The U.S., may now stand for “Unexpected Surcharge”

For years you’ve thought that the acronym “U.S.” has stood for “United States.” Perhaps. But it also stands for “Unexpected Surcharge.” It’s no secret that the U.S. estate tax will apply to U.S. citizens, permanent residents of the U.S., or green card holders. But suppose you’re none of these. You’re a Canadian citizen and resident. Perhaps you’ve never even set foot in the U.S. The fact is, you could still be liable for U.S. estate tax if you’re not careful.

 The U.S. estate tax will apply to anyone who owns “U.S.property,” which includes U.S. real estate, almost all personal property located in the United States (vehicles, boats, art, jewellery, etc.), shares in U.S. corporations (including those held in your registered plans), U.S. debt obligations (government bonds, receivables from a U.S. person or company, etc.), and U.S. intangible properties (contractual rights, trust interests, patents, trademarks, and so on).

Here’s the problem: As a Canadian citizen and resident, you'll face estate tax on your “U.S. property” (U.S. assets) at the same rates as U.S. citizens. This means you could pay a tax as high as 35 per cent of the fair market value of those assets at the time of your death.