Cross-Border
Estate Planning

Advice For US and Canadian Residents

Written by Tiffany Woodfield, CRPC®, CIM®, TEP®, Senior Financial Advisor, Associate Portfolio Manager

In your journey of life, you have travelled, lived and worked in more than one country.

Now that you have acquired your assets, you want to make sure they are protected from tax pitfalls and go to your loved ones or charity of choice.

Losing your assets as you transition between two countries would be devastating. That's why understanding cross-border estate planning and cross-border financial planning is critical.

Please note that this article is general in nature. We recommend you speak to qualified cross-border tax, legal and financial planning experts to understand your situation.

Why Is International Estate Planning Important for International Families?

When our clients come to us, an important goal for them is understanding how to transfer wealth during their lifetime and after their death.

Ideally, you want to plan. Arranging who will receive your assets when you pass and providing clear end-of-life directives will reduce family distress when you are gone. When you are considering your estate and investments, you want to have an estate plan that considers the beneficiaries and assets in multiple countries.

The documents you will likely want are a will, financial power of attorney and a durable power of attorney for healthcare.

You may consider various trusts, but you will need to know the tax implications of these in the country where your assets are held and where you reside. The rights accorded to a beneficiary depending on where they reside, and the tax jurisdiction is also fundamental.

Quote About Why Is International Estate Planning Important for International Families?

What Is Cross-Border Estate Planning?

Cross-border estate planning is the process of designing how your assets will be transferred to beneficiaries across more than one country.

The goal with cross-border estate planning is to minimize taxes while respecting the estate, gift, and inheritance laws in each jurisdiction. Cross-border estate planning is about more than just writing a will. It's about working with professionals to ensure your estate doesn't get hit with double taxation or unexpected legal hurdles.

If you or your beneficiaries have ties in both the US and Canada, you'll have to think about:

How the US estate tax might apply, even if you're living in Canada
Whether your Canadian will covers your US assets, or vice versa
How to avoid probate in both countries
What happens to your RRSPs, IRAs, or 401(k)s when you pass
Whether your trusts are recognized on both sides of the border
And how your beneficiaries will be taxed, depending on where they live

Due to the level of complexity involved in cross-border estate planning, it’s important to work with a cross-border financial advisor, a lawyer, and an accountant who understand the nuances of the US and Canadian systems.

Without the right planning, the inheritance you wish to leave to your loved ones could get tied up or double-taxed.

What Are the Biggest Pitfalls of Cross-Border Estates and Inheritances?

The biggest risks for a cross-border individual's family when it comes to inheritance are unexpected taxation or delays due to conflicting US and Canadian estate laws. Here's a quick breakdown of what this actually means:

1. Double Taxation

Without proper planning, the same assets could be taxed in both countries, once by the US and again by Canada. This can occur if the estate triggers US estate tax rules while the heirs also face Canadian income tax on inherited accounts, such as IRAs or RRSPs. That’s a costly and often avoidable outcome.

2. Freezing or Delays in Distributing Assets

If your wills or estate documents aren’t properly aligned for both countries, your estate could get stuck in multiple probate processes, one in each country. That delays distributions and can increase legal fees.

3. Inheritance Tax Issues for US Heirs

If your beneficiaries live in the US, receiving Canadian assets—or vice versa—could come with unexpected tax reporting requirements. In some cases, heirs could even trigger penalties or audits simply because they didn’t know the rules. (Make sure you have a family meeting with your beneficiaries so they know what to expect.)

4. Trusts Not Recognized or Taxed Differently

Trusts that work well in one country may be ineffective or penalized in the other country. For example, a Canadian trust might be considered a “foreign trust” by the IRS, requiring complex reporting and possible taxation.

The Basics of US-Canada Cross-Border Estate Planning

If you are a US person, the global taxation of citizens and green card holders make planning ahead of time even more critical.

You may have children from a prior marriage and others from a current marriage. Succession planning becomes crucial.

First, you want to make sure you have your beneficiary designations on your registered accounts, such as RRSPs and IRAs. When planning a transfer of your estate across the US-Canada border, you must know where you need a will and in which country your executor will be.

You may wonder if you need two wills if you have assets in both countries.

It may be true that having a will in the country where your property is owned is ideal. However, you need to consider that if you have two wills, your lawyers should work together so that one will doesn't revoke the other.

Another consideration with cross-border estate planning is the use of a trust. In simple terms, a trust is a legal vehicle that allows a third party, the trust, to hold the assets on behalf of the beneficiary(s).

Working with a Cross-Border Wealth Management Firm

Estate planning can be complicated when you are a Canadian and reside in Canada.

But when you add the intricacy of being considered a US person and perhaps having assets in both countries, the risk is much higher of making costly mistakes.

Thinking about no longer being able to take care of your affairs may be unpleasant. However, with proper planning, your wishes will be easier to follow. Your beneficiaries may be able to avoid the distress of spending years trying to sort out your affairs.

Working with a cross-border financial planning team who can help guide you makes estate planning simpler. You will feel confident that you have done your best to take care of your loved ones.

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US Revocable Living Trust

A US revocable living trust may not be a good option for a Canadian resident, regardless of whether you are considered a US person.

It may cause tax and estate problems. As always, speak to a qualified tax and law professional to understand your situation.

Many people like to use a trust to avoid probate and have the public know all their probable assets once they have passed. A trust helps to avoid the cost and time of assets being tied up in probate. However, when you have a cross-border estate, it isn't always that simple.

The US government recognizes a US revocable living trust as a disregarded entity, which means it is not taxed as an entity separate from you.

If a Canadian resident controls the US revocable living trust or if a Canadian resident contributed to the trust, it may be considered a Canadian resident trust. As a Canadian resident trust, it would be taxable on its worldwide income. It is viewed as an entity separate from you.

Can You Create a Cross-Border Trust?

The next consideration that may arise is the option of a cross-border trust (CBT).

Because the CRA and IRS recognize a cross-border trust as a disregarded entity, it means the business is not separated from the owner for tax purposes in both countries. Therefore having a CBT may help to avoid double taxation as foreign tax credits are easier to use.

Estate Planning with Foreign Property

Whether you are a Canadian or a US person residing in Canada, you need to consider the tax, legal and administration factors of owning foreign property in the US.

Many people want to use trusts to avoid the costly and lengthy probate processes or gain creditor protection. Still, only specific options may work when residing in Canada. You will need to speak to your cross-border lawyer to identify the best path forward.

If you are a foreign person, you may be subject to withholding tax on your US property's selling price according to Foreign Investment in Real Property Tax Act (FIRPTA).

Even when you reside in Canada, the property is owned in the US, so the IRS has the first right to tax the gains.

You will also still need to report your gains or loss to the CRA as a Canadian resident. This FIRPTA is taken to ensure you pay your US income tax obligation.

Once you file your US tax return, it may be refunded from the IRS if there is a balance owed to you. Also, the Canada-US Income Tax Treaty helps you to avoid double taxation. You can likely utilize foreign tax credits to offset the amount paid to the IRS. You will also need to consider where you are a citizen, a resident and your domicile.

You would need to speak to a cross-border accountant to understand your particular situation, as there may be exceptions to the withholding tax.

FIRPTA Withholding

List About 4 Main Benefits of a Cross-Border Trust

The Benefits of Cross-Border Trusts

You may be considering whether or not to use a cross-border trust (CBT).

While you would need to consult with a lawyer to consider your particular situation, I will explain why there is an increase in the popularity of CBTs.

When you pass on your property through a trust, you avoid probate, and the property goes directly to your heirs.

First, it is important to understand what probate means.

When you pass away, anything that cannot have a direct beneficiary designation will go to your heirs through a will. Before it transfers, it goes through the process of probate.

Probate is the legal process where the court determines the validity and wishes of your will. Probate can be costly and is time-consuming.

During probate, your probate assets are essentially frozen until the court determines the validity of your will and settling of your estate. This would include property and assets on either side of the border.

Another downside of probate is that this court process is public. Anyone can see your assets' value, and probated wills are public records filed in a Register of Wills in the US. It would likely be registered with the probate courts in Canada, and anyone can apply for a copy.

You can see why many families prefer to use a trust to avoid probate.

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LLC Limited Liability Corporation

We have had several clients come to us who have inherited a limited liability corporation (LLC).

It is a structure created in the US that does not have an equivalent in Canada. In the US, an LLC allows the owners to get taxed when they earn income from the LLC.

The actual LLC does not file a tax return as it is considered a disregarded entity. In Canada, an LLC isn't recognized. It is seen as a corporation, and the CRA would tax the corporation.

