Cross Border Tax & Estate Planning for Canadians
The Altro LLP estate planning team possesses a wide range of experience in all aspects of wills, trusts and estates. Our professionals provide individuals, families and business clients with comprehensive advice customized to their specific needs to ensure the smooth transfer of assets to the next generation including reducing or eliminating probate fees and minimizing or deferring tax on capital gains, income splitting through the use of spousal (for married or common law spouses) and testamentary trusts as well optimizing wills to enable charitable giving.
Planning for the transfer of assets on death requires careful consideration of the tax consequences that may arise at such time. Our lawyers will analyze the different tax consequences that may apply in respect of various asset classes such as registered plans, non-registered investments, corporate assets, real estate and personal property.
Without proper planning, a Canadian taxpayer’s estate may encounter a host of legal issues if he or she dies intestate (without a Will). These include the application of probate tax on assets that may have been transferred without probate, triggering capital gains tax which may have been deferred and/or guardianship issues for minor children.
Most notably, the application of relevant statutes, for example, in Ontario, the Succession Law Reform Act, will dictate how assets are to be distributed in the absence of a Will. Such distribution will depend on the next of kin who survive the testator/testatrix and often results in a distribution that may not have been the intention of the deceased.
Our professionals analyze the facts specific to each client’s situation in order to recommend and implement an appropriate plan. We also help clients settle estates of Canadians who pass away owning real property in foreign jurisdictions.
Cross Border Estate Planning for Canadians With US Assets
Canadians who own a Florida condominium, an Arizona home, US stocks or an interest in a US business hold US-situs assets that the US can tax on death. The US estate tax is calculated on the value of those assets, not the gain, and an estate with US-situs assets over US$60,000 generally must file Form 706-NA. The Canada–US Tax Treaty provides a prorated unified credit and an additional marital credit, which eliminate the tax for many families, but only when the estate claims them correctly and the worldwide estate is within the treaty limits. Canada, for its part, taxes accrued capital gains on death. Cross border estate planning coordinates the two systems so that each tax is minimized and credits offset each other.
Planning tools we use include cross border trusts, spousal trusts that qualify for both the Canadian rollover and the treaty marital credit, non-recourse financing, insurance, and choosing the right owner for each asset. Our Canada–US estate planning guide for snowbirds and the article on US estate tax planning for Canadians under the One Big Beautiful Bill Act cover these strategies in more depth.
Ontario Wills and Powers of Attorney Planning
Ontario levies Estate Administration Tax on the value of assets that pass through probate. A well-drafted Ontario estate plan frequently uses multiple wills: a primary will for assets that need probate, such as real estate and most bank and investment accounts, and a secondary will for assets that can be transferred without it, such as shares of a private corporation. Properly done, this keeps a significant portion of the estate outside the probate calculation.
Every Ontario plan should also include a Continuing Power of Attorney for Property and a Power of Attorney for Personal Care, so that a trusted person can manage finances and health decisions during incapacity without a court application. Clients with US property need a separate US-compliant power of attorney as well, because Ontario documents are frequently rejected by US title companies and banks. Since January 1, 2022, marriage no longer automatically revokes a will in Ontario, and Ontario courts can now validate a will that does not meet formal signing requirements, so existing plans deserve a fresh review. We also discuss virtual witnessing of wills and powers of attorney in Ontario. When an estate does go to court, our guide to Ontario probate explains each step.
Ontario Trust Planning
Trusts remain one of the most flexible estate planning tools in Ontario:
- Alter ego and joint partner trusts allow individuals aged 65 and over to transfer assets on a tax-deferred basis, avoiding probate and providing continuity on incapacity.
- Family trusts support income splitting within the current rules, estate freezes and creditor protection.
- Testamentary spousal trusts defer tax until the surviving spouse’s death while protecting the capital for children of a prior relationship.
- Henson trusts preserve disability benefits for a beneficiary with a disability.
Trusts are subject to the 21-year deemed disposition rule and to Canada’s expanded trust reporting requirements, and a trust with a US-citizen trustee or beneficiary requires additional US analysis. Our US citizen tax and estate planning team reviews those files.
Quebec Wills and Protection Mandates
Quebec civil law recognizes three forms of will: the notarial will, the holograph will written and signed entirely by the testator, and the will made in the presence of two witnesses. A notarial will is an authentic act, recorded in the registry of the Chambre des notaires du Québec, and does not need to be verified by the court after death, which allows the liquidator to begin settling the estate immediately. Holograph and witnessed wills must first be verified (probated) by the court or by a notary.
A protection mandate (mandat de protection) names the person who will look after your property and personal well-being if you become incapable. It takes effect only after it is homologated, a procedure that confirms incapacity and the validity of the mandate. Quebec’s 2022 reform of protective supervision replaced curatorship and advisers with a single, tailored tutorship regime and introduced a new assistance measure, making an up-to-date mandate even more important. A Quebec mandate should be paired with a US power of attorney for any US property.
Working With a Quebec Notary Specializing in Wills, Trusts and Powers of Attorney
Managing Partner David A. Altro and our Of Counsel Alessandro Tortis are Quebec notaries, which means Altro LLP can prepare notarial wills, protection mandates, trust deeds and powers of attorney as authentic acts, and coordinate them with Ontario, Florida and other US documents in a single plan. Few firms combine a Quebec notary specializing in wills, trusts and powers of attorney with US-licensed attorneys under one roof. See also our discussion of how Quebecers can avoid US probate.
US Revocable Trusts and Canadians
US advisors often recommend a revocable living trust to avoid probate. For a Canadian resident, a standard US revocable trust can create Canadian tax on transfer, trust reporting and 21-year rule problems, and it provides no US estate tax benefit. We explain why in is a US revocable trust okay for Canadians? and design cross-border alternatives when probate avoidance is the goal.
Frequently Asked Questions
What is cross border estate planning?
Cross border estate planning is estate planning for people with assets, family members or citizenship in more than one country. For Canadians, it usually means coordinating Canadian deemed-disposition tax and provincial probate with US estate tax and US probate on US property.
Do I need a separate will for my US property?
Sometimes. A separate US will or a trust can simplify US probate, but multiple wills must be drafted together so that one does not revoke the other. We decide case by case.
Does a Quebec notarial will need to be probated?
No. A Quebec notarial will does not require verification by the court, although US property governed by it may still require an ancillary probate in the state where it is located.
To start or update your plan, book a consultation with our cross border estate planning lawyers.