Estate Tax

stewak2 · Post by **stewak2** » Thu Feb 08, 2007 9:03 pm

For 2006, estates valued at $2M or less are not taxable at all, regardless of disposition. That goes up to $3.5M in 2009, and the estate tax itself is repealed altogether in 2010 - for one year. In 2011 a sunset clause takes effect and the exemption reverts to 2002 levesl - $1M unless law is changed. This is from the IRS web site.
I agree if you have > $2M estate, non-USC spouse requires careful planning (die in 2010, perhaps?)
I'm still curious about the RRSP. I have made the election each year to defer taxation on growth, and the contributions were not deducted in the US.
Although in my case the entire value of my estate. including the RRSP, is under 1.5M, I would be suprised if the IRS would forgo the deferred tax.

nelsona · Post by **nelsona** » Thu Feb 08, 2007 11:00 pm

IRS would not be allowed to INCOME tax it if you transferred it to your spouse, since that would not be taxed in Canada (that is a treaty provision).
It would be the same as when you transfer to an RRIF.

The same will happpen if you divorce and transfer part of your RRSP in the settlement.