Estate Tax Update

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US Estate Tax Exposure for US Citizens Living in Canada (Revised Edition, February 28, 2011)

If you are a US citizen living in Canada, you may be subject to both the Canadian and US tax regimes at your death.

As a Canadian resident, you are subject to Canadian income tax at death. As a US citizen, you are subject to US estate tax on the fair market value of your worldwide estate at the time of your death. Your worldwide estate includes all property owned at death — regardless of where the property is located — even:

• life insurance proceeds, if you own the policy or if the proceeds are payable to your estate;
• certain property transferred within three years of death;
• registered plans (e.g., registered pension plans, registered retirement savings plans and registered retirement income funds);
• certain trust interests; and
• stock options.