The suggestion, by Badger and Nononymous, for this new thread came from a comment by Elizabeth, which I’ve excerpted here and can be found in its entirety at this link followed by several comments in reply.
Please share your information and experience regarding estate matters for former US citizens both in reply to Elizabeth’s question and/or in a broader sense, and ask your own questions about these matters on this thread.
Elizabeth wrote: . . . My father, who was born in the USA and moved to Canada in [the 1980s], passed away recently. A little background… after moving here he was under the impression that he didn’t need to file taxes in the US if he properly filed in Canada . . . He relinquished his US citizenship in [the 1990s] by taking the citizenship oath in Canada, along with the rest of our family. He never lived as an American after that, never renewed his US passport, never lived there. He did collect Social Security from the years he did work there, but that was it. His accountants want me to file US taxes for his estate, but I don’t think I need to as he was not a US citizen anymore.
Was it US policy in 1990 that taking citizenship of another country causes you to loose US citizenship?
@Marie
If that was your intention. Which would mean you had to cease to use or renew your US passport, file US tax returns or vote in any US election.
http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/
Yes, if done with the intention of relinquishing US citizenship by so doing.
Thank you for the new thread. I will give you all a little more information on what has happened since my father’s death.
First, I went to see his lawyer (concerning the will), and the lawyer was the first one to say that I needed to file back taxes for my father. My father had told his lawyer that he was born in the US on social occasions, sharing stories. Obviously my father wasn’t hiding that he was born there and spent most of his life there, but he was Canadian now. He completely lived as a Canadian. The lawyer gave me a long story about how his wife (US citizen) had to file back taxes and that all is good with her now. He suggested I file as well. I explained to him I wasn’t a US person anymore. He basically told me I was wrong.
Next, my father’s accountants said I needed to file back taxes for my dad. And that they would need to file for his business as well. And that he could owe $10,000 for every year, blah blah. I didn’t like the scare tactic. I explained to them that I would think about it.
This was all extremely overwhelming and worrisome. Then one day recently, I suddenly had a completely clear thought about the situation. He was Canadian, had not filed US taxes since he had been here, so why would I file taxes in the US for him if he didn’t think he needed to? I researched some things and decided it wasn’t necessary. I told our accountant my thoughts and he didn’t know enough about citizenship based taxation to understand. The story of my life. But he asked a fellow accountant that specialized in US tax. To my surprise, this other accountant actually knew about the rules prior 2004. He got it! Finally, someone got it. But… he still wanted something more so that we could all cover ourselves. That is why he asked for an opinion letter from a lawyer.
So I told them I would get back to them in the new year with my decision. I feel confident in what I know. My father was not a US citizen. He did not renew his US passport, he did not live there or have assets there, and he did not file taxes there.
Congratulations. You have a clear understanding of the issues and what you do not need to do. You need to follow Canadian law but not US. ( I hope your Dad didn’t have a lot of US assets)
Your father’s lawyer and the 2 accountants want to cover their behinds. The scare tactics are extremely annoying. In the end, it probably comes down to the size and complexity of the estate.
One lesson here is to not have a lawyer or accountant who knows anything about your birth or citizenship history!
Thank you DoD. My father had no assets in the US.
And yes, the scare tactics are annoying. I have good stories on those too. I should post here more often.
It all hinges on the intent of the individual at the time the expatriating act took place. Actually determining a person’s past intent is a nebulous thing but the best indicator is that person’s behavior in the years since the potentially expatriating act took place.
Note that the loss of US citizenship is NOT at all contingent on whether or not one possesses a CLN. Looking at the behavior of Elizabeth’s father, it is pretty obvious that he intended to lose US citizenship, believed he lost US citizenship, and acted as if he was was no longer a US citizen after he became a Canadian. Following the advice of those accountants would be a terrible mistake. They are merely doing what they do best, namely covering their asses, which in this case is in direct conflict with the interests of their client. They are most definitely not experts in US citizenship law.
Something I’m curious about is that Elizabeth refers to them as “his accountants”. Presumably they were OK with her father not filing US taxes for all those years after he became a Canadian so why do they now suddenly believe his estate needs to file with the US? Maybe they noticed the dreaded US birthplace when they saw his death certificate?
This situation is somewhat similar to my situation. When I pick an executor I will make sure that they understand that in spite of my US birthplace, I lost US citizenship years ago and my instruction is that they not file anything with the IRS. If they are not OK with that then I will find somebody who is.
Had you done what the lawyers said you must, and filed back taxes etc. I would argue that you could sue your lawyers for malpractice. Lawyers are supposed to have a competent knowledge of the law.
