Cross-Border Estate Planning for Canada and the US

Cross-border estate planning between Canada and the US starts with three facts: whether each spouse is a US citizen, which country each one lives in, and what property sits in which country. Those decide whether Canada taxes the death through the final return, whether the US taxes the worldwide estate or only US property, and which treaty credit applies. The rest is getting beneficiaries, title and wills to work in both systems. This is the planning hub for our estates, trusts and gifts guides.

How do you plan an estate across the Canada-US border?

By working out first which tax regime applies to each person, then planning around it. A Canadian resident faces the deemed disposition at death under ITA 70(5). A US citizen faces US estate tax on property “wherever situated” (IRC 2031(a)). A non-citizen who isn’t domiciled in the US faces it only on property situated in the US (IRC 2103).

Person who dies	What Canada taxes	What the US taxes	Main treaty relief
Canadian resident, not a US citizen, no US property	Deemed gains and registered plans on the final T1	Nothing	None needed
Canadian resident, not a US citizen, owns a Florida condo or US shares	Deemed gains, including on the US property, on the final T1	US-situated property, with a $13,000 credit or the treaty’s prorated credit	XXIX B(2) prorated credit, XXIX B(3) marital credit, XXIX B(6) Canadian deduction for the US tax
US citizen resident in Canada	Deemed gains and registered plans on the final T1	The worldwide estate, above the basic exclusion	XXIX B(7) US credit for Canadian tax on property outside the US

The specific cases each have their own guide, listed at the end of this page. The planning levers are mostly the same in every row: where property sits, who it passes to, how it’s titled, and which returns get filed on time.

How does Canada tax death?

Through income tax on the final return. A person who dies is deemed to have disposed of each capital property for its fair market value immediately before death (ITA 70(5)), and half of the gain is taxable (ITA 38(a)). The full value of an RRSP or RRIF is generally income too. There’s no separate tax on the heirs.

• The spousal rollover. ITA 70(6) defers the gain on property left to a spouse or qualifying spousal trust, where both the deceased and the spouse were resident in Canada immediately before the death and the property vests within 36 months.
• Registered plans. A RRIF’s value is deemed received immediately before death under ITA 146.3(6) and an RRSP’s under ITA 146(8.8), unless the plan passes to the spouse in a way the CRA’s rules allow.
• Probate. Provinces charge their own fees. Ontario’s Estate Administration Tax is $15 per $1,000 of estate value over $50,000 (Ontario).

The full Canadian picture, with a worked final return, is in does Canada have an estate tax?

How does the US estate tax work across the border?

It depends on citizenship and domicile. The tax applies to the estate “of every decedent who is a citizen or resident of the United States” (IRC 2001(a)), and the IRS treats a resident as someone domiciled in the US at death (Instructions for Form 706). Everyone else is a nonresident non-citizen, taxed only on US-situated property and filing Form 706-NA once US assets plus certain gifts pass $60,000.

• Citizens and US-domiciled people. The credit covers the tax on the basic exclusion, which the IRS lists as $15,000,000 for 2026 deaths and $13,990,000 for 2025 deaths (IRS, what’s new: estate and gift tax). The 2026 basic credit is $5,945,800. Tax above the exclusion runs at 40 percent under IRC 2001(c). For a US citizen in Canada, see US estate tax for US citizens living in Canada.
• Canadians who aren’t US citizens. The statute gives a credit of $13,000 (IRC 2102(b)(1)), which covers a $60,000 taxable estate. The treaty lets a Canadian resident’s estate claim instead a share of the citizen’s credit, prorated by US assets over worldwide assets. That’s covered in the $60,000 exemption vs the treaty and US estate tax for Canadians who own US property.
• What counts as US property for a non-citizen: real property and tangible personal property located in the US (Treas. Reg. 20.2104-1(a)) and shares “only if issued by a domestic corporation” (IRC 2104(a)). The old look-through for US funds ended for deaths after 2011, and insurance on a non-citizen’s own life isn’t US property (IRC 2105).

How does the treaty prevent double tax at death?

