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Cross-Border Estates: What Canadians with U.S. or Overseas Assets Must Plan For

Cross-Border Estates What Canadians with U.S. or Overseas Assets Must Plan For

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Owning property or investments across borders is no longer unusual for Canadians.  

Retirement homes in Florida. Bank accounts in Europe. Rental properties in Dubai. Shares in a U.S. corporation. Each of these assets carries pride, value, and opportunity.  

But when death comes, they also bring legal, tax, and practical challenges that go far beyond a simple will. 

This article is written for Canadians who hold property abroad. It explores the issues that arise when death and law intersect across multiple countries. It is a guide for families who want to avoid conflict and reduce unnecessary cost.  

It is also a reminder that cross-border planning is never generic. Each family must match the rules of the countries involved with their own goals. 

Why cross-border estates demand special attention

Canadian law does not apply in a vacuum. When a Canadian passes away owning property in another country, that property may fall under the laws of the place where it sits.  

This principle is known as lex situs. A home in Arizona is subject to Arizona property law. An apartment in France is subject to French law. 

The will drafted in Canada might not be enough to control what happens abroad. Sometimes it is recognized. Sometimes it is not.  

Each country has its own requirements for wills, probate, and succession. Overlooking this can lead to delays, frozen accounts, or even loss of value. 

U.S. estate tax and Canadian residents

A significant percentage of Canadians possess U.S assets. Vacation properties in Florida, California or Arizona are good. The shares of U.S. corporations are also common.  

Such assets can be exposed to U.S. estate tax on death of a Canadians owner. 

The United States imposes estate tax on the fair market value of U.S. property owned by non-residents at death. The threshold is lower for non-residents than for U.S. citizens.  

However, Canada and the U.S. have a tax treaty that provides credits and deductions to avoid double taxation. The treaty effectively allows Canadians with worldwide estates under a certain value to escape U.S estate tax. (IRS) 

But once the value rises, exposure becomes real. 

As of 2025, the U.S. federal estate tax exemption for citizens and residents is over 13 million USD.  

For Canadian residents with U.S. property, the treaty allows a prorated share of that exemption. The calculation can be complex, requiring detailed reporting of worldwide assets. 

For example, a Canadian who owns a Florida condo worth 600,000 USD with a worldwide estate of 10 million USD may have to file a U.S. estate tax return. Even if no tax is payable, compliance is mandatory. 

The Canadian side of the tax equation

Canada does not levy estate or inheritance tax. Instead, it imposes a deemed disposition tax.  

When a Canadian dies, they are deemed to have sold all their assets immediately before death at fair market value. The gain is included in their final tax return. This applies to Canadian assets and to worldwide assets owned by the deceased. 

So the same Florida condo is not only subject to potential U.S. estate tax, it is also deemed sold under Canadian rules. Canada will tax the capital gain.  

Relief is possible if the U.S. estate tax is paid, through the foreign tax credit system and the treaty. But paperwork and timing matter. If the return is not filed, penalties and interest compound the pain. 

Multiple wills for multiple jurisdictions

One planning tool is the use of separate wills for different jurisdictions. A Canadian resident with property in Ontario and a vacation home in Florida may have one will governed by Ontario law for Canadian assets, and another will drafted under Florida law for that property.  

This can simplify probate, reduce cost, and prevent one jurisdiction from delaying the other. 

The key is coordination. Two wills should not contradict each other. They must be carefully drafted to ensure that one does not revoke the other. Professional advice in both jurisdictions is essential. 

Forced heirship in civil law countries

Many countries do not permit absolute testamentary freedom.  

In France, Spain, and many civil law jurisdictions, children and spouses are entitled to fixed portions of an estate. These are known as forced heirship rules. 

This is true for countries like Spain. The families that own property in such countries should accept that the local law can dictate different results not similar to the Canadian expectations.  

Planning tools like usufruct arrangements or corporate structures can sometimes manage these rules, but they require local expertise. 

Probate recognition across borders

Even when wills are recognized, the process of probating them can be slow when assets are located abroad.  

Some countries require resealing of probate. Others require a fresh court application. Bank accounts may be frozen until foreign court documents are provided. 

To reduce these delays, families often use joint ownership, beneficiary designations, or local holding companies.  

These tools can bypass probate in certain cases. Each option carries tax consequences, so advice is needed before acting. 

Trusts and cross-border complications

Trusts are powerful estate planning tools in Canada.  

But not all foreign countries recognize trusts in the same way. Civil law countries may treat them as foreign arrangements subject to extra reporting or even penalty taxes.  

The U.S. recognizes trusts but applies its own tax rules, which may conflict with Canadian rules. 

For Canadians with children living abroad, leaving property through a trust can raise unexpected complexity.  

The trust may be subject to ongoing filings in the child’s country of residence. Without planning, the gift meant to simplify may instead burden the family with tax bills and lawyers. 

Reporting obligations and penalties

Both Canada and the U.S. have extensive reporting rules for cross-border assets.  

In Canada, residents must disclose specified foreign property worth more than 100,000 CAD on Form T1135.  

This includes real estate, bank accounts, and securities. Failure to file can bring steep penalties even if no tax is owing. 

In the U.S., estates of non-residents owning U.S. property may need to file IRS Form 706-NA.  

Again, penalties apply if deadlines are missed. Families who delay can end up paying more in fines than in taxes. 

Family conflict across borders

Tax is not the only concern. Family relationships can suffer when assets are spread across borders.  

Different heirs may live in different countries. Local laws may favour one heir over another. The cost of foreign lawyers may discourage some heirs from claiming their rights. 

Clear communication is vital. Families should know what property exists, where it sits, and what law will apply. When surprises appear after death, disputes follow. Open discussion now prevents courtrooms later. 

Practical steps to start cross-border estate planning

  • List all assets. Note where they are located, how they are titled, and their approximate value.
  • Check local rules. For each country, find out what succession and tax laws apply.
  • Review tax treaties. See how Canada’s treaties with that country handle estate and inheritance tax.
  • Consider multiple wills. Draft them carefully to avoid conflict.
  • Update beneficiary designations. Ensure they are recognized in the country where the asset is held.
  • File required disclosures. Meet Canadian and foreign reporting rules.
  • Communicate with heirs. Share the plan and document the reasoning.

The human side of cross-border estates

Beyond tax and paperwork, cross-border estates are about people. 

The Florida condo where grandchildren swam. The bank account built from years of overseas work. The London flat purchased as a safe haven. These assets hold memory as well as value. When they pass across generations, the goal is more than tax savings. It is preserving the story and ensuring fairness. 

Families that take time to plan give a gift of clarity. They prevent heirs from becoming adversaries. They turn property into legacy. 

Conclusion

Cross-border estates demand foresight. They sit at the intersection of multiple legal systems, multiple tax regimes, and multiple family expectations.  

Canadians with U.S. or overseas property must not assume a domestic will is enough. They must take steps now. 

At Forum Estates, we work with families to align Canadian rules with the rules abroad.  

We partner with local counsel when needed. We document with precision. We help reduce tax, avoid delay, and preserve relationships. 

Cross-border estates can be complex. But with planning, they can also be managed with clarity and fairness. 

 This blog is for general information only and does not constitute legal advice. Estate laws vary by situation and jurisdiction. For guidance specific to your circumstances, please consult a qualified estate lawyer. Forum Estates is not responsible for actions taken based on this content.