Do you own property or stocks in the United States? Even if you are not a U.S. citizen, your estate could be subject to taxes.
You may be subject to U.S. estate taxes if the market value of your U.S. assets at the time of your death exceeds US$60,000. In this case, your estate will have to file an estate tax return within nine months of the date of death, even if no tax is due.
The most common assets subject to these estate taxes include real estate, U.S. securities (stocks, bonds, ETFs, etc.), tangible property that is permanently located in the United States (cars, boats, works of art, etc.), and the contents of safe deposit boxes, but not money in personal U.S. bank accounts. The duties apply to the market value of these assets at progressive rates ranging from 18% to 40%.
Calculate your tax credit
However, thanks to the tax treaty between Canada and the United States, you are entitled to a credit in the calculation of estate duties. This credit is based on the proportion of your assets located in the United States at the time of death relative to your total worldwide assets.
This credit means that, in most cases, there is no estate tax to pay if the value of your worldwide estate is less than the current exemption threshold, which is US$15 million in 2026. This threshold will be indexed to inflation starting in 2027.
Your estate may also benefit from a marital credit if the U.S. assets are bequeathed to the person to whom you are legally married. Note that it is possible to reduce Canadian capital gains tax by deducting U.S. estate taxes.
Planning your estate
Constant changes in U.S. tax laws can lead to unexpected tax consequences, such as estate tax, double taxation, or increased reporting requirements.
A tailored strategy can optimize the transfer of your estate, reduce your exposure to U.S. tax, facilitate the transfer of title to your heirs, and ensure compliance in both countries.
How you hold your assets is particularly important. Various strategies can be used to avoid U.S. estate taxes, such as transferring the subject property to a personal trust or a Canadian corporation, and sharing ownership of a property.
Constant changes in U.S. tax laws can lead to unexpected tax consequences. It is recommended that you consult an international tax specialist to optimize your estate planning.
