have resulted in changed circumstances, but the importance increases with a relocation overseas, or a move from one foreign country to another. Make sure your tax, estate planning, pensions and investment approach is tailor-made for you with specialist, personalised advice. Recently, Cirone's practice has seen an increase in inquiries in the following areas: Planning and preparation of cross-border Wills ("CB Wills") for U.S. citizens living in Canada. Introduction Few countries enjoy the close, friendly relationship enjoyed by Canada and the United States. Accordingly, if the expat grantor moves to Germany with her family, the children-beneficiaries will be German residents and the intended consequences of the grantor trust will conflict with German gift and inheritance tax laws. Cross-Border Successions within the European States & Estate Planning for Canadians This matter involved giving advice to a non-UK resident and non-UK domiciled individual and his family to ensure a coordinated succession planning strategy across two jurisdictions. While the foreign investor in the U.S. may become very aware of the federal (and possibly state) income tax regime, she might be well served by learning the particulars of the federal (and possibly state) estate tax regimes that could impact the distribution of those investments to her heirs. 529s) to reduce your tax-able estate: Lifetime gifting strategies are a common method for reducing a taxable estate in the United States. If the investor resides in 1 of the 16 estate tax treaty countries, there may be significant relief, however. Cheyenne received her J.D. Currently, the vast majority of Americans, at home or abroad, have little concern for U.S. federal estate taxes. Sharing and Use of Personal Data Generally, more recently ratified U.S. estate tax treaties follow the “new” rules based upon a domicile-based approach. Utilizing wills in international estate planning: Naturally, the will is one of the more common and widely utilized estate planning tools in the United States. Our estate planning team possesses a wide range of experience in all aspects of cross border planning for wills, trusts and estates. Determining which country is the decedent/donor’s domicile for transfer tax purposes; Determining in which country the property is deemed to be located. Cheyenne Reese , Principal, Legacy Tax + Trust Lawyers, Vancouver, BC. For gifts, the recipient takes the donor’s original cost basis. • Providing confidential financial advice and other services to our clients; © 2020 Thun Financial Advisors, a division of Creative Planning  |  All Rights Reserved   |, U.S. Citizen inside the U.S.? Does your estate plan have a U.S. connection? Info Here > We make it … Both countries have different, often conflicting, tax rules about trusts and estates and … Texas and Mexico share 1,254 miles of that border. 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. Conversely, the situs rules of the foreign jurisdiction will apply to that portion of the U.S. person’s estate that is deemed to have situs in that foreign jurisdiction. Finally, the concept of a trust is likely to be of little or no legal validity in a succession regime. We obtain this additional information only directly from you, not from any third-party service. Naturally, the likelihood that the effectiveness of an American’s existing estate plan will deteriorate will depend not only on where the family relocates, but also on how much the family integrates its wealth/assets/investments into the new country of residence, and for how long the expat family remains (or plans to remain) in the new country of residency. In connection with our professional activities, we regularly seek out potential clients and others who may be interested in learning more about our advisory services. 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. For instance, a special trust to benefit your family members may in certain cases minimize U.S. estate tax and protect your wealth. When engaging in cross border financial planning, we determine a client’s cross border tax, estate, investment, retirement, and immigration planning needs in light of their particular goals and objectives. Including cross border financial, estate, investment, business, and tax planning. They also provide the donor with control over the use of the gifted proceeds and flexibility regarding the designation of account beneficiaries. In the process of regular business activity, we may collect certain basic personal data: This is analogous to the intestate succession rules followed in common law when the decedent has otherwise failed to legally direct the distribution of wealth upon death. Generally, these older treaties provide for primary and secondary credits to be applied to reduce double taxation: the non-situs country (where the property is not located) will grant a credit against the amount of tax imposed by the country where the property is located. This is already a complex situation, requiring the assistance of legal and financial professionals. 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 all of the relevant countries that may factor in the distribution of property prior to and upon death, and the myriad of available techniques that, when correctly identified and utilized, can mitigate the punitive effect of transfer taxes. Personal data is securely protected on our own internal servers and the technology systems of our trusted technology vendors. For example, consider a U.S. citizen who established a revocable grantor trust in favor of his children and grandchildren, but who thereafter moves to live and work overseas. TD Bank Tower Toronto-Dominion Centre66 Wellington Street West, Suite 3430P.O. Read Article. E state taxes can be a huge liability if you are not properly prepared. Our firm has decades of experience providing estate planning guidance and advice to families in Canada and the United States. Will Todd is an independent lawyer who provides cross-border tax and estate planning advice to individuals and families from his downtown Vancouver office. As a result, a major part of her practice is related to cross border U.S. – Canada transactions and estate planning, including estate, gift, and generation skipping tax issues. However, PICs may be instrumental in the financial plan of a non-U.S. person investing within, or outside of, the United States. 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. We work with families and individuals from a broad range of backgrounds and circumstances, creating customized plans to meet the unique needs of each client. These are issues that extend beyond the scope of this guide, but certain issues can be discussed to illustrate the nuances involved in cross-border estate planning. Subsequent powers of attorney must be carefully drafted to ensure that they do not impact the effect of other, pre-existing documents. U.S. Courts have looked at a number of factors in determining the domicile of a decedent. Qualified domestic trust (QDOT) – an important tool for marriages between a U.S. citizen and a non-citizen spouse: A QDOT is a type of trust designed to afford the surviving spouse the ability to claim use of and income from the decedent spouse’s estate during the lifetime of the surviving spouse, but then the QDOT assets will pass to the original decedent’s heirs upon the death of the surviving spouse. 