This means you likely cannot use the foreign tax credits against each other because one would be taxed in your name and the other as a corporation. This means you are at risk for double taxation.

Please speak to a cross-border lawyer and cross-border accountant to understand your situation more clearly and avoid this issue.

Lifetime Gifts to Minimize US Estate Taxes

There is no gift tax in Canada; however, if you gift investments or real estate, a deemed disposition may occur.

For example, if you gifted a house, the CRA sees it as though you sold the property at fair market value (FMV), and you would owe any tax on the capital gain.

In the United States, you can give up to US$19,000 yearly to any number of beneficiaries and avoid gift tax. You shouldn’t face tax until you reach your maximum lifetime gift and estate tax exemption, which is US$13,990,000 per individual in 2025.

The federal estate tax applies to the value of the estate over the current threshold at your time of death. It is paid from the assets of your estate before the remaining assets are distributed to your beneficiaries.

The federal estate tax threshold will “permanently” increase to $15 million per person, effective January 1, 2026. For couples, this results in a combined exemption of $30 million. This is a result of the Big Beautiful Bill Act, which was signed into law on July 4th, 2025.

For married couples, if your assets pass to a US citizen spouse, you can defer the estate tax by using the marital deduction. If your spouse isn't a US citizen, you cannot use the marital deduction, and you may consider a special form of trust called a Qualified Disability Trust (QDOT).

You may be able to gift money to beneficiaries during your lifetime to reduce your estate value. But be careful to look up state taxes, since some states charge estate tax and inheritance tax above various thresholds.

The Basics of Dynasty Trusts

A dynasty trust is usually created to pass wealth from one generation to another without transfer taxes such as estate tax, gift tax or generation-skipping tax.

Keep in mind that if the dynasty trust is set up in the US and the beneficiaries of the trust are Canadian residents (or if the contributor is a Canadian resident), it may be deemed to be a Canadian resident trust as well as a US resident trust. This can cause tax complications.

It is essential to speak to a qualified cross-border lawyer and cross-border accountant to see if this may be an option for you.

Learn More About Dynasty Trusts

Canadian Testamentary Spousal Trusts

A Canadian testamentary spousal trust is a trust designed under the Income Tax Act to roll over assets to your spouse or common-law partner tax-free.

The provisions in your will create this trust. Your surviving spouse is entitled to all the income from the spousal trust. Nobody else can use or receive any income or capital during the surviving spouse's lifetime.

Common situations where spousal trusts may be considered are:

Second marriages
If a surviving spouse doesn't have a solid financial education
If you want greater control over business assets
Wealth protection

For more information, visit: Types of Trusts at Canada.ca

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Cross-Border Estate Planning Is Complex

There are more strategies and options than mentioned in this article, as well as other trust options.

Estate planning is complex and requires working with a cross-border wealth management team and a cross-border lawyer.

Cross-Border Estate Planning with SWAN Wealth

At SWAN Wealth Management, we work with a network of cross-border lawyers when doing Estate Planning for our clients.

You will need to speak to a qualified lawyer about your personal situation.

It is important to understand that to create a cohesive estate plan; you need your financial advisor, lawyer and accountant to work together.

All members of your team need to understand your goals.

Raymond James Trust Canada

At SWAN Wealth, we work with Raymond James Trust (Canada) (RJTC) for trust services.

RJTC provides trust services to help safeguard your legacy and ensure your wishes are followed.

You can appoint (RJTC) as the executor and trustee to administer your estate and help you make the best decisions. Our trustee services can help guide with technical, tax and reporting and the administration of trusts.

