Our own Jeff Sheldon was recently featured in a Wall Street Journal article, “A Cross-Border Retirement Without Tax Woes.” He shared the story of a couple who retired to the U.S. from Canada. While they sought sunny weather and a simpler life, when it came time to sort out their taxes and streamline their retirement investments, they were confronted with a cloudy, complicated situation. Adding to the challenge, “the wife was a Canadian citizen, the husband held dual citizenship in Canada and the U.S., and the couple owned retirement plans, property and other assets on both sides of the border.”
What to do? After other advisors told the couple to liquidate their Canadian retirement accounts and transfer those assets to U.S. accounts, the couple turned to the cross-border expertise of Cardinal Point. Jeff was concerned that such a move would subject those assets to double taxation, first as a withholding tax in Canada and then again as taxed income in the U.S. Fortunately, he came up with a solution that enabled the couple to avoid being taxed twice while still receiving funds from their tax-deferred Canadian retirement accounts.
Then Jeff identified a significant issue with their estate plan. “[T]he husband’s estate was considerably larger than his wife’s. That ordinarily wouldn’t be an issue, but the wife isn’t a U.S. citizen and isn’t eligible for the unlimited marital exemption.” As a result, the wife would owe estate taxes on what she inherited from her husband. To prevent this, Jeff employed two strategies to help ensure she wouldn’t owe estate taxes on that money.
As with many cross-border moves, there were no “one size fits all” solutions to fit the couple’s complex financial, tax and estate planning needs. It wasn’t a quick fix, but our tailored advice helped the couple worry less about their retirement and enjoy more Florida sunsets.