Abbreviated Question re: Executor Duty to Pay Foreign Tax

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tropikdreamz50
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Abbreviated Question re: Executor Duty to Pay Foreign Tax

Post by tropikdreamz50 » Thu Oct 10, 2019 7:44 am

I am posting here to abbreviate the content of an earlier post relating to an estate matter in Ontario. I realize that a long post with multiple questions may go unanswered for a while and am hoping a more consolidated question will be more likely to get a reply.

So, in brief, is the executor (apparently known as "estate trustee" in Ontario) of a will required by Ontario and/or Canadian law to pay all back income taxes, both domestic and foreign, owed by the decedent prior to death prior to distributing funds to the beneficiaries?

As the only U.S. resident among the three beneficiaries, I would of course like to see all tax matters handled by the estate prior the beneficiaries being paid, rather than having the tax issues dumped solely on me later. I based the latter statement on my understanding that the IRS can come after me for the decedent's back taxes if I inherit from the decedent's estate.

nelsona
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Re: Abbreviated Question re: Executor Duty to Pay Foreign Tax

Post by nelsona » Thu Oct 10, 2019 3:51 pm

What US tax liability would the deceased have?
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tropikdreamz50
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Joined: Wed Oct 09, 2019 11:42 pm

Re: Abbreviated Question re: Executor Duty to Pay Foreign Tax

Post by tropikdreamz50 » Thu Oct 10, 2019 9:39 pm

nelsona wrote:
> What US tax liability would the deceased have?

This info was my long post, but was omitted in my abbreviated post. The decedent lived in the U.S. for about 18 years, and became a long-term permanent resident. It's likely that she never effectively disclaimed this residency status. If this is the case, she was a U.S. Person for a roughly 22 year period during her retirement in Canada. I'm pretty sure that she did not file U.S. tax returns during this period, since like many people in her situation, she didn't know she had to.

As a result, to fully settle matters with all creditors, the estate will have to pay all the U.S. back taxes. I asked whether this was mandatory for the executor, because I am the only beneficiary who lives in the U.S. and my understanding is that the IRS can come after a beneficiary for taxes that were owed but not paid by the estate.

nelsona
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Re: Abbreviated Question re: Executor Duty to Pay Foreign Tax

Post by nelsona » Fri Oct 11, 2019 5:18 pm

As is often and consistently advised her, US persons should NOT be the executor of Cdn estates, not for the reason you mention, but because it raises foreign trust reporting problems. Maybe you could back out? It's also not wise for the executor to be an inheritor.

In any event, the only concern would be estate tax, not income tax, and any Cdn tax would no doubt cover that.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

tropikdreamz50
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Joined: Wed Oct 09, 2019 11:42 pm

Re: Abbreviated Question re: Executor Duty to Pay Foreign Tax

Post by tropikdreamz50 » Fri Oct 11, 2019 6:46 pm

nelsona wrote:
> As is often and consistently advised her, US persons should NOT be the
> executor of Cdn estates, not for the reason you mention, but because it
> raises foreign trust reporting problems.

I am a dual citizen Canada-U.S., but I'm not the executor of the estate. My sister, who lives in Canada, is the executor. She is a Canadian citizen. Her status as a U.S. person isn't clear to me. She acquired a Green Card in the U.S. in 1980 and lived and worked in the U.S. until about 1993 when she returned to Canada where she has lived ever since. I don't know if she ever filed the paperwork needed to actively renounce her U.S. Permanent Residency.

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