Cross Border Revocable Living Trust by cqc17512


Cross Border Revocable Living Trust document sample

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									  Sound Planning Reduces Risk When Owning Florida Property
By David A. Altro B.A., LL.L, J.D, D.D.N, Fin.Pl., TEP
U.S. Attorney and Canadian Legal Counsel
Senior Partner of David A. Altro & Associates, LLP
                                                                                     2) A deed transferring the ownership from the client’s name to his
                                                                                     new CBRLT is prepared and recorded.
With a little foresight and good advice, Canadians can protect their
slice of Florida paradise and their estate from most personal disas-                 Advantages of CBRLT
ters. A little knowledge can be a good thing.
                                                                                     1) Property is exempt from Florida Probate
Probate — When the owner of Florida real estate dies
                                                                                     2) The beneficiary, whether surviving spouse, children or others are
When a condo is owned by the deceased alone, the property will be                    designated as such in the trust with as many scenarios or provisos as
subject to Florida probate. This is the legal process before the Florida             appropriate in any well thought out estate plan.
court where the real estate is situated to be transfer ownership to the
                                                                                     3) Creditors will not be able to seize the beneficiaries’ interest in
owner’s beneficiaries. Probate is expensive, time consuming and
                                                                                     the Florida condo or the proceeds if it’s sold.
freezes the estate. Probate may cost up to three per cent of the market
value of the property at time of death. Probate proceedings may take                 4) If the beneficiary divorces, the ex-spouse will have no right to
between six to 12 months.                                                            share in the beneficiary’s inheritance.

                                                                                     5) If the property owner becomes mentally incapacitated, he is re-
How to avoid Florida probate?
                                                                                     placed by the successor trustee named in the trust. This avoids
    ISSUE                     PROBLEMS                         SOLUTION              Florida guardianship procedures.
Probate upon         Expensive
                                                                      Our solution   6) No annual filing requirements to the IRS or Canadian tax au-
death                Freezes the estate                               works in
                     Delays transfer to beneficiaries                 most states    thorities.
Incapacity           CDN POA may not be valid in U.S.
                     Guardianship procedures                                         7) No deemed disposition upon transfer of title to the trust.
                     Delays and additional costs
                                                               Cross Border
                                                                Revocable            8) No annual accountant or attorney services required.
Protection for       Creditors may seize property of
                                                               Living Trust
Heirs                                                           “CBRLT”SM            9) U.S estate tax payable upon death of first spouse deferred by
                     Divorcing spouse of beneficiary
                     may have claim to inheritance
                                                                                     Qualified Domestic Trust (QDOT) in the CBRLT
Estate Tax           US death tax even if there is a
                     surviving spouse                    NRM        QDOT within
                                                                    the CBRLTSM
                                                                                     How to Minimize U.S. Estate Tax

To avoid Florida probate, the deed should be in the name of a Cross                  High net worth Canadians owning U.S. real estate or U.S stocks
Border Revocable Living TrustSM (CBRLT). This works whether the                      face important U.S. estate tax issues if the value of their assets
client is in the process of buying or already owns the property. The                 (Canadian and U.S.) exceeds $2 million.
steps are as follows:
                                                                                     One effective method of reducing or eliminating a Canadian resi-
1) A CBRLT is drafted with special clauses for Canadian residents.                   dent’s U.S. estate tax is to use a special non-recourse mortgage
The client is the grantor and trustee. He has the full power and au-                 (NRM) against the U.S. property. The non recourse mortgage loan
thority to lease, mortgage or sell the property.
                                                                                                                                         Page 2

                                 will reduce the U.S. taxable estate by the amount of such loan.

Montreal Offices                 The non-recourse financing can be obtained from U.S. commercial banks that offer the special mortgage pro-
8301 Transcanada                 grams to their Canadian resident clients. For example where a client is worth $5 million, a NRM of $650,000
Suite 1000
Montreal, QC                     on a $1 million condo could provide a U.S. estate tax savings of over $160,000.
H4S 1Z1
Toronto Office                   Advantages of the Non-Recourse Mortgage
5255 Yonge St.
Suite 800                        1) The NRM can significantly reduce or eliminate the U.S. estate tax liability;
Toronto, ON
M2N 6P4                          2) If the funds of the NRM are used for the purposes of earning income from business or property, i.e. if it is
Calgary Office                   invested in Canadian stocks and bonds, the interest paid by the borrower could be deductible for Cana-
715 5th Avenue SW                dian income tax purposes;
Suite 2800
Calgary, Alberta                 3) Alternatively, the NRM can be repaid in full at any time should in the U.S. estate tax be repealed or
                                 amended in the future.
Florida Offices
Ft. Lauderdale, FL
4000 Hollywood Blvd.
Suite 350 N. Tower
Hollywood, Florida
                                                          U.S. Estate Tax – Examples
Naples, FL                                                Example 1       Example 2        Example 3         Example 4        Example 5
1000 Tamiami Trail
Suite 201
Naples, Florida                  U.S. Assets              $500,000        $500,000         $500,000          $750,000         $1,000,000
USA 34102
Sarasota, FL
5824 Lakewood Ranch
                                 Canadian                 $1,500,000 $2,500,000 $5,500,000                   $5,250,000 $9,000,000
Blvd Sarasota, Florida           Assets
USA 34240
                                 Worldwide                $2,000,000 $3,000,000 $6,000,000                   $6,000,000 $10,000,000
Phoenix Office                   Estate
3336 N. 32nd Street
                                 U.S. Estate Tax 0                        $25,667          $90,733           $150,700         $259,044
Suite 106
Phoenix, AZ                      Liability
USA 85018-6241

       On April 23, 2008 David A. Altro presented his seminar on Cross Border Tax and Estate Planning for Canadi-
        ans with U.S. Assets for over 100 members of Coastal Carolinas Association of REALTORS in Myrtle Beach,
                 South Carolina. The feedback was outstanding. Below is a quote from Shirley Calpas, Realtor®.

         “I found your presentation on working with Canadians very informative and fun. Dave, you are the best
          speaker that I have heard in my many years in corporate America. Look forward to working with you.”

                 If you would to arrange a speaking event for David please contact Matt Altro at 514 832-5182.

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