If you are a Canadian individual who is transferred to the United States, you may be exposed to US estate, gift or generation-skipping transfer tax (collectively, transfer taxes). The exposure depends on whether you are regarded for transfer tax purposes as a US resident or a non-resident alien. Criteria for determining residency for US transfer taxes differ from those for determining residency for US income taxes.
Key aspects of transfer taxes are discussed below and summarized in Table 1 on page 3. All dollar amounts are in US currency.
You will be considered a US resident for transfer tax purposes if you are domiciled in the United States. You acquire domicile in the United States by both:
Domicile is a subjective test because it depends on your intent to remain in the United States. Courts and commentators have developed some objective criteria to help determine whether the intent necessary to establish domicile is present. These criteria include: