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.
Reduce taxes for Canadians with U.S.-resident children
DAVID A. ALTRO & JONAH Z. SPIEGELMAN
It’s not uncommon for Canadians to move to the U.S. for school or work, and settle there permanently. Estate planning for the wealthy parents of these emigrants requires special attention.
Cross-border planning is complicated by the fact that inheritances are subject to both Canadian and U.S. tax rules. Plans must consider tax efficiency in settling the estate of the Canadian parents, as well as how the funds are treated in the hands (and, later, the estates) of U.S.-resident beneficiaries.
A key issue relates to assets U.S residents inherit; specifically, U.S. estate tax exposure when those beneficiaries later die.
To illustrate the issue, consider the following example. Doug and Mary are Canadian residents and citizens in their 70s. Their net worth is $6 million, consisting mostly of non-registered cash-equivalent investments supporting their retirement. Their only child, Susan, attended Harvard medical school and is now a pediatrician practicing in Boston. She’s divorced with two young children. Please click here to read the rest of the article.