All About Estates

Is a U.S. Estate Tax Return Due?

So you’ve taken on the role of executor of your dear friend, Sally’s estate.  It just so happened that Sally owned a vacation property in the United States.  You’ve come across a couple of blogs in the last few weeks that suggest her estate may owe some taxes to the IRS.  You have no idea whether this is true and what you may need to do.  You decide to keep reading these blogs to see if they’ll help you. 

So what do you need to know?

As the executor, it is your obligation to prepare and file all necessary tax returns in all relevant jurisdictions for Sally’s estate, pay any taxes owing and obtain all tax clearances, if appropriate.  The filing due dates for tax returns required by all relevant jurisdictions may not be the same.  Failing to file tax returns on time will likely result in interest and penalties, which you may be responsible to pay. 

In earlier blogs I have written about how a deceased Canadian resident/citizen is subject to U.S. estate taxation with respect to assets they own that are situated in the U.S.- like Sally’s vacation property.

As Sally’s executor, her U.S. vacation property may mean you must file a U.S. estate tax return, if the fair market value at death of Sally’s vacation property exceeds US$60,000 (US$60,000 is the “exemption equivalent” of the applicable unified credit of US$13,000).  The correct form is Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a non-resident not a citizen of the United States). 

Generally Form 706NA must be filed by nine months after the date of Sally’s death.  A six month extension is available if requested prior to the due date.  To ask for an extension you must still pay the estimated correct amount of tax before the due date.  Interest will still accrue on any amounts that are still owed by the due date that are not paid at that time. 

You should also know that the long arm of the IRS may result in their collecting any unpaid estate tax from any beneficiary who receives a distribution of Sally’s property.  If this happens, you as the executor may be looked upon to pay the taxes. 

This is a complicated area.  If you are unclear about what to do, you might want to get some help. 

Corina Weigl

About Corina Weigl
Corina Weigl is a partner in the Trusts, Wills, Estates and Charities group at Fasken, a leading international law firm with over 650 lawyers and 9 offices worldwide that offers comprehensive estate planning, estate administration, personal tax planning, charitable giving and estate litigation services. Email: