will trigger federal and state estate tax, and to avoid probate. Estate planning challenges for the expat and/or multinational family: Multi-jurisdictional estate planning issues are actually nothing new for Americans and their financial advisors: A typical affluent American family may have brokerage accounts, savings accounts, and a security deposit box with valuables in New York, a primary residence in Connecticut, a second home in Florida, and possibly even a trust established in Delaware or South Dakota. There seems to be some risk in a strategy of multiple wills, as the traditional rule holds that the legal execution of a will extinguishes the validity of any property has situs in both (or even in neither) country. Currently, the vast majority of Americans, at home or abroad, have little concern for U.S. federal estate taxes. It should also be noted that, while the QDOT trust can certainly be a useful tool for arranging for the eventual transition of the U.S. estate to U.S. citizen heirs while providing maintenance for the surviving non-citizen spouse, the tax and maintenance consequences may pose considerable negatives that outweigh the benefits of setting up the trust arrangement. Connections: Key Cross-Border Estate Planning Strategies. An expat should understand the particular definitions and requirements under the laws of the country(ies) in which they live, work, or own property. Trusts are a primary method of devising a scheme of distribution that may allow some or all of the decedent’s assets to bypass probate, and (sometimes) to defer or avoid estate taxation. We will otherwise only use your personal data internally in connection with our ordinary professional activities as an investment advisory firm. to understand that the standard U.S. estate plan may no longer protects wealth as intended. Terry Ritchie featured in The Insurance & Investment Journal article, Managing Cross-Border Clients. For gifts, the recipient takes the donor’s original cost basis. These “permitted” uses may include: How those tiebreaker rules operate will depend on whether the treaty follows the newer or the older situs rules in U.S. estate tax treaties. Cheyenne received her J.D. Offering cross-border wealth management solutions. Part of the Raymond James Financial family of companies, Raymond James (USA) Ltd., or RJLU, is a Canadian based US registered investment firm offering integrated cross-border wealth management solutions to Americans living in Canada and Canadians living in the US.As RJLU advisors, we are licensed and regulated in both Canada and the US, … A United States expat family, a U.S. person married to a non-citizen spouse, a non-U.S. person investing in the United States, or other families with multiple nationalities, will need to have an investment plan that is correctly in sync with a tailored cross-border estate plan. Permanent resident (green card) status would in most (but not necessarily all) cases establish domicile. • When you sign up for our mailing list, or register for our complementary educational topics on investment management and/or financial planning topics of interest to you; Substantial planning flexibility in common law regimes: In the estate planning context, common law jurisdictions typically afford much more discretion to the individual (the settlor) to design a scheme of distribution to those people or institutions (heirs) to whom the individual desires to pass on her wealth before or after death. Both countries have different, often conflicting, tax rules about trusts and estates and … CROSS BORDER TRUST AND ESTATE PLANNING. For ex-ample, the UK has three residence statuses that impose different rules based on length of residency or election of status: resident, domiciliary, or deemed domiciliary. If an individual and his or her family have ties across the border, either through residency, citizenship, domicile or the location of an asset, it is important to obtain legal advice from experienced lawyers who can assist in identifying critical issues and preparing a coordinated and effective cross-border estate plan. • Fulfilling other tasks that you may request or any other purpose for which you provide your consent. Our estate planning team possesses a wide range of experience in all aspects of cross border planning for wills, trusts and estates. Who Can Benefit Those clients who benefit from our cross-border financial, tax and estate planning and investment management oversight expertise include: Designed, written and delivered by leading industry experts. Moreover, If the trust provides for a successor U.S. trustee, then a settlement (triggering UK capital gains taxes) could also be declared on the death of the UK resident trustee (the grantor). Thun Financial Data Privacy Statement In addition to optimizing after-tax returns, a holistic approach involving all of the various accounts available to cross-border investors (brokerage, IRA, etc.) Michael Cirone is a Canadian and U.S. lawyer with 20 years of experience providing cross-border personal tax and estate planning services. As mentioned previously, foreign direct ownership of U.S. real estate will subject the non-resident’s estate to U.S. estate tax. Cross Border Estate Planning for Canadians. Call us at 416-847-1859 ... Planning ahead for this transfer of property can eliminate lengthy procedures and ensure that your assets are protected from domestic and foreign estate … The four combinations mentioned in the abstract above may be depicted graphically as on page 40 of this issue of Trusts & Trustees, in the article ‘Cross-Border Planning For Real Estate: Austria’ by Niklas Schmidt. CROSS-BORDER ESTATE PLANNING: CANADIAN PARENTS OF U.S. CHILDREN U.S. transfer taxes (U.S. gift, estate and generation skipping taxes) should be a concern to any practitioner creating an estate plan with U.S. links. Transfer taxes are more closely tied to the concept of domicile rather than residency. Finally, the concept of a trust is likely to be of little or no legal validity in a succession regime. You, your children, your spouse or one of your beneficiaries is domiciled in the U.S. You own real estate or personal property located in the U.S. or other U.S. situs property, including shares of U.S. corporations. Moreover, grandparents and great-grandparents can employ a 529-plan gifting strategy to shrink the taxable estate and to pass on wealth to grandchildren and great grandchildren (otherwise “skip classes” that would trigger generation skipping transfer (GST) taxes in addition to estate or gift taxes). 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