Estate Matters; RRSPs, RDSPs, RESPs, TFSAs; Snowbirds

56 thoughts on “Estate Matters; RRSPs, RDSPs, RESPs, TFSAs; Snowbirds”

1. @ Barbara
   My husband’s situation was much simpler — no trust involved and he was executer and sole inheritor of his mother’s estate. We did have to do some head scratching on how to terminate his mother’s stocks (never had those things ourselves) and how to do the IRS forms (never seen those things before) but that was about it. Wish I had some good advice but I don’t so I just want to send best wishes for a satisfactory resolution to your husband’s trust complications. It’s so hard to be dealing with a loved one’s passing while trying to get through this type of frustration too. Good luck!

2. While the fund manager scratches his head about what to do and no longer responds to messages from my husband, the inheritance distribution is held up for him and all his siblings. Some of the latter still view his living abroad as “playing” even though he’s been outside the US full-time for over 30 years. So long-standing sibling disputes are magnified by this issue. Oh Lord, what a mess the US government has given us.

3. @barbara
   As all Americans are considered residents of the US for tax purposes, then why in hell does it matter that you are not physically present there?
   It boggles my mind how the US always make a relatively simple thing hugely complicated.

4. Just wondering about the following scenario: a friend of mine has dual citizenship (Canadian/US). My friend has never filed taxes (and has no intention of doing so). Her father, a US citizen, lives in the US. In the event that he passes and leaves an inheritance, does she become at risk of IRS scrutiny/involvement/problems? Thanks

5. @ greg

   The short answer is no. US estate taxes (if there are any) will be paid by the estate, not the heirs.

6. @Greg: Taxes are not the problem with inheritance. The so-called “Patriot Act” and a hundred other vindictive pieces of legislation are the problem, some of which just went into effect this year. I will tell you from experience that you should advise your friend’s father to get advice from an attorney WHO UNDERSTANDS THE INHERITANCE LAWS AS THEY APPLY TO NON-RESIDENT US CITIZENS.

   First, make sure that she is NOT the executor of any trust attached to his estate, because her physical presence outside the US turns any investments into a “foreign trust”. Which then turns her life into living hell once he’s gone.

   My mother-in-law passed away in February, and left an inheritance of mainly stocks, bonds, and mutual funds to my husband. It is now late June and he still has not received the full inheritance because every US financial firm refuses to deal with him without “proof” that he resides full-time in the United States (an address of a relative doesn’t suffice). The firm holding the funds will not transfer them overseas, and no US firm will accept him as a client. Meanwhile, for the same reason, the firm holding the funds has cancelled his temporary account, so everything is frozen and locked. None of it has a thing to do with taxes. It has to do with the US government equating Americans overseas with terrorist money-laundering child sex traffickers.

   It didn’t just affect him. The fact that one of the heirs lives outside the US full-time made the entire inheritance untouchable for more than two months until a loophole was found to at least distribute his siblings’ shares. Instead of showing support and understanding, his siblings (who still don’t understand why he lives abroad after 35 years) resent him over this.

   All of this could have been prevented, apparently, with a small change in wording in the will and trust documents. I don’t recall that exact wording. Anyway, your friend’s father’s situation will be different. Consult an expert–not any old US attorney, but one with actual experience in this area.