With credits that run in both directions, depending on who died. Article XXIX B was added by the 1995 Protocol. Paragraph 2 gives a Canadian resident who isn’t a US citizen the prorated unified credit, and paragraph 7 gives the estate of a US citizen or resident a credit for Canadian income tax on property outside the US.

• XXIX B(2), the prorated credit. The greater of the ordinary nonresident credit and a share of the citizen’s credit equal to US gross estate over worldwide gross estate. It’s allowed “only if all information necessary for the verification and computation of the credit is provided.”
• XXIX B(3) and (4), the marital credit. An extra non-refundable credit for property passing to a spouse that would qualify for the marital deduction if the spouse were a US citizen. The executor elects it and irrevocably waives the marital deduction, and it equals the lesser of the unified credit and the US tax on that property.
• XXIX B(6), the Canadian deduction. US estate tax on property situated in the US comes off the Canadian tax for the year of death on income and gains arising in the US and, where the worldwide gross estate is over US$1.2 million, on income and gains from property situated in the US. For a US citizen it’s capped at the US tax that would have applied if they weren’t a citizen.
• XXIX B(7), the US credit. Computed under the US foreign death tax credit rules (IRC 2014) and claimed on Schedule P of Form 706, with Form 706-CE.
• XXIX B(8), small estates. Where a Canadian resident non-citizen’s worldwide gross estate doesn’t exceed US$1.2 million, the US may tax only property whose gain the US could tax under Article XIII, which keeps US real estate taxable. The 706-NA instructions describe it as an exemption “from tax on U.S. securities or certain other U.S. situs property” (Instructions for Form 706-NA).

What if your spouse isn’t a US citizen?

Then the US marital deduction isn’t available unless the property goes into a qualified domestic trust. IRC 2056(d)(1) denies the deduction where the surviving spouse “is not a citizen of the United States,” and also switches off the IRC 2040(b) rule that counts only half of a spousal joint tenancy. Canada’s rollover under ITA 70(6) has no citizenship condition; it turns on residence.

• QDOT. Under IRC 2056A, at least one trustee must be a US citizen or a domestic corporation with the right to withhold the tax from any distribution other than income, and the executor elects it on the return, no later than one year after the due date including extensions. Estate tax is then charged on principal distributions and on what’s left in the trust when the surviving spouse dies. See do we need a QDOT?.
• Treaty marital credit. Available when the deceased was a US citizen or a resident of either country and the spouse lived in either country. It waives the marital deduction, so it’s an alternative to a QDOT. The 706 instructions require a statement that refers to the treaty, waives QDOT rights and shows the computation.
• Joint property. With a non-citizen spouse, IRC 2040(a) includes the full value of joint property except the part shown to have originally belonged to the other owner and not to have come from the deceased for less than full value. Title choices are covered in the joint tenancy guide.
• Portability. A nonresident surviving spouse who isn’t a US citizen “may not take into account the DSUE amount of a deceased spouse, except to the extent allowed by treaty” with the spouse’s country of citizenship (Instructions for Form 706).

Do you need two wills for Canada and the US?

Often, but the tax reason is narrower than people think, and drafting belongs to a lawyer in each country. On the tax side, Ontario’s Estate Administration Tax is charged only when an estate certificate is issued, and where the court issues a certificate “Limited to the Assets Referred to in the Will,” only the assets in that will count in the value (Ontario). Ontario also leaves real estate outside Ontario out of the value.

• What two wills don’t change. Neither the Canadian deemed disposition nor the US estate tax depends on how many wills there are. Both look at what the person owned at death.
• Coordination. Wills, trusts and powers of attorney are legal documents. Have a lawyer in each country draft them so they don’t revoke each other and so a QDOT or spousal trust is actually set up if the plan needs one.

The full question is in do I need two wills?, and Ontario’s fee in Ontario probate fees.

