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

[carolepudlock]

I didn't check with the lawyer that drew up will. I went to "justanswer.com" a canada law firm. Its just new wording. In what country are you located? We are not talking about millions of dollars here, just a little money and a little house with no other family, I still don't understand what there is to report???every year????? it doesn't make sense. I did send info to our american tax accountant, waiting to here back. It shouldn't be this complicated, for what we are talking about. Estate trustee sounds like its a big estate worth millions? which in my case is not the case.

[nelsona]

A foreign trust is a foreign trust.
Just to give you an examplre.

Every Joe in canada has an RRSP right. Nothing special needs to be reported in Canada about it.

However, in US, you need to file a special form (8891 or 3520) and also td-09.22-1 form. So that's 2 forms. That has nothing to do with taxes. Failure to report the RRSP on that form runs a minimum 10K per year. plus a percentage of the RRSP. That's not tax, that doesn't matter about the size or anything. And you need to do this every year, even when you take no money form the RRSP.

Why? because it is considered by IRS to a foreign TRUST. So, since you are a "truste" of an estate in canada, you *may* be subject to those trust laws and reporting and penalties.

That is why -- if you still wish to be a trustee or executor -- it is important to find out if you are froma US trust exeprt. And, since you sday it is a small estate, perhaps not worthy of spending bucks to find out an experts opinion on this, it is better to simply NOT be the trustee or executor.

I've said, now at least twice, all I know on the matter.

When you ask your accountant, the question to ask is: "Is the fact that I am a trustee of my mother's finances make me subject to 3520 and FBAR reporting requirements?" If he doesn't know, he's not an expert.

Let us know what you find out, since many yanks with Cdn relatives are in the same boat?

[carolepudlock]

what is RRSP? I will let you know what US accountant, US lawyer and Canadian lawyer says. This may take some time. Thanks again. Carol

[nelsona]

Ask one of your relatives what an RRSP is.

Its just to show how something that is simple and uncomplicated in canada, gets very complicated when you cross the border.

[andied]

nelsona, you wrote in another thread "I find the notion of a Cdn resident renouncing US citizenship so foolish, that I won't even entertain any questions on it. Free country right?"

I think this current thread illustrates why one might renounce their US citizenship.

My young adult daughter (dual citizen) recently asked about relinquishing her US citizenship. She was born in Can, never lived in US, married to Cdn and with a child who was born in Can. Why be burdened with the reporting to the IRS, and risk (through lack of knowledge) making errors and potentially suffer financial ruin, from an aggressive IRS.

I certainly appreciate your help and advice, through this forum. I had my dual citizen daughters listed as executors of my Cdn estate - never occurred to me that it would require 3520 reporting. I have now torn up my will and seeking to find another solution.

[nelsona]

The reason it is foolish, is that renouncing citizenship for tax purposes, still keeps you automatically taxable for the next 10 years. and makes it harder for you to even visit US, which for the 90% of Cdns who live within walking diestance of the border, doesn't make sense.

[andied]

It doesn't necessarily automatically keep you taxable for 10 years - only if you renounce to avoid taxes, and how is this determined?

The new HEART act affects "covered expatriates" - those with at least 2 million net worth or net cap gain over 600k, or those with average annual net income tax for the five taxable years preceding expatriation exceeds $139,000. Obviously a lot of people would not be affected. Also, "Certain dual citizens and persons who relinquish US citizenship before reaching 18.5 years of age are not treated as covered expatriates" I do not believe an individual such as my daughter, who was born outside of the US and has never lived in the US, would be considered a "covered expatriate" regardless of her assets.

Also, an opinion from a legal blog: "As a national political issue, expatriation is hardly new. In the Foreign Investors Tax Act of 1966, Congress decided to make an issue of expatriation. In that Act, lawmakers tried to impose onerous taxes on exiting wealthy Americans who relinquished their U.S. citizenship "with the principal purpose of avoiding" U.S. taxes, a highly subjective intention that was virtually impossible to prove. The IRS couldn't prove such "intent" and very rarely even tried."

If Donald Trump renounced, the IRS would likely follow up, but for the "average" taxpayer, maybe...maybe not. Obviously relinquishing one's citizenship is to be given thorough consideration.

[nelsona]

Have at it... I simply refuse to look into any technical details related to it.

[carolepudlock]

from various sources: The will is not even an active document until my mom dies. I don't even have to know about it. Before she dies its a dormant document waiting to become active when she dies. She could change it ten times. Its not relevant to anything until she dies.
I am future executor of mothers will as far as I know, but it not even necessarily final. People are confused with the terminology.
this was quoted from professionals. I looked up the form you were talking about to file. It requires figures of money I received. I received nothing! until years away when my mom does pass on.

[nelsona]

I'm glad you sought advice on this. I would caution however that your reading of Form 3520 is slightly different than mine.

As long as you do not co-own anything with her right now, or in the future, you are probably fine. But, in my opinion, you and your mother have indeed set up a foreign grantor trust. Same would be true if she would give you POA (power of attorney). Seems to me that she already has given you that power -- but I may be confused by the new terminology as you say. I hope the IRS is not similarly confused.

All the best.

[carolepudlock]

Can you tell me, if you were me. How should I be named or how should a Canadian will be written, so it is acceptable in USA without problems? What do they call me in the will? just executor/beneficary or what? I don't know the difference in any of these, aren't they all the same meaning? I promise I'll try and make this my last question.
remember: one daughter, us resident and one mother : Canadian citizen and resident- and no other family. what to do that's acceptable in BOTH countries?

[nelsona]

What i have DONE, is have my mother name one of HER trusted friends as executor. My mother decides who inherits.

As I said, earlier, it is ALWAYS the best policy to have the executor who is not a beneficiary.

[carolepudlock]

I heard from an American estate law attorney. He said, no 3520 is necessary as this is a "will" document, NOT a "trust" document. As under Canada law, the US law is that if I am on the accounts and home ownership documents (which I am) I am co-owner and if she specifies on those accounts and on the deed that it is with "right of survivorship", these items never go into her estate for probate. He said get the accounts and deeds corrected to specify that you are co-owner with right to survivorship and this would eliminate all the problems. He does not see this as a trust as I am co-owner right now and the document my mom had done by the canada lawyer was a "will" and not a trust document. This is what has to be done to fix this. I am letting you know, for others with the same problem. your thoughts?

[nelsona]

This seems to take care of the estae issues.

However, as co=owner, this does make you liable for tax on the increased value of the house, as it is not your principle residence.

Who's idea was it to put her home in your name?

[carolepudlock]

she bought the house maybe 5 years ago. She was with my step dad but she didn't want his name on house. So she put me and her on the house, main reason was when he passed he didn't want his kids coming to get what they could get. especially her house. He passed away Dec. 30 and we have to re-do the will anyway. I think the easiest way to do this is to simply pick someone else to be estate trustee/executor and me just an heir? I have been working on this for a week and I've just about had it with the subject. Remember it is a will not a trust document. your thougts?