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Cross-Border Concerns for Athletes

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Canadian hockey players in the NHL who play for American teams have specific planning needs and require the specialized advice of a cross-border financial advisor. This article by Cardinal Point’s Terry Ritchie looks at what cross-border issues professional athletes may face, including immigration, estate, tax and investment planning considerations.

Ritchie first examines the potential immigration pitfalls for athletes living and playing across the border. It’s important for these athletes to work closely with their advisors and immigration counsel to secure or extend their U.S. work visas, apply for permanent residence with a U.S. Green Card, or ultimately become a naturalized U.S. citizen. Ritchie illustrates potential immigration issues with a case study of an athlete who faced these hurdles and partnered with his advisors and immigration attorney throughout the long, complicated immigration process.

The article goes on to look at the onerous tax consequences that can come with expatriating back to one’s home country after an athletic career in the U.S. The dreaded U.S. Expatriation Tax holds that a player who has a U.S. Green Card for more than eight years is classified as a long-term resident and could potentially face a significant two-fold tax hit when leaving the U.S.

Ritchie goes on to illustrate some of the woes that can come when advisors lead their athlete clients to bend compliance or CRA rules. He uses a case study to show how compliance violations can also result in a number of adverse Canadian and U.S. income tax problems. Finally, the article looks at the need for estate planning if a player is domiciled in the U.S., marries a U.S. citizen, has children in the states, and/or has non-U.S. beneficiaries.

How Does Canada’s Public Pension Program Compensate Expats Living in the US?

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In this article, John McCord discusses Canada’s two-part public pension program and how pension benefits are applied to Canadian expats living in the US. Eligibility for the first part, Old Age Security (OAS), is determined by age, time spent as a Canadian resident and legal status, but not retirement status or employment history. The second part, the Canadian Pension Plan (CPP), is directly tied in to salaries. The specific CPP benefit is determined by the amount and duration of CPP contributions (from prior employment). The highlight of both benefit programs is that, due to the Canada-US Tax Treaty, expats are not subject to Canada Revenue Agency tax rates or foreign withholding taxes. With lower US tax rates, this provides a clear benefit for Canadian expats living in the US. As each program mentioned has strict qualifying criteria, McCord details some of the specific regulations and emphasizes that it is important to partner with a qualified team of tax, legal and investment professionals who have specific experience in cross-border financial planning strategy.

What Should Canadians Consider Before Purchasing US Real Estate?

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This article outlines financial planning concerns for Canadian buyers who want to take advantage of real estate opportunities in the United States for either financial or lifestyle choices. Author John McCord highlights complex issues such as estate, insurance, financing, residency, immigration and taxation that are important considerations in the purchase of property in the U.S. In addition to potential tax advantages, a unique real estate investment opportunity through the EB-5 visa program also offers the possibility of a streamlined Green Card approval process. To understand the merits and the pitfalls, McCord recommends consulting with a qualified team of professionals who specialize in Canadian and United States cross-border transitioning and asset management in order to develop the best individualized strategy.

Why Is It Important To Create A Cash Flow and Net Worth Statement?

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This article focuses on the cash flow and net worth statement as essential to the financial planning process, serving to both quantify and qualify one’s financial affairs. When updated annually, these documents can help set goals and be useful in tax planning and risk management. The cash flow statement shows inflows and outflows of cash receipts and disbursements over a time period. Subtracting total cash outflows from total cash receipts produces a number that shows the individual or household’s spending patterns. Cash flow statements also help project future income and spending patterns. The net worth statement is comprised of three components: assets, liabilities, and net worth. Net worth is determined by subtracting total liabilities from total assets; it helps indicate one’s level of financial freedom and flexibility.

Is Your Financial Life In Order?

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John McCord’s article highlights the start of 2012 as the perfect time to reassess the state of your financial plan, including your investment, taxation, insurance, retirement and estate needs. When cross-border complexities are present, the need for a coordinated review is even more pronounced. The process starts with a qualified advisor and a planning analysis of the preceding year’s after-tax cash flows. An advisor should also review goals, values and time frames, and financial plans should be updated to reflect significant events. In addition, account consolidation should be considered in areas such as retirement accounts.