RDSP questions

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fangle
Posts: 22
Joined: Tue Feb 18, 2014 1:00 pm

RDSP questions

Post by fangle »

Hello,

Dual US/CAN resident in Canada.

If my Canadian partner grants me power of attorney over their RDSP, would I then have to report the RDSP on my FBAR? I'm guessing yes, but wanted to double check. This would only be to facilitate things administratively as my partner is competent to be holder of the RDSP. Would this create other US reporting requirements (8938 for example if I meet overall threshold) and should I avoid doing this?

As long as I keep it under the US annual gift exemption are there any issues on either side of the border with giving money to my partner that they will later contribute to their RDSP? I don't want to add complications to what will be a small RDSP.

Many thanks.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RDSP questions

Post by nelsona »

RDSPs, while they are trusts, are not subject to trust reporting, since 2020, so nothing to worry about there.

So all you need to worry about is FBAR and income tax.

For FBAR, Include the account with your other joint accounts.

Include annual income, but only if you file jointly in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
fangle
Posts: 22
Joined: Tue Feb 18, 2014 1:00 pm

Re: RDSP questions

Post by fangle »

Thank you.

FBAR only then for me as we are not married and we don't have any joint accounts. I hope if we get married that I can file MFS which I understand is most common to keep things simple when one spouse is non-US citizen.

Do you happen to know if I need to avoid becoming the holder of the RDSP? I'm not sure if the holder has to change with RDSPs if they lose capacity down the line. I hope not but will ask some RDSP experts as this website seems to suggest not being a holder/contributor as a US citizen:

https://www.rdsp.com/tutorial/rdsp-rule ... s-citizens "This tax liability can be on the beneficiary, but can also be on the holder or a contributor to the RDSP, depending on their citizenship. The reason for this is because of what are known as the “grantor trust rules” in the Internal Revenue Code, specifically section 679."

Now that I know about the impact of a POA and FBAR: I have a question related to FBAR and enduring power of attorneys rather account specific, I have seen articles that suggest a line in the power of attorney like this, "Brier suggests that clients add a new line to their durable power of attorney forms. It would say that you exclude power over any foreign account unless or until an agent has expressly accepted that power." Has anyone seen that work to exclude accounts from FBAR? I

I reside near my senior Canadian only parents and it would be practical for me to be one of their attorney options as I can walk into their local bank. And I am likely to have enduring power of attorney for my Canadian only partner at some point as well. I don't want to have to badger my family for all their financial details for my FBAR when they are managing now. Or should I just avoid holding power of attorney for my parents and put it on my distant, but not dual siblings.

Thank you
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RDSP questions

Post by nelsona »

FBAR is innocuous. Whatever accounts you have access to, report them. The language you quoted would prevent you from having POA, which is not your goal. You want POA over this account. So FBAR it.

Its unlikely that filing MFS will make any difference in your US tax liability, as the US tax you currently pay, if any is undoubtedly used on your Cdn return as a credit, and will continue to be.

I generally advise, for estate matters that as a US citizen it is best not to be an executor of a CDN estate if there are other alternatives.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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