All About Estates

Tomorrow is Election Day in the U.S.

One of the most unusual election campaigns in recent times will hopefully come to a conclusion tomorrow. I would like to take the opportunity to review the possible outcomes for Canadian Estate & Tax planners. Both Hilary Clinton and Donald trump have proposed changes to the Estate Tax regime in the U.S. These changes can impact Canadians in the event that the individual is a) a U.S. citizen or b) in a non U.S. resident but has U.S. real property (which includes among other things U.S. real estate and investments in U.S. stocks).

The current situation provides for taxation of up to 40% on a U.S. citizen’s net worth in excess of $5.45 million. For non-U.S. citizens, holding U.S. real property, there is an exemption based on the pro-rated calculation of the value of U.S. real property to the value of the worldwide estate.

The Clinton Plan proposes an increase in the rate of taxation to 50% on estates worth over $10 million, 55% for estates over $50 million, and 65% for estates exceeding $500 million (interesting some research has shown that this would have only affected 223 taxpayers in 2014). Furthermore, she wants to reduce the basic exemption currently at $5.45 million to exemption to $3.5 million (the level of the basic estate tax exemption in 2009). She states that the Estate Tax only impacts the very largest estates, and the reformed Estate Tax would only affect the wealthiest 4 out of every 1,000 estates in the country

The Trump Plan will repeal the Estate Tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. He further suggests to prevent abuse, he proposes that contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed.

No matter who wins the election, any changes to the U.S. Estate tax system won’t likely happen right away but one thing is certain, this election has being very taxing on everyone.

About Paul Fensom
Scotiatrust offers a full range of estate, trust and philanthropic advisory services designed to meet a client’s personal objectives and designed to evolve across a variety of life stages and financial events. Email: