If the surviving spouse is a US citizen, then in general one-half the value of the jointly owned property will be included in the estate of the first spouse to die.

If the surviving spouse is not a US citizen, the portion of jointly owned property that is taxed in the estate of the first spouse to die is based upon who provided the “consideration” to purchase the property (i.e. whose assets were used to purchase the property). Such tracing is rarely possible though for a married couple and the full value of the property will be included on each spouse’s death.

Generally, the full value of the jointly owned property is included in the estate of the first spouse to die, and then it is included again in the estate of the surviving spouse, if then still owned. This could lead to double tax for which there is no relief. With proper planning and timely cross border estate administration, these tax traps will be avoided.

Therefore, although probate will be unnecessary on the first spouse’s death, his/her estate will need to file a U.S. estate tax return in order to avail itself of the treaty relief to eliminate or minimize the estate tax payable. It is also necessary in order to clear title to the property so the surviving spouse can sell it if he/she prefers.

• What is a Transfer Certificate and why does my estate need one?
• Will my executor have to probate my estate in the U.S.?
• Are there ways for my estate avoid probate in the U.S.?
• How does the gift tax impact Canadians?

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.