The cross-border financial, tax, and estate planning advisors at Cardinal Point Wealth Management recently issued an alert to any Canadian taxpayer with U.S. connections that careful planning may be needed to avoid hefty estate taxes. This is especially critical when the anticipated U.S. estate tax exposure exceeds what can be protected by available deductions, exclusions, and treaty credits. Nonetheless, by taking the necessary measures to minimize said exposure, individuals can save substantial amounts of money for their heirs and beneficiaries. Cardinal Point Wealth Management also advises that, when contemplating proposed plans and strategies, factoring in the associated costs and ongoing legal compliance requirements is crucial.
The government uses three main criteria to determine who is considered a U.S. person and who may be subject to these taxes. The group includes U.S. citizens, Green Card holders, and those who satisfy what is known as the Substantial Presence Test. That test is based on how many days per year the person spends in the United States. Applying the formula of that test accurately to determine whether someone is considered a U.S. person liable for U.S. taxes can be a complicated process. For this reason, many certified cross-border tax planning and cross-border estate planning professionals, such as those at Cardinal Point Wealth Management, strongly recommend that Canadians with U.S. connections seek guidance from a cross-border will and estate planning advisor.
Consulting an estate and cross-border tax planning advisor who is adept in these matters is equally important because specific exemptions may be available to individuals, qualifying them to avoid getting classified as a U.S. person. Exemptions like these can help individuals avoid or even eliminate costly estate taxes, offering substantial savings. For instance, international treaties might safeguard one’s estate from cross-border taxation. The Canada-U.S. Tax Treaty allows a U.S. person to potentially benefit from a spousal credit against U.S. estate taxes. The property must be passed to the surviving non-U.S. spouse (the Canadian citizen) in a manner that would otherwise qualify for the U.S. marital deduction to be eligible for the spousal credit.
Furthermore, there can be additional tax ramifications if both spouses are U.S. persons, and one of their estates surpasses a specific financial threshold. Even in such cases, there may be several planning options available to offset the estate taxes if one spouse dies and leaves their estate to the surviving spouse. Other strategies, such as using a special trust within the Will, may effectively defer taxation. An alternative solution could be to set up a credit shelter bypass trust. This option would allow assets and wealth within the trust to eventually transfer to the Canadian spouse, without incurring any U.S. estate taxes. There are similar types of trusts that can be used to help children or grandchildren who are beneficiaries, protecting them from estate taxes. Properly structuring the ownership of real estate or purchasing certain types of life insurance can minimize tax exposure. For those in a cross-border situation, consulting an experienced Canada-U.S. cross-border financial planning advisor can provide valuable insight, assisting in resolving complex tax laws and making Will & Estate planning less stressful and more beneficial.
About Cardinal Point Wealth Management:
Cardinal Point Wealth Management is a leading independent cross-border financial advisory firm specializing in cross-border wealth management for individuals, families, and businesses in the United States and Canada. With a team of experienced professionals, Cardinal Point provides comprehensive cross-border financial planning, cross border investment management, and cross-border tax planning services to help clients achieve their financial goals across borders. With offices in the United States and Canada, Cardinal Point Wealth Management is well-equipped to assist clients with their unique financial needs in both countries.
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Company Name: Cardinal Point Wealth Management
Contact Person: Kris Rossignoli
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Phone: 8662132036
Address:2255 Glades Road, Suite 324A
City: Boca Raton
State: FL 33431
Country: United States
Website: https://cardinalpointwealth.com