U.S. Estate Tax repeal - Will it be the “Death” of your planning?

by Fasken Martineau DuMoulin LLP | Mar 20, 2017   ()

U.S. citizens living in Canada need to be alert to the Trump administration's Repeal of the Death Tax

This briefing is intended for individuals that could be impacted by this repeal

With the recent election of President Trump and with the Republican Party taking control of both the House of Representatives and Senate, Canadians - business owners and individuals alike - have begun to consider the implications to them of the next four years of a Trump administration. One of the first developments of interest is the introduction of the Death Tax Repeal Act of 2017 on January 24, which calls for the repeal of the U.S. estate tax, or as it is often called, the "death tax".

The proposed legislation could affect a large number of people in Canada. Under the current rules, U.S. estate taxes are imposed on the worldwide estates of U.S. citizens wherever they reside. By some estimates, there are approximately 1,000,000 U.S. citizens residing in Canada. In addition, Canadian citizens who own "U.S. situs property" at the time of their death are subject to the U.S. estate tax regime based on the proportion that their U.S. situs property represents of their worldwide estate. The most common forms of U.S. situs property are U.S. real property (including vacation homes owned by "snowbirds") and stocks of U.S. corporations that are directly owned by an individual. Finally, there are a number of individuals who were born outside the U.S. but who reside in Canada who may qualify as U.S. citizens for purposes of the rules, if one or more of their parents are U.S. citizens by birth. These individuals are sometimes referred to as "Accidental Americans".

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Source: Lexology
Source: Lexology

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