Start by understanding what you own and how it may be treated on both sides of the border.
A useful starting point is to identify any U.S.-situs assets and consider whether your estate may be exposed to U.S. estate tax. U.S.-situs assets typically include U.S. real estate and shares of U.S. corporations, including those that are held within Canadian registered plans.
That makes it important to keep an up-to-date inventory of your U.S. assets and their current fair market values.
“Clients should also update their worldwide net worth,” Marquis says.
The Canada-U.S. tax treaty can provide important relief from U.S. estate tax for eligible Canadian residents. Under the treaty, the U.S. estate tax exemption amount, US$15 million in 2026, is prorated based on the ratio of U.S.-situs assets to worldwide assets, therefore the greater your worldwide estate value, the greater your potential exposure to U.S. estate tax. For purposes of these rules, Marquis notes that worldwide assets often include unexpected items such as family trust assets and life insurance. A careful assessment of this exposure may thus catch certain individuals off guard.
Foreign property can also create Canadian reporting obligations.
“Canadian residents may need to file Form T1135 if the total cost amount of specified foreign property is more than C$100,000 at any time during the year,” Marquis says.
That includes foreign stocks held in a Canadian brokerage account. Importantly, the C$100,000 threshold is based on cost amount, not current fair market value. That distinction matters: investments that have grown well above the threshold may not have crossed the threshold on a cost basis when they were first purchased.
Foreign real estate used solely for personal enjoyment is generally excluded from T1135 reporting, but many other foreign investments are not. Certain foreign investments held within RRSPs and TFSAs are also excluded.
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