Insurance and Estate Planning: A Case Study for Americans Living in Canada

At Cardinal Point, many prospective cross-border clients with whom we meet cite the U.S. estate tax as a source of much stress and confusion. After all, an American living in Canada could be subject to up to 40% U.S. estate tax rate on U.S. assets, depending on when the decedent passes and the worth of U.S./worldwide assets at the time of death.

Our team has developed a case study to examine how insurance impacts the estate planning needs for Americans living in Canada. We discuss the specific insurance and estate tax issues related to the case as well as some planning strategies to address these issues.

Our example focuses on Thomas and Joyce, a high-net-worth couple who resides in British Columbia. They are both U.S. citizens and are considered to be residents of the U.S. for gift and estate tax purposes. As such, they will face U.S. estate tax exposure when their worldwide estate exceeds $5.34 million (U.S. dollars).

This case study looks at some of the key cross-border considerations Thomas and Joyce face, including:

  • The S. gift tax,
  • The S. and Canadian estate taxes,
  • A hypothetical analysis of S. estate tax exposure,
  • Strategies to structure insurance proceeds, and
  • Other factors such as probate fees and inflation concerns.

The following is a brief excerpt (the full case study can be found here):

U.S. Gift Tax


U.S. citizens face U.S. gift tax based on transfers of wealth during their lifetime. Thomas and Joyce are entitled to make tax-free gifts if such gifts are not greater than the annual exclusion of $14,000. Any gifts in the current tax year that exceed the annual exclusion amount would be considered as taxable. A U.S. gift tax return would be required to be filed to report the taxable gifts. Our case study couple is entitled to a lifetime gift tax exclusion of $5.34 million. As long as their lifetime gifts do not exceed this amount, no actual gift tax will have to be paid.

Meeting Your Estate Planning Needs

In coordination with our cross-border estate planning partners, Cardinal Point Wealth Management can review your existing estate plans and further assist (if required) in the creation of a flexible cross-border estate plan that will consider your specific long-term goals. Given today’s ever-changing estate and gift tax rules, this is an extremely important piece of your overall plan wealth management plan.

Get in touch with Cardinal Point today to begin the conversation and ensure that your cross-border plan is tailored to your unique situation.

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