Estate Planning: Using trust in Canada to avoid probate

joeinusa · Post by **joeinusa** » Tue Oct 30, 2007 11:07 am

My mother is very sick and her lawyer is suggesting a trust be set up to avoid probate on her home and GICs as they pass to my siblings and me.

She is and my siblings are all Canadain and Canadian residents. I am US resident.

Her lawyer is not expert on US tax law so does know if there is any impact to me. My mother would set up the trust and be the grantor. I would be a beneficiary. However I do not know if IRS would be expecting me to do reporting. They have requirement for Form 3520 to be filed for foreign trusts but I am unclear if that applies to beneficaries.

Also I am not expecting to pay any tax in US or Canada as money from the trust before or after Mom's passing would be gifts/inheritance.

If this is a bad idea, we would have other options, in worse case paying the probate which in Ontario is 1.5%

nelsona · Post by **nelsona** » Tue Oct 30, 2007 11:50 am

Personl opinion: your mothers lawyer is wanting to pocket the fees himself, in the form of trust set-up fees and lawyers fees.

My advice, thank him for the suggestion, and tell him that you will get another lawyer to do it, to see his reaction. I would do this with a Financial Planner, not a lawyer.

Cross-border trusts are generally not a good idea. None of ther gift (or bequest when she dies) will be taxable to you or any of your siblings, regardless of this trust.

She should be considering gifting assets now, if probate fees are the real issue.