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Cross Border Revocable Living Trust document sample
Cross Border Revocable Living Trust document sample
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 beneficiary 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 USA33021 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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