You Can't Solve a US Estate Tax Issue With a Canadian Solution
Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
I Execute Tax-Efficient Investment Portfolio Solutions So That Your Business, Family, And Estate Assets Are De-Risked And Protected Against Financial Risk, Economic Threats, Inflation And Higher Taxes.
Guest Contributor: Peter J. Merrick, TEP
You Can't Solve a US Estate Tax Issue With a Canadian Solution - You Need an American Estate Tax Solution - Here's Why: For non-resident Americans, accidental Americans, non-resident green card holders, and foreign nationals with significant US investments, navigating the US tax system is vital. This is particularly pertinent when it comes to non-American life insurance policies and situs assets.
What are situs assets? They are financial interests deemed located within the US. Notably, death benefits from non-American life insurance policies fall under this category, subjecting them to US estate taxes. Foreign nationals, even if they don't reside in the US but have hefty investments in US stocks, bonds, or businesses, also share this estate tax vulnerability.
Some might consider transferring these policies to an Irrevocable Life Insurance Trust (ILIT) as a solution. However, it's not that simple:
Three-Year Look-Back Rule: Simply transferring a policy to an ILIT isn't a guaranteed safety net. If the original policyholder dies within three years, the benefits revert back into the taxable estate, negating any intended tax-saving advantages.
Policy Standards Mismatch: Non-American life insurance policies may not meet the IRS standards for tax and estate exemptions. If these policies lack provisions required by the US, the anticipated tax benefits could be null.
If you belong to the aforementioned categories and possess non-American life insurance policies or assets in the US, the path is intricate.
The key? Consult with a financial advisor well-versed in life insurance, cross-border treaties, and the nuanced US tax code. Such expertise will guide you in making informed decisions, protecting you from unexpected tax implications and ensuring total compliance.
If you would like to discuss strategies and explore opportunities to protect your US situs assets from US estate taxes,
schedule an introduction with Peter J. Merrick by CLICKING HERE.
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About the author. Peter J. Merrick, TEP, is a Commentator/Keynote Speaker & Expert in US/ Canadian/International Cross Border and Estate Planning and Insurance & Annuity Planning - Author of The Business Novel - The King of Main Street. To read reviews, please click here.
Who is Peter J. Merrick, CFP, TEP?
Over three decades, Peter specialized in de-risking and saving his clients up to 40% of their wealth that would have otherwise been paid out because of poor planning. These proven solutions effectively shelter income, reduce taxes on income and estates and defer or eliminate tax on investments and creditor-proof assets for domestic and international clients.
Peter is also an author:
Peter has written three comprehensive LexisNexis business, legal, tax, succession and estate planning textbooks. For 18 years, Peter wrote a column for LexisNexis called "The Bottom Line," one of the largest professional tax and accounting publications.?Peter was also a university and college finance and financial planning lecturer for over 12 years.
In 2019, Peter relocated to San Diego, California, from Toronto, Canada. Right now, he sees a number of wealth-saving opportunities resolving long-ignored issues for Canadians in corporate planning, cross-border US and international planning, financial, philanthropic, and estate planning implementation, utilizing Canadian/US Life Insurance and Canadian/US Annuity strategies.
Peter works with high-net-worth individuals and their legal, tax and financial professionals performing Canadian estate freezes and terminal tax planning, as well as those who seek to relocate to the US or have financial interests in the US from places like Canada and other national jurisdictions.
It is absolutely essential that you partner with and work with an expert familiar with the Canadian Income Tax Act, the IRS Tax Code, and US/International Tax Treaties before implementing any strategy in the areas of Canadian estate freezes, terminal tax planning, and cross-border planning.
Let's set up a complimentary introductory meeting with Peter J. Merrick to review your policies by CLICKING HERE.