Cross-Border Blog

U.S. Estate Planning Checklist for Snowbirds

1. Understand how the U.S. Estate Tax affects your estate.
The Estate Tax is a tax by the United States government on your right to transfer property at your death. For non-residents, non-citizens, it consists of property that is situated in the United States, such as bank and investment accounts with U.S. financial institutions, real estate (including boat slips), insurance, trusts, annuities, business interests and other assets. Canadians are subject to Estate Tax on the fair market value of property situated in the United States on death exceeding $60,000.

2. Learn the dos and don’ts of how to own U.S. property.
There are a number of ways to own property in the United States and any one of them could create unwanted tax consequences without proper planning. Forms of ownership include sole ownership, joint ownership with right of survivorship, tenants in common, corporation, limited partnership, limited liability company (LLC), revocable trust, Florida Land Trust or irrevocable trust (such as a cross border trust). Each one has its own unique issues that should be addressed with an experienced cross border professional.

3. Are you covered if you lose capacity to make your own decisions about your property?
If you become incapacitated for any reason, you will not be able to transfer title to property or access your bank accounts in the U.S. The agent appointed under your Canadian power of attorney document will not be authorized in the U.S. If you do not have a power of attorney authorized under the laws of the State where the property is located, a guardianship proceeding will be necessary, which is time consuming and costly. Even though you may own your property jointly with your spouse or children, a property transaction cannot proceed without a valid power of attorney document or a court appointed guardian, if you lack capacity to make your own decisions.

4. Who do you want to make your health care decisions in the United States?
If you end up in a hospital or other health care facility in the United States and you cannot make decisions for yourself with respect to your medical care, your family will have to seek the courts to appoint a guardian, unless you have a valid power of attorney for health care decisions executed under the laws of the United States.

5. Know what happens to your property in the United States upon your death.
It depends on how you own your property in the U.S. Property passes one of two ways in the United States: automatically under the form of ownership OR through the probate process. The only methods of automatic transfer are i) joint ownership with right of survivorship, ii) under a life estate deed, also referred to as a ladybird deed or iii) pursuant to a declaration of trust. Otherwise your U.S. property will be subject to the probate process in the State where it is located.

6. Just because your property does not require probate in the U.S., doesn’t mean it is not subject to the U.S. Estate Tax.
Even if your property in the United States transfers automatically on death by reason of title (such as jointly owned property with your spouse), your estate is still liable for the Estate Tax and the property is still subject to a federal tax lien.

7. Beware of the Gift Tax! Do not add your children to the title on U.S. property to avoid probate.
Canadians seem to always be trying to find ways to avoid probate, but avoiding probate can have unintended consequences. There are good ways to avoid probate and there is a bad way. Adding your children to the title will trigger U.S. Gift Tax and quite possibly Canadian income tax. Understanding the potential U.S. gift and Canadian income tax consequences is critical to effective cross border estate planning for Canadians.

8. Using a separate last will and testament for property situated in the United States is an effective and efficient estate planning tool.
It is highly recommended to have a separate U.S. will governing the disposition of your property situated in the U.S. on your death. I have seen many problems arise during an estate administration because there was no separate U.S. will.

Ownership of property in the United States is complex. Therefore, it is important that any Canadian, snowbird or otherwise, that owns or is planning to purchase property in the United States or an executor of a Canadian estate dealing with property situated in the United States contact an experienced cross border tax & estate lawyer. If you have any questions regarding this or any other cross border tax or estate issue, please contact Michael Kennedy at 519-252-3888 or

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.
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