Common Questions

Cross-border families need to navigate estate laws in both the US and Canada, which can complicate estate planning. It's crucial to work with advisors who specialize in cross-border issues to ensure compliance and tax efficiency in both jurisdictions.
It is important to understand that the rules of Canada and the US regarding taxation at death are different and that you need proper planning. For instance, Canada doesn’t have an “estate tax” per se but rather a “deemed disposition,” which means when you pass away, it is as if you sold everything right before you died. Any taxes from capital gains need to be paid before assets can go to your heirs. The US only charges an estate tax if your overall estate is worth more than a set threshold when you pass. But even if no tax is payable, your estate might need to file a US estate tax return.
Federal estate taxes apply to US estates exceeding a certain value threshold, currently $13.61 million for 2024. Planning strategies like gifting during your lifetime and using trusts can help reduce your taxable estate. However, it is essential to speak to a professional about your personal situation; otherwise, you could be leaving a tax burden on your heirs.
Estate tax treaties between the US and Canada aim to prevent double taxation on estates and inheritances. These treaties can provide significant tax relief by determining which country has taxing rights and may allow for tax credits.
The US imposes federal estate taxes on estates above a certain threshold, while Canada does not have an inheritance tax but a “deemed disposition” at death. In both countries taxes must be paid out of the estate of the deceased before the assets can be transferred. As a result, a beneficiary won’t pay taxes on an inheritance but will need to report any income earned from the inherited the assets.
Strategies such as using tax-deferred accounts, gifting, and setting up trusts can improve tax efficiency. It is important to align these strategies with the tax laws of both the US and Canada to optimize the estate's value.
Understanding the context of estate planning, including legal, tax, and financial implications in both the US and Canada, is crucial for cross-border families. This ensures that the estate is managed efficiently, taxes are minimized, and assets are distributed according to the family's wishes.
If you're a Canadian who inherits money from the United States, you generally don’t have to pay tax just for receiving that money.

The estate may owe taxes in the US if the person who died (decedent) held US situs property above a certain threshold. US situs property refers to assets situated in the US, such as shares of US corporations or US real estate. As of 2025, if the decedent's worldwide estate is valued at more than US$13,990,000, the estate may be required to pay estate taxes.

You likely won’t pay tax in Canada just for receiving the money, but if that inheritance earns income (like interest, dividends, or gains), you will need to report and may owe tax on that income going forward. If you receive a large inheritance, you may need to report it to the CRA or IRS, depending on your status and the amount.

Source: IRS
A US will may be valid in Canada if it meets local legal requirements and is valid under the US jurisdiction.

However, Canadian provinces have their own rules, and you should create a new will when you move across the border. In addition, if you have two wills, they must not cancel each other. Work with legal professionals in both countries to make sure your estate plan works properly.
Canada does not have a foreign inheritance tax, unlike some countries.

There isn't a tax on assets inherited from abroad. However, if the inherited assets later earn income such as rent, interest, dividends, or capital gains, you must report that income in Canada.

If you inherit a US property and later sell it, you will owe capital gains tax in Canada on any increase in value from the time you inherited it. You may also owe US tax at the time of sale. Large foreign inheritances may need to be disclosed to the CRA or IRS, even if no tax is owed.
There are estate tax treaty provisions between Canada and the US, but there is no comprehensive gift tax treaty.

The Canada‑US Income Tax Treaty includes estate tax provisions that give Canadian residents some relief from the US estate tax. The Canada-US treaty doesn't include general gift tax provisions. When people refer to "gift tax treaties" in this context, they are usually just mispeaking.

Source: IRS Estate and Gift Tax Treaties
Canada has no gift tax. However, if you gift property, you may owe tax on the capital gain.

In the US, gifts over a set annual amount may count toward a lifetime limit and require filing a gift tax return. US citizens and green card holders must follow US gift tax rules, even if they live in Canada.
Estate tax planning is the process of organizing your finances so fewer taxes are owed when you die. In the US, this may mean using the lifetime exemption or trusts to lower the estate tax.

In Canada, it often means reducing capital gains from deemed dispositions. It may also include purchasing life insurance to cover the tax burden that will arise upon death. Careful planning helps protect your assets for your loved ones.

Next Steps

If you're planning a cross-border move or you've already moved from the US to Canada and need help simplifying and optimizing your finances, please schedule a call with SWAN.

At SWAN Wealth, we specialize in cross-border financial planning and wealth management. We would be happy to ensure that you're onside with the IRS while protecting your investments and retirement assets.

Resources

About the Author

Tiffany Woodfield is a dual-licensed financial advisor and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany specializes in advising clients who live both in Canada and the United States and need to simplify their cross-border financial plan, move their assets across the border, and optimize their investments so they can minimize their tax burden. Together Tiffany and John Woodfield help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the US.

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About the Author

Tiffany Woodfield is a dual-licensed financial advisor and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield.

Tiffany specializes in advising clients who live both in Canada and the United States and need to simplify their cross-border financial plan, move their assets across the border, and optimize their investments so they can minimize their tax burden.

Together Tiffany and John Woodfield, CFP and Portfolio Manager, help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the US.

Schedule a Call