Moving Out of Canada

Non Resident Beneficiaries, US Citizenship, US Residency, and Property Held in the US

Special estate planning considerations must be made when a person, their spouse or their children are:

  • Non-residents of Canada,
  • US citizens, or
  • US residents for tax purposes.

In addition, if you own property in the US, this may also be subject to US estate tax.

The US income and estate tax regime is very different from that of Canada. In general, the tax consequences of being caught in their estate tax web are very onerous. Ownership of property in the US (for example a 2nd home in Florida by Canadian residents while having US estate tax consequences) can typically be planned around to avoid double taxation. It is US citizenship and residency that has a greater potential tax burden.

For example, if your son or daughter moves to the US for a job opportunity and obtains a “green card” allowing them to work in the US, they will be resident in the US for tax purposes. The estate tax consequences of their move to the US will arise if they remain resident in the US for a period of 7+ years. At that point they may become subject to US estate taxes or an exit tax upon returning to Canada.

In conclusion, these issues present a whole new set of complicated estate planning scenarios and they require specialized advice and attention. It is important that you seek the help of a professional if you are dealing with these issue.