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. Except in response to direct instructions from you (e.g., a client asks us to send a brokerage tax record to their accountant), we do not share your personal data with third parties. You may have a serious estate tax issue if you are a US citizen and have used a typical Canadian estate … Estate planning can become complicated by the different tax, estate planning and estate administration laws and rules between Canada and the U.S. 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. Cross-Border Successions within the European States & Estate Planning for Canadians Watch our webinar on cross-border estate and tax planning, with a focus on the US and Canada, hosted by Joshua Miller, CFP ®, Senior Wealth Strategist, with Mark Kane, CFP ®, CIBC Senior Vice President, and Rebecca Tunney, an estate planning … * Applicable Membership or Subscription discounts will be added in your shopping cart Description: . Lifetime gifting to the non-citizen spouse: First, although a citizen can give unlimited assets to a fellow citizen spouse during her lifetime, there is a special limit allowed for tax-free gifts to non-citizen spouses of $155,000 annually (2019). Estate tax treaty “tiebreakers” and the new/old situs rules: Another key effect of tax treaties is that they establish tie-breaker rules. 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. 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. Cross-Border Estate Planning April 16th, 2021 Attend via Live Webinar. can also help with transfer taxes. from the University of Victoria in 2005 and her Masters of Law Degree in International Taxation from New York University in 2006. $11.4 million personal lifetime exemption (2019). In short, since no one can confidently predict where the estate tax exclusion, marital deduction and tax rate levels will be in the future, ignoring estate planning based on current tax thresholds may be a costly mistake. U.S. taxation – “exceptional” in reach and scope: America is “special” in many ways, but few aspects of American “exceptionalism” are as tangible as the way the U.S. Treasury levies taxes on its citizens who leave its borders to live and work abroad. Access a 40% discount on the cost of purchasing European Cross-Border Estate Planning textbook, written by Timothy Lyons (Sweet & Maxwell). That the testator be legally competent and not under undue influence; That the will describe the property to be dis-tributed; That the will be witnessed by the requisite number of witnesses. You are a U.S. citizen residing in Canada. 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. KeatsConnelly can assist in your cross border tax planning needs. Please fill your name, email, check the consent box, and click subscribe. Moreover, where both countries have a claim and assess taxes, a tax credit regime may operate to eliminate or at least reduce double taxation. 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. These regimes are obviously quite different, for the decedent in a civil law country may have little or no say in the distribution of all (or most) of the wealth accumulated (or previously inherited), during her lifetime. Foreign tax credits in the absence of an estate tax treaty: In the absence of a treaty (the majority of jurisdictions), the potential for double taxation increases, but foreign transfer tax credits may still provide some relief from double taxation. INTRODUCTION. For that reason, standard traditional estate planning tools will not work in those situations. As mentioned previously, foreign direct ownership of U.S. real estate will subject the non-resident’s estate to U.S. estate tax. Within the cross-border context, individuals would be wise to seek legal counsel with a specialized focus on estate planning in the relevant jurisdictions. Info Here > US ESTATE AND GIFT PLANNING. 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. The treaty rules establish taxation priority by first determining which jurisdiction was the domicile of the decedent. 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 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. Persons Investing in the United States. While U.S. citizens and residents are subject to federal estate tax on worldwide assets, the non-resident alien’s estate is subject to federal estate tax only on U.S. situs assets, consequently “situs” has an important role to play in estate planning for many cross-border families. INTRODUCTION AND CASE STUDIES A. Tax filing requirements as well as health insurance and risk management needs are other key cross border considerations that we analyze. Families with a mix of citizenships and/or immigration statuses face unique challenges. For example, if you are a Canadian who owns property in the US but are not a US citizen or resident, the US will tax your estate 40% of the fair value of the property. • Communicating with you with respect to new research, webinars, or other firm activities or events that may be of interest to you; and These “permitted” uses may include: 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. • When you or a member of your immediate family seeks a confidential consultation with us; The particular status of the taxpayer will have significant income and transfer tax consequences, and of course, the particular distinctions vary by country. We are committed to protecting and respecting your privacy. 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. Obtaining Personal Data We will otherwise only use your personal data internally in connection with our ordinary professional activities as an investment advisory firm. All rights reserved. E state taxes can be a huge liability if you are not properly prepared. Ask us a question now! • Fulfilling other tasks that you may request or any other purpose for which you provide your consent. In practice, there is no bright-line test for non citizens to establish domicile. 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. 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. The personal and financial merits of the QDOT and alternative planning tools must be analyzed on a case-by-case basis. Learn More. Cross border trust and estate planning . With offices in the United States and Canada, we help clients with cross-border law matters and legal concerns. Common law vs. civil law foundations: While the estate tax laws of different U.S. states may have critical differences (e.g., the recognition and/or treatment of community property), these differences are subtle in comparison to the international landscape. Cross-border estate planning lawyers Having a lawyer with experience in both Canadian and US estate planning is key. Estate and Tax Planning for Cross-Border Families. Whether you have general business transactions or international disputes, are travelling or a snow bird, we can help you with cross-border representation or legal services. Estate Disputes: Keeping the Peace. This exposes distributions from the trust to potentially higher German transfer taxes. Currently, the United States has estate and/or gift tax treaties with sixteen sovereign nations (see Appendix A). We can help you understand how U.S. estate tax could affect your estate planning and how to minimize taxation in both jurisdictions through careful specialized estate planning. These topics also include cross-border issues that complicate estate planning: transfer tax rules, treaties, and credits. U.S. lawyer with experience in resolving these complex issues, however shopping cart Description: double taxation than. 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