US resident - how to claim Canada Pension, US social sec

[nelsona]

The paragraph you quoute takes care of canadian rules.

However, It is the IRS that you have to worry about, and it is the fact that youa re a trustee. By definition you are a trustee of a foreign trust (foreign to US) and are subject to IRS trust reporting rules.

I already said you will owe nothing form any monies you receive from the estate to either govt. That is true wheter you are a trustee and executor or an heir.

What you need to to take care of is the fact that if you are a trustee, you are now now, every year until her death, subject to US foreign trust rules which are very complex and always changing, and full of penalties for non-compliance. It would merely be simpler if someone else, living outside US, were the trustee. Just this short dialogue should be enough to make you realize that its too complex for you or I. I refused to be my parents' exector trustee or whatever, becuse I live in US.

In canada, one need only worry about income taxes and probate at death. In US one must consider income tax, probate, estate tax, and -- even before death -- trust reporting.

[nelsona]

So, what I'm saying is that your mom's lawyer earned his money by making a very good trust document, which would be perfect if you were living in canada.

But I doubt that he took the time or has the expertise to address all IRS concerns and that he has not instructed you on how to comply with IRS regulations.

[carolepudlock]

what is there to report as being named a trustee. I received NO money. Will my mom have to make a new will out? and if she names a cdn. resident, how do I receive all assets, when the time comes? This is too confusing. but I really appreciate you going back and forth with me on this. Exactly how do we do this? get a US or Cdn. attorney or both? I have nothing to report, I am just named on will, in event of death.?

[nelsona]

Its a simple change to the will -- a codicil. The person who drew up the will could do this easily. All you are changing is the trustee and/or executor part. You can still be the heir. They are separate 'jobs'.

The executor will give you the assets based on your mother's wishes. He 'executes' her wishes. You inherit what she gives you.
If she needs a trustee (does she really? Most don't) then ask her to name someone locally.

There is no point discussing how you can comply with US regs.

[carolepudlock]

I will print all this out and show my mom, so she can talk to her Cdn. lawyer about this. Thankyou so much. If she names someone else as trustee, I do nothing, right? but when she does pass don't I pay taxes on this inheritance $$? I promise this is my last question, for now.

[eortlund]

NelsonA:

My American in-laws named my husband executor of their will. We are all Americans--they are in the US and we are in Canada. Sounds like you're saying this set-up is not an issue because Canada doesn't have these reporting issues?

[nelsona]

You inlaws estate id not foreign, so it is not a foreign trust in the eyes of IRS. And you are merely an executor, not a trustee.

Our US resident poster was unfortunately made a trustee of a Cdn (ie. foreign) trust. Not ideal.

[nelsona]

Eortlund.

There is a trade-off. She will not be subjest to estate tax although she lives in US.

You will be even though you live in canada.

[nelsona]

... if you inherit. so be nice.

[eortlund]

I'm always nice, and probably will inherit something. But isn't there an amount that can be transferred before an estate tax kicks in?

[nelsona]

Sure. $11K

[carolepudlock]

Nelsona , what is the difference as to whom the resident of Canada is on the will, when I am still the one inheriting everything. I still have to get it to the usa? It states on the will I am a non-resident. I don't get it, please explain in detail if possible. How does having a canadian resident on there, fix the problem?

[nelsona]

Anyone can inherit money. That is not a problem. However, US residents who are trustees of foreign estates have special REPORTING requirements every year.

Stop focussing on how you will get the money. that is quite simple. You'll get a cheque and a house.

Focus on removing yourself as trustee.

[carolepudlock]

Nelsona; I just found out from Canadian law firm that the term "estate trustee" is the same as executor/beneficier. It new terminology. According the them everything should be ok, except they suggested my mom write a letter to the bank and specify that I am to inherit the money and no one else before she passes. This way nothing can be held up in courts, etc. I just have to pay off her debts first. Thought I'd let you know. This put my mind at ease. You had me very nervous about reporting? every year before she dies?. We don't need anyone else on the will. It states I am a non-resident and the lawyer who drew it up knows that too. Thanks for your help.

[nelsona]

Carole, You need to check with a US tax specialist. The information you tell me refers to Canadian rules. You live in US and need to abide by US rules.

Of couse the lawyer that drew up your papers is going to tell you they are perfect. They are not US tax estate experts.