Cross Border Estate Planning

Buying U.S. Property The Right Way

Bob and Mary put an offer on a $500,000 condo in Sarasota, Florida. When they came to see me they asked whether to put the title in Mary’s name alone as Bob has numerous business interests and potential creditor exposure back home in Toronto. Here are the issues that face Mary should she pass away while owning the Sarasota condo.

SETTLING MARY’S FLORIDA ESTATE/THE PROBATE PROCEDURES

Should Mary pass away, as owner of the Sarasota condo, the title to the property will be tied up in Florida probate for an extended amount of time. Probate is the legal procedure before the county probate court where the property is located. Probate is expensive, time consuming and freezes the estate. The beneficiary, Bob, in this case, will need to hire a Florida licensed attorney to probate the Florida property. Probate may cost up to three percent of the market value of the property as of the date of death.

IS THE CANADIAN WILL VALID IN FLORIDA?

Generally, if a will is valid where drawn i.e. in Toronto pursuant to the laws of the Province of Ontario, then it will be valid in Florida. However, the bad news is that the Ontario will is not exempt from the Florida probate procedures and expenses as mentioned. Well, how can Mary organize her Florida estate plan to avoid the probate expense and hassles upon her death; bearing in mind that Mary is a Canadian citizen and resident?

THE CROSS BORDER TRUST

The Cross Border Trust can be established by Mary while alive whether she is in the process of purchasing or already owns a property in Florida or other State. Should Mary pass away with title in the Cross Border Trust, there is no probate. It is completely avoided. Although Mary passed away, Mary’s Cross Border Trust did not. Where Mary stated in the Trust that Bob shall be the beneficiary, he inherits it without the expense, and the delays and aggravation of the Florida probate procedures. This is a great structure as Mary is the only party in the Cross Border Trust Agreement. She is the grantor, the trustee and the beneficiary. There is no need to hire any outside person or trust company to act as a trustee. Mary can do it all by herself. Mary has all the powers. She can sell the property, mortgage it, lease it or gift it (except watch out for gift tax!) without any complications. And, if there is a capital gain on sale, the US tax on such gain will be at the lowest rate under the Internal Revenue Code which is approximately 15% where owned at least 12 months.

By David A. Altro

David A. Altro, B.A., LL.L, J.D, D.D.N, Fin.Pl., TEP
Florida Attorney and Canadian Legal Counsel
David A. Altro & Associates LLP
Montreal, Toronto, Calgary, Sarasota, Naples, Ft. Lauderdale, Phoenix
1-800-370-4860