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Understanding Your Exposure
If both of these conditions apply to your estate, it may be subject to U.S. estate tax upon your death:
The value of your U.S. assets exceeds US$60,000
If the value of your assets that have a U.S. location or connection is greater than US$60,000, you must file a U.S. estate tax return regardless of whether there is a tax liability.
Your worldwide estate is greater than $5,549,000
If the value of your worldwide estate is more than US$5.549 million and the value of your U.S. assets is greater than US$60,000, you may have exposure to U.S. estate tax.
The following are examples of assets that have a U.S. location or connection. Please note this is not a complete list.
- U.S. real estate
- Assets of a trade or business conducted within the U.S., such as shares of a non-publicly traded U.S. corporation
- Shares in publicly-traded U.S. corporations
- Bonds, debentures and other debt obligations issued by U.S. corporations and governments
- Tangible property located in the U.S. (i.e. vehicles, art, boats, jewellery)
- U.S. retirement plans
- Deposits in a U.S. brokerage firm
- All U.S.-listed Exchange-Traded Funds (ETFs)
Strategies to Minimize Your Exposure
Here are some ways you can reduce the taxes that your heirs would be responsible for paying. A financial planner can help you understand the strategies available to reduce the U.S. tax, and will work with your tax and legal advisors to determine what works best for your particular situation.
- Keep your worldwide estate value below US$5.45 million
- Gift or sell U.S. assets before your death
- Transfer U.S. assets to your spouse at fair market value
- Hold U.S. assets in a Canadian corporation or Canadian Trust
- Transfer U.S.-based retirement plans to an RRSP
U.S. Residency — Canadians Travelling to the U.S. Beware
The United States income tax residency rules could affect you.
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RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.