From The Globe and Mail article:
Mr. Ritchie says he increasingly receives inquiries from well-to-do Canadian retirees who want to spend even more time at their homes in sunny Florida, California or Arizona than the rules allow…
From the Insurance & Investment Journal article:
Managing cross-border clients is a challenging area for advisors that requires thorough knowledge on how to handle life insurance, investments, taxes and pensions while respecting two countries’ rules and regulations.
The Insurance and Investment Journal spoke to U.S-Canada cross-border expert Terry Ritchie, a director at Cardinal Point Wealth Management, who’s specialized in the field for more than 25 years to find some answers. He says if you don’t have knowledge or experience it is very easy to mess things up for your client.
Estate planning issues can create family discord, especially in cases in which there is a sizable inheritance and heirs have disparate circumstances and competing interests.
“You seem to know people,” says Terry Ritchie, director of cross border wealth services with Cardinal Point Capital Management Inc. in Calgary, “but when someone dies and there’s money [involved], their real colours come through.”
Managing delicate family dynamics can be challenging, Ritchie adds, but there is much you can do as a financial advisor to prevent and minimize potential conflict. Ritchie offers the following advice for helping clients keep family peace before and during a wealth transfer:
Encourage open dialogue
Ritchie recommends hosting a family meeting that includes the client and all the beneficiaries of the estate as part of the estate planning process. Heirs who are unable to attend in person can connect by speaker phone or online. The conversation should cover how the wealth transfer will unfold and issues unique to that case that might arise.
As the financial advisor, you are in a position to address family members’ questions about the ins and outs of the wealth transfer. For example, you can field questions that may arise regarding taxes, which can complicate the process, especially if there are cross-border tax issues.
But the level of disclosure you get into — such as the client’s net worth and the distribution of assets — is your client’s call. Ritchie lets his clients decide whether it makes sense for him, as the advisor, to communicate with the family. Once he has the approval to engage the family, he is careful to treat the children equally and be up-front about how he’s helping their parents.
Improve your client knowledge
Expand the scope of your discovery process to include getting to know your clients’ family dynamics. Ritchie usually holds an in-depth conversation with clients about how their children are faring, asking if there are any issues he should be aware of that could complicate the wealth transfer.
For example, Ritchie becomes attuned to the marital status and financial circumstances of his clients’ children, which helps him get a better sense of their motivations. By becoming familiar with your clients’ children, you create an opportunity to continue a relationship with that generation.
“I have a pretty good understanding of the cast of characters I might be dealing with in the future,” Ritchie says. “Many advisors don’t go that deep.”
Take the heat
If your client feels caught in the middle of an intractable sibling rivalry over the inheritance, Ritchie says, help ease the stress by acting as an intermediary.
He has faced situations in which clients’ children want to dictate the terms of how and when the assets will be distributed. In one case, one sibling felt that the wealth was being divided unfairly, because others were receiving a larger portion to include their children.
In such cases, Ritchie will take on the role of “bad cop,” enforcing the client’s expressed wishes and explaining the reasons behind the decision.
When the children prove relentless in pushing for their preferences, he often tells his clients: “Don’t be the bad guy, let me be the bad guy.”
Irrespective of where you stand politically, the circus currently playing out in the contest for the next President of the United States has a number of Americans—both Democrats and Republicans—looking at options that might include leaving the United States and moving to Canada.
Indeed, by midnight of March 1—Super Tuesday in the United States—searches for “How to move to Canada” had spiked by 1,500%, according to Google Trends.
For some, leaving the country might seem rather extreme. However, we get it!
At Cardinal Point, many of us have a stake in the direction of our political system in both Canada and the United States. And we are intimately aware of the unique immigration, financial, tax, investment and estate-planning implications of becoming an American in Canada. We understand the immigration options and the challenges those decamping for the north might face.
Before Americans hop into their cars, fill their gas tanks (in gallons) and make their way to Canada, they first need to be aware that one can’t simply show up at the Canadian border and expect to live and work in Canada. Like the United States, Canada has a formal immigration process that must be adhered to.
In order to live and work in Canada, you might be able to secure your immigration via one of a number of business and family categories.
Canada’s family immigration laws differ from those of the United States. Notably, you cannot just marry a Canadian citizen and expect to automatically become a Canadian citizen. A formal process must be adhered to before a spouse of a Canadian citizen can live permanently in Canada and ultimately seek Canadian citizenship.
If you are already employed in the United States, your occupation might qualify you for one of Canada’s Skilled Worker Entry programs. This would entitle you to a visa to live and work in Canada. And depending on your work or trade, you might be entitled to the new Express Entry application process.
If you are self-employed in the United States, you might be able to qualify for business immigration to Canada under the Self–Employed Person program. If you have a specific occupation that fits into the Government of Canada’s Arts and Culture or Technical and Skilled Occupations in Art, Culture, Recreation and Sport, you might be able to immigrate to Canada under that program.
Under the Provincial Nominee Program (PNP), Canadian provinces and territories are allowed to nominate persons who wish to immigrate to Canada and who are interested in settling in a particular province. Each Canadian province – except Quebec – have agreements with Citizenship and Immigration Canada (CIC) that have developed programs to welcome certain nominees to settle and work in the province and contribute to the community.
If you would like to start a business in Canada, you might be entitled to apply for the Start-up VISA. You would have to have a Letter of Support from a designated angel investor group, venture capital fund or business incubator. You must also meet specific ownership requirements in the business. Get scores of at least 5 in the Canadian Language Benchmark test in either English or French and finally meet sufficient settlement funds based on the size of your family. You also must be able to secure a minimum investment of $200,000 from a designated Canadian venture capital fund or $75,000 from a designated Canadian angel investor group. No investment is required if you are accepted into a Canadian business incubator program.
The immigration process is definitely the first hurdle that you would have to overcome before entering Canada. It is a process and for some could be a rather costly one as well.
Working with appropriate Canadian immigration counsel, the advisors at Cardinal Point are well-positioned to assist you in partnering with the right attorney through this process.
But beyond the immigration hurdle, if you remain a U.S. citizen, you would still be considered a resident of the United States for income, gift and estate-tax purposes. So if you were hoping to avoid the tax policies of the previous and next administration, I’m afraid you’re out of luck.
As a U.S. citizen, you would be required to continue to file U.S. income-tax returns on your worldwide income (even if that income is only now in and from Canada). And you would have to comply with a number of other foreign reporting and compliance requirements.
Furthermore, as a resident of Canada, you would also be subject to tax in Canada on your worldwide income, including any income that might continue to trickle in from the United States.
Although both countries would have the right to tax you on your worldwide income, you would be entitled to apply foreign tax credits against the same source of income to help to reduce the perceived exposure to double taxation. However, without proper tax planning upon entering Canada, and without continued ongoing planning, you could find yourself exposed to double taxation and a number of nasty tax surprises.
Fortunately, we have the unique expertise to assist you so that you can enjoy the Canada-U.S. lifestyle.
To that end, we would encourage you to request our Cardinal Point White Paper: Manage your Canadian and U.S. cross-border lifestyle.
This paper will provide you with additional insight into how a Cardinal Point cross-border financial advisor can assist you with your unique cross-border financial planning complexities.
And if it does not make sense to move to Canada, bear in mind that our offices in the United States can provide you with comprehensive, U.S.-only wealth management services.