Page 176 - A Canuck's Guide to Financial Literacy 2020

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In 2017, President Donald Trump signed the Tax Cuts and Jobs Act which increased the
estate exemption threshold to $11.4 million USD from $5.49 million. This was welcomed
news for Canadians who owned property in the United States.

This exemption of $11.4 million has a sunset clause as it will revert back to $5 million USD,
adjusted for inflation by 2025. The November 2020 presidential elections could also change
this threshold.

U.S. Estate Planning Strategies

As US assets are taxed at a maximum federal tax rate of 40%, it’s important to be aware of
the potential tax liability even thought your worldwide estate is likely under $11.4 million. For
high net worth families, we’ve listed some common tips below:

▪ Purchase life insurance to cover the U.S. Estate Tax bill
▪ Selling your U.S. assets before death – be aware that the sale of assets could trigger
capital gains in Canada
▪ Hold assets in joint tenancy
▪ Hold assets in a corporation instead as an individual
▪ Gifting assets to family members
▪ Invest in Canadian mutual funds that hold US securities