A cross-border estate planning checklist

1. Status of each spouse. Citizenship, residence for Canadian tax, and US domicile. These pick the row in the table above.
2. US-situated assets. US real estate, tangible property in the US and shares of US companies, including US-domiciled mutual funds, since a regulated investment company is by definition a domestic corporation (IRC 851(a)). US bank deposits are generally outside a non-citizen’s US estate under IRC 2105(b).
3. The worldwide number. Value everything once. The treaty’s prorated credit needs the worldwide gross estate disclosed.
4. Beneficiary designations. On each RRSP, RRIF and TFSA, a designation keeps the plan out of Ontario’s estate value, but the RRSP or RRIF income still lands on the final return unless a spouse takes it over. For US plans left to Canadians, see a Canadian inheriting a US IRA or 401(k). For US-person beneficiaries of Canadian plans, see RRSP and RRIF on death.
5. Joint ownership. Ontario leaves out jointly held assets that pass automatically to the other owner. The US includes them under IRC 2040, and only a US-citizen spouse gets the half rule.
6. The spouse plan. If either spouse isn’t a US citizen and US tax is possible, decide between a QDOT and the treaty marital credit.
7. Life insurance. For a US citizen, proceeds on their life are in the gross estate if payable to the executor or if they held incidents of ownership (IRC 2042). See life insurance across the border.
8. Trusts. A Canadian beneficiary of a US trust, or a Canadian contributing to one, may have T1141 or T1142 filings (T1141 and T1142). Freezes and alter-ego trusts are in freezes, alter-ego trusts and bypass trusts.
9. US heirs. A US person who receives more than $100,000 in a year from a foreign estate reports it on Form 3520 (IRS). See a US person inheriting from a Canadian estate.
10. Wills and powers of attorney. Drafted by lawyers in each country, coordinated with the list above.

Forms and deadlines after a cross-border death

Return or filing	Who files it	When it’s due
Final T1 return	The legal representative	April 30 of the next year for a death from January 1 to October 31; 6 months after death for November or December
Optional T1 for rights or things	The legal representative, if it helps	Later of 1 year after death and 90 days after the final return’s assessment
T3 return for the estate	The executor, if the estate has income after death	90 days after the trust’s tax year-end
Ontario Estate Information Return	The estate representative	180 calendar days after the estate certificate is issued
Form 706 (US citizen or resident)	The executor, when the gross estate plus adjusted taxable gifts exceeds $15,000,000 for 2026, or to elect portability	9 months after death, with a 6-month extension on Form 4768
Form 706-NA (non-citizen with US assets)	The executor, when US assets plus certain gifts exceed $60,000	9 months after death, with a 6-month extension on Form 4768
Form 3520, Part IV	A US person receiving over $100,000 from a foreign estate in a year	15th day of the 4th month after their tax year ends, generally April 15

The Canadian dates come from the CRA’s filing and payment due dates. The US dates come from IRC 6075(a), the Form 706 instructions and the Form 706-NA instructions. Where a return takes a treaty-based position, the 706 instructions point to Regulations section 301.6114-1 for the disclosure statement. Before distributing a Canadian estate, the executor can ask the CRA for a clearance certificate; without one the executor is personally liable for unpaid tax up to the value distributed (CRA). Executor exposure in both countries is in executor liability in cross-border estates.

Guides in this estate hub

• Does Canada have an estate tax? The final return, the spousal rollover, RRSPs and RRIFs, and Ontario probate.
• US estate tax for US citizens living in Canada. The worldwide estate, the non-citizen spouse, and the XXIX B(7) credit.
• US estate tax for Canadians: $60,000 exemption vs treaty. The prorated credit and the marital credit, worked through.
• US estate tax for Canadians who own US property. What happens when a non-citizen dies owning US assets.
• T1141 and T1142 for Canadians and foreign trusts. Contributions to and distributions from non-resident trusts.
• Do we need a QDOT? When a spouse is Canadian and not a US citizen.
• Do I need two wills? The tax role of multiple wills across the border.
• Freezes, alter-ego trusts and bypass trusts. Canadian planning tools and how the US sees them.
• A US person inheriting from a Canadian estate. Tax and reporting on both sides.
• Deemed disposition at death vs the US step-up. Two basis rules for the same death.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.