Moneysense.ca
By Debbie Stanley, June 24, 2024
The transfer of Canadian estates to U.S. beneficiaries comes with various legal, tax and financial implications. Learn about the factors to consider.
Managing a cross-border inheritance often means dealing with multiple currencies. When preparing your estate plan, you will want to keep in mind some key points that your future executor will come across when distributing your estate:
- Currency exchange rates: Fluctuations in exchange rates can affect the value of the inheritance when converting from Canadian to U.S. dollars. For instance, if the Canadian dollar weakens against the U.S. dollar between the time of inheritance and the time of transfer, the value of the inheritance in U.S. dollars could decrease.
- Banking and investments: Transferring funds and managing investments across borders may incur extra fees and require dealing with different financial institutions. For example, transferring funds from a Canadian brokerage account to a U.S. account might involve transaction fees, wire fees and foreign exchange fees.
Handling a will with cross-border implications requires careful legal navigation. Key issues include:
- Asset transfer: Transferring assets like real estate or investments across borders may involve additional legal and regulatory steps. For example, transferring a Canadian investment account to a U.S. beneficiary might require navigating both Canadian banking regulations and U.S. tax reporting requirements.
- Recognition of wills: Canadian wills are generally recognized in the U.S., but differences in probate laws can complicate the process. Legal advice in both countries is often necessary. For instance, if a beneficiary wants to sell an inherited Canadian property, they may need to follow both Canadian and U.S. legal procedures.
Cross-border estate planning for Canadian parents with U.S. resident children involves navigating complex tax regulations and potential pitfalls. While your estate may be valued under the federal threshold and might not face U.S. federal estate taxes, there are state taxes and other considerations that could impact its final value.
