Wealth without Borders
The purpose of this quarterly newsletter is to share cross-border wealth management news and insights with our cross border clients and colleagues.
Revocable trusts are fairly common estate planning tools for U.S. persons who live in the U.S...So what happens when someone who maintains a U.S. revocable trust moves to Canada? If the soon-to-be Canuck is the trustee of the U.S. revocable trust, the Canada Revenue Agency (CRA) will consider the trust a Canadian resident for tax purposes and treat the trust as a separate entity from the grantor...This difference in tax treatment creates the potential for double taxation, taxation that often cannot be fully offset using foreign tax credits, as well as onerous and costly tax filing obligations.
Our cross-border clients will be happy to hear that on January 5th, 2025, the bill to repeal WEP was signed into law. This means that those individuals affected by WEP may receive additional Social Security benefits. Better yet, the bill is retroactive back to benefits received in January 2024.
The Steele Wealth Management team are specialists at maximizing retirement income for all our clients, and we are happy to see elimination of WEP with more money in the pockets of our cross-border clients! While WEP repeal simplifies retirement income planning, there is still plenty of planning to do to maximize income in retirement!
This edition of Wealth Without Borders discusses the elimination of the WEP. Read about the possibility that it will be repealed. We also examine tax and financial planning moves to help prepare you for the upcoming tax season if you are obligated to file a US tax return. Have you thought about 2024 tax planning? Read about actionable strategies to consider before year-end deadlines while considering your cross-border situation: your Canadian Investments integrated with your US investments. Plan a meeting with Steele Wealth Management to examine nuances and changes that could impact your typical year-end planning.
You may have been advised to transfer your Individual Retirement Account to a Registered Retirement Savings Plan. This misguided advice is usually a terrible mistake! You may keep and maintain your IRA when you become a Steele Wealth Management client. There is no need to collapse your IRA. There is no need to transfer your IRA to an RRSP. Transferring your IRA to an RRSP is not necessarily in your best interest.
At Steele Wealth Management, we’re here to make estate planning a positive, life-affirming endeavour that leads to the preservation of your family values. Consider adding a Transfer on Death (TOD) agreement to your RJLU investment accounts as part of your overall cross-border estate plan. A TOD agreement is easy to implement and avoids the probate process.
Understanding the ins and outs of the various Social Security benefits is difficult enough for financial professionals who reside in the US and work with clients who have spent their entire working lives in the US. Those financial professionals who work with clients who have spent time working in both Canada and the US must surmount an even greater wall of understanding when it comes to Social Security benefits, as well as how these benefits interact with Canadian social benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS).
It’s crazy how fast time flies – It’s already approaching the end of 2023! While tax and financial planning should take place all year long, here are several actionable strategies to consider before year-end deadlines while taking into account your cross-border situation: your Canadian Investments integrated with your US investments. Plan a meeting with Steele Wealth Management to examine nuances and changes that could impact your typical year-end planning. This edition of Wealth Without Borders examines tax and financial planning moves to help prepare you for the upcoming tax season if you are obligated to file a US tax return.
U.S. retirement accounts, such as IRAs and Roth IRAs, are excellent wealth-building and tax minimization tools that we use at Steele Wealth Management for planning with our cross-border clients. Our cross-border IRA account owners can name beneficiaries to inherit an IRA after they pass away, similar to naming beneficiaries for Canadian registered plans. There are significant benefits to having named beneficiaries on these accounts. However, the complexity involved with transferring an IRA at death can be a nightmare for non-residents of the U.S. without proper planning. This article discusses the implications of the IRS transfer certificate requirements and the extended wait time to access the funds.
As we near the end of another calendar year, it is important to be aware of the requirement to withdraw minimum distributions from individual retirement accounts. Care must be taken to ensure compliance with the rules – especially as some of those rules have shifted in the past year. Be sure to speak with us to ensure you’ve met your obligations to avoid any penalties.
The FBAR is the Report of Foreign Bank and Financial Accounts. If you are considered a “US person” and have financial accounts in a country other than the United States, filing this information is mandatory. The penalties for not filing the FBAR are very punitive and severe. At Steele Wealth Management, we understand the challenges involved in managing wealth in both countries and our experience with complicated situations provides us with the expertise to help. The requirement to file annual FBAR forms is just another example of the complications that we help our clients address.
Moving from the US to Canada brings a myriad of financial complexity with rules and decisions concerning wealth, retirement, investment and estate planning. Many of our cross-border clients maintain their US citizenship after moving to Canada. This results in the need for complex planning for tax obligations in both countries. The Steele Wealth Management team has the expertise and experience to manage these complexities. Our team is uniquely positioned because we can integrate Canadian and American wealth to form a coordinated strategy and we work closely with our clients to translate their personal needs into a plan specific to their unique situation. We are licensed and regulated in both Canada and the US, and therefore we can hold and manage investments for our clients in both countries simultaneously.
The Steele Wealth Management team has received a tremendous increase in inquiries from prospective cross-border clients regarding issues to consider when there is an obligation to report to both the Internal Revenue Service (IRS) and the Canada Revenue Agency (CRA). Our cross-border clients have unique investment, tax and estate planning challenges. Although each client’s situation is unique, we frequently address some common issues in our planning. This newsletter is a collection of these issues.
The end of the year provides a time to review financial plans and see how they should adapt considering your cross-border situation: your Canadian investments integrated with your US investments. It is imperative that you meet with Steele Wealth Management, coordinated with your tax professional, to examine nuances and changes that could impact your year-end planning while keeping in mind your long-term goals. This edition of Wealth Without Borders examines tax and financial planning moves to help prepare you for the upcoming tax season if you are obligated to file a US tax return.
