Estate Tax Planning

Planning for the transfer of assets on death requires careful consideration of the tax consequences that may arise at such time.

Mutanho Professional Corporation (MPC) provides 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 and testamentary trusts as well optimizing wills to enable charitable giving.

Our professional accountants in Kelowna 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. We work with reputable legal firms and investment professionals to help us structure your Will and financial portfolios so that you don’t encounter legal issues or probate tax issues when the time comes.

We take a detailed analysis of the facts specific to each client’s situation in order to recommend and implement an appropriate plan. We also help clients with estates of Canadians who pass away owning real property in US and other foreign jurisdictions.

US Estate Taxes for Canadians owning US properties

Canadian residents (who are not US citizens) may be subject to US estate tax if they die owning certain US assets, such as shares in US corporations and US real estate. Unlike Canadian taxes at death, US estate tax is applied to the fair market value of the assets subject to the tax rather than the accrued capital gain on the property. For NRAs, US estate tax is imposed on the fair market value of US situs property.

Generally, a US decedent is required to file a US Estate Tax Return (Form 706) if the decedent’s worldwide assets at death are greater than the estate tax exemption amount in the year of death or if the deceased’s executor elects to transfer the “deceased spousal unused exclusion” amount to the surviving spouse, regardless of the size of the decedent’s worldwide assets.

An NRA decedent is required to file a US Estate Tax Return (Form 706-NA) if the NRA’s US situs assets at death are greater than $60,000. The estate tax return is due 9 months after the date of death, although the executor can request an automatic six month extension of the time to file (which does not extend the time to pay). If a deceased NRA is claiming any Treaty credits (such as the enhanced unified credit and marital credit), the executor will also be required to file a Treaty Based Return (Form 8833).