@Elizabeth
Please do. We love the horror stories.
Sounds like you absolutely made the right decision in the end. John Richardson is a citizenship lawyer that someone in the thread mentioned. If you still need that 3rd opinion, I suggest contacting him.
@Nononymous
A few posts came in while I was composing mine. The lawyers and accountants will unavoidably see a US birthplace on the death certificate even if they had no clue beforehand. That’s why it is best to lay the cards on the table from the get go. Its not fair to ambush an executor. Its a thankless enough job as it is!
I know from your previous posts over the years that you possess “stealth” US citizenship. That’s a much more complicated scenario compared to Elizbeth’s father and myself. Hopefully this will all work out before we actually need our executors but I’m not holding my breath.
@maz57 Yes, they were his accountants for years and knew he was a US citizen and that he chose not to file. They stated this in documents each year that accompanied his tax returns. There was no detail as to why he chose not to file in those documents. Obviously it was because he didn’t have to file. Again… they are just trying to cover themselves. Understandable.
The thing is, they didn’t understand the situation completely. They didn’t understand why he was not considered a US citizen anymore. That is the problem with lawyers and accountants. They usually do not have the full understanding.
@Nononymous I will go through and see if I can find the appropriate threads to share my horror stories with scare tactics. 🙂
@maz57 Concerning your comment about your executor, I have drawn up my self-documented relinquishment letter and have it tucked away with my other documentation. My executor will also know about it.
@maz57
I’ve instructed my executor to assume that I’m not a US citizen, despite the US birthplace. (Quick backstory: accidental, born in US but Canadian from birth due to parentage, moved back as a toddler; spent a few years working and studying in the US many decades ago, only filed taxes then, never after returning to Canada.)
But if I”m honest with myself this is probably something that I will need to deal with more thoroughly by renouncing or “renouncing” – manufacturing some sort of document to claim I don’t have US citizenship.
I still wonder why we haven’t heard more stories about this though. There are a lot of of elderly duals in Canada, some with substantial estates and real estate gains. Lawyers and accountants should be all over this, just think of the fees!
@Elizabeth
We are obviously on the same wavelength. After posting I was thinking that dealing with this situation is the best argument I have seen so far for actually spending the time and money to obtain a CLN, even if no Form 8854 is ever filed. If you had your father’s CLN to shove under the noses of the accountants, I’m sure that would be the end of the discussion.
Short of spending the $2350 for a CLN, a signed statement concerning the facts of loss of US citizenship might be just as effective for our purposes, particularly if it is notarized and looks nice and official. Tucked right in there along with your birth certificate. All these accountants really want is a piece of paper which relieves them of responsibility. Unfortunate that your father didn’t correct them back in the day and explain that he was no longer a US citizen and was therefore no longer liable for US taxes. There should have been no mention of the US at all in his file.
My beneficiaries will be joint owners of all I possess, if I can just get through current sale of property without being unexpectedly lumbered with an appointment in Samarra.
No probate necessary.
@Nononymous
Just as there are still many duals in Canada who haven’t heard of US citizenship based taxation, I’ll bet there are many lawyers and accountants who don’t have a clue as well. Now if I could just find one to appoint as my executor…..
@maz57
You need the Canadian equivalent of this guy:
https://en.wikipedia.org/wiki/Lionel_Hutz
Let me know if you find one.
Yeahhh. At least someone’s got it right. I am not an American citizen…I relinquished it in 1980 when I crossed the border choosing to live in Canada, when I didn’t renew my passport because I preferred to be Canadian, and again in 1994 when I took an oath to focus only on Canada. I’m glad to be where my mother was born, where my grandmothers were born, and where my great grandparents were born! I’m jumping for joy. Yeahhhhh!
@Nononymous
Lionel is no longer with us…..I guess I’ll have to call Saul.
@Elizabeth,
Thank you for bringing this situation to light. We are about to draft wills. I will be including in mine a statement that I am not a US citizen or US person, that I renounced in 20xx, and including a notarized copy of my CLN as part of the will.
This may be the best option for future executors, as opposed to keeping a CLN tucked away with other important documents. When they grab the will upon my death, it’s all one bundle.
One could just use a FI as executor – a FI that doesn’t have a W9 on file. They’d likely not be arguing in favor of contacting the IRS.
@The Mom – you might want to include proof that you were NOT a covered expatriate in that packet of documents (if such proof exists – a copy of form 8854 should do it). If the IRS ever finalises the regulations on section 2801 (the extra 40% tax on heirs of covered expatriates), and if your heirs make the mistake of becoming US tainted, then they may have to prove a negative to avoid the tax.