In a previous post I wrote about the estate & gift tax exemptions increasing in 2018 to over $11,000,000 ($11,700,000 in 2021). However, that threshold for filing an estate tax return and paying estate tax relates to United States citizens and residents (specifically those that consider the U.S. their domicile) on their worldwide estates.
Canadians, like all non-resident, non-U.S. citizens, are entitled to a mere $60,000 exemption. Yes, you read that correctly, $60,000. No, I did not forget a zero or two. $60,000, that’s it. For example, if you have a vacation home in Florida or a cottage in Michigan with a fair market value on date of death of $250,000, your estate is subject to U.S. estate tax.
Thankfully, Canadians are not without hope, as the U.S. Canada Tax Convention (the “Treaty”) contains some relief. But follow the rules carefully in order to allow your estate to reap the benefits of the Treaty. Otherwise, your estate will have an estate tax liability.
- What are the Treaty rules regarding the estate tax?
- What property is subject to the estate tax?
- How does the gift tax impact Canadians?
- What if my spouse and I own U.S. property as joint tenants?
- Will my executor have to probate my estate in the U.S.?
- Are there ways for my estate avoid probate in the U.S.?
I will answer these and other cross border questions in the new year, so please check back often and if you have a specific situation that you want addressed, please do not hesitate to contact us through our Consultation Form. You can also visit us at www.ingenuitycounsel.com.
About Ingenuity Counsel & Michael Kennedy
Ingenuity Counsel, based in Windsor, Ontario, Canada, provides cross border tax & United States legal services to Canadians. Michael Kennedy, with close to 20 years of legal experience, and his team at Ingenuity Counsel, advise Canadians who own property in the United States, particularly Michigan, California & Florida, with respect to federal income & estate tax, estate planning & probate administration.
Mr. Kennedy is an attorney-at-law admitted in the States of California, Michigan & Florida. He is also authorized as a Foreign Legal Consultant by the Law Society of Ontario to provide legal services in Ontario respecting the laws of the United States. Mr. Kennedy provides legal advice only as it pertains to U.S. laws. Prior to establishing Ingenuity Counsel in 2012, he practiced law in the United States for more than 10 years in California, Michigan and Florida. Michael has a U.S. law degree (JD) from Western New England University School of Law and his Master of Laws degree (LLM) from Georgetown University Law Center in Washington DC.