Advisor.ca – Reduce taxes for Canadians with U.S.-resident children



David A. Altro and Jonah Z. Spiegelman recently co-authored an article which appeared on Advisor.ca and is scheduled to appear in the April or May 2014 edition of Advisor’s Edge magazine.

In the article, David and Jonah explain the considerations and opportunities that Canadians should keep front of mind if they have US-resident children who will inherit their estate. Click here to view the article online or scroll down to read an excerpt from the piece. Read the rest of this entry »

What is Mine Might Not be Yours: Estate Planning for Blended Families



Post-divorce, many Canadians are lucky enough to find second relationships, whether it is cohabiting leading to a common law partnership or another trip down the aisle. According to a 2011 census data release by Statistics Canada, blended families (where one or both spouses have children from previous relationships) have become a national norm, representing about one in eight couples’ families with children. This blog takes a closer look at the type of estate planning issues that blended families can face.

As new relationships are formed with the new spouse’s family, estate planning becomes more complicated and steps must be taken to ensure that your intentions to protect your children from the prior marriage and/or for your new spouse to be protected upon your death, and that your estate will ultimately be distributed to the intended beneficiaries. Read the rest of this entry »

Planning for Disabled Beneficiaries in Ontario



Whether you own Cross-Border assets or not, when dealing with the transfer of assets to a disabled beneficiary who is resident in Ontario, special planning may be needed to preserve your disabled beneficiary’s entitlement to certain benefits he or she may be receiving, or may be entitled to receive in future.

The Ontario Disability Support Program (“ODSP”) is a provincial program offering income and employment support to adults with physical and/or mental disabilities.

An eligible applicant must show financial need, which is determined by calculating the assets held by such applicant. A single adult is entitled to hold up to $5,000 worth of assets. If he or she has a spouse (whether married or common-law), the limit rises to $7,500. The limit increases by $500 for each dependent child living with the disabled beneficiary. Read the rest of this entry »

Tax Efficient Estate Planning through Wills



Apart from any other estate planning measures one might choose to implement, there is always a role for a well-planned will. However, the content of those wills depends on whether one or both spouses are US citizens.

Mixed Marriage – One Spouse is a US Citizen

In the case of a mixed marriage, the wills of each spouse will be very different. The reason for this is that different strategies and tools will be employed based on the rules that apply to a given estate.

To illustrate this scenario, take the example of Harry and Wanda. Harry is a US citizen by birth who came to Canada as a child. He married Wanda, a Canadian citizen, and they had three children who did not inherit Harry’s US citizenship. Their combined estate is $10 million, virtually all of which is held in joint names. Read the rest of this entry »

Is a U.S. Revocable Trust Okay for Canadians?



Revocable trusts are a common estate planning tool in the U.S. Also referred to as living trusts and grantor trusts, they provide a method of avoiding costly probate and incapacity proceedings. A well written revocable trust will also include tax and creditor protection planning for future generations. In addition to all of these benefits, the individual setting up the trust remains in control of the trust and trust property during his or her lifetime.

A revocable trust does not provide creditor protection to the grantor, nor does it shield the grantor from U.S. estate tax liability. Rather, it is a powerful and popular tool for U.S. citizens and residents who are below the U.S. estate tax exemption amount to hold their personal residences. The revocable trust is popular among Americans, and rightly so. Read the rest of this entry »

The Perfect Match: Trusts + Marriage Contracts = Asset Protection

“I want my children to have all the things I couldn’t afford. Then I want to move in with them.”
- Phyllis Diller

While we don’t all want to move in with our children once they are grown adults as Phyllis Diller quips above, we do want to ensure that our children enjoy an abundant, comfortable adult life.

One way to accomplish this is to create an estate plan that protects our children’s assets. Such protection becomes even more important when our children get married. Although we hope that our children’s marriages will stay strong and happy, matrimonial bliss doesn’t always last forever. To safeguard your children’s future, it is imperative to create an estate plan that provides maximum asset protection in case of divorce. Read the rest of this entry »

What Obamacare Means for Canadians Looking to Move to the U.S.



As Canadians, we tend to take for granted the benefits we are entitled to when living in a country with universal healthcare. However, provincial healthcare is only available to Canadian residents who spend the requisite amount of time in their home province every year. Historically, when it came time for some Canadians to leave Canada, many were realizing that it was far from easy to get insured in the U.S., especially with a pre-existing condition or because of age. This obstacle alone could sometimes be a showstopper for those people who found themselves to be uninsurable.

The U.S. healthcare system is designed for those over age 65 to be covered through the U.S. Medicare program (“Medicare”). The problem with this for Canadians over 65 is that in order to be eligible to Medicare, one must either have had a green card for at least five years, be a U.S. citizen or be married to a U.S. citizen who has accumulated 40 quarters of social security. This means that in the past, people over 65 getting a green card and moving to the U.S. had to wait at least five years to be eligible to Medicare. If that person wanted to fill that five year insurance gap by getting private insurance for this period of time, it was nearly impossible to get coverage because private insurance companies were allowed to deny coverage to people of a certain age or having a pre-existing condition. Read the rest of this entry »

RRSPs – Cross-Border Rollovers and Other Opportunities for Tax Deferrals & Savings



The owner of a registered retirement savings plan (“RRSP”) (whether before or after its maturity) is deemed to have disposed of the account upon death and the full value of the RRSP is brought into the deceased owner’s income in her terminal income tax return. Read the rest of this entry »

IRS To Recognize All Legal Same-Sex Marriages for US Federal Tax Purposes



On August 29, 2013, the US Internal Revenue Service (“IRS”) and the US Department of Treasury released announcements confirming that in light of the historic US v. Windsor ruling from June 26, 2013, the IRS will recognize all legal same-sex marriages performed in one of the 50 states, the District of Columbia, a US territory, or a foreign nation. Read the rest of this entry »

State Inheritance & Estate Taxes and New York’s Estate Tax Refund To Same-Sex Couples



State Estate & Inheritance Taxes

A lot is often said about the US federal estate tax, especially amongst Canadians with US property. What many Canadians do not realize is that 14 different US states, and Washington, D.C., levy state estate tax as well. An additional five states levy an inheritance tax, with New Jersey and Maryland having both estate tax and inheritance tax. An inheritance tax is normally levied on inheritance received by friends, unmarried partners, and non-immediate family. A deduction or credit is typically given against state estate tax for inheritance tax paid in states with both taxes. Read the rest of this entry »