Inheriting wealth from overseas? Know the rules

Canada, 9th August: Is an inheritance coming your way soon? Get to know various rules to avoid any financial legal complications afterwards.

If you are a Canadian or new immigrant going to inherit a big fortune in the coming times, you must plan accordingly to make judicious use of the acquired inheritance.

Immigrants inheriting wealth must know rules—Immigrants in Canada expecting a windfall from overseas, be it in any form including cheques, cash, investments or real estate, must play by rules. And the best decision in case you are still not certain about the options is to wait and keep the inheritance for a period between 30 to 90 days, suggests president of KCM Wealth Management, Vancouver, Adrian Mastracci.

Inheritance within Canada--If the inheritance is inside Canada, then the rules are quite simpler to know and follow. However, in case the money or any asset is being inherited from overseas by an immigrant, then the rules seem to appear complicated.

According to national director and vice president of wealth services for BMO Harrris Private Banking, Sara Plant, handling the situations where immigrants inheriting from overseas are unaware of the rules in Canada can prove to be taxing for financial advisers.

The fact is that lack of adequate knowledge of rules may lead to huge tax bills on the part of the recipient of the inheritance.

 

Plan early—Immigrants or Canadians expecting to inherit wealth or assets from overseas must initiate their planning process at the earliest possible time, that is, before the death of the person from whom the international inheritance is expected to come. Only such a step can help you from facing tax complications in Canada.

• Play safe for a short time—After receiving an international inheritance, the best thing is to keep it safe anywhere with a guaranteed interest rate for at least a couple of months. Avoid taking any rash decisions like splurging money on buying cars, luxurious appliances or making trips overseas, say financial experts.

• Inbound inheritance trust—To save your international inheritance from taxes, you must put it in an inbound inheritance trust if it exceeds $1 million.

Such an investment income is non-taxable in Canada. Reason being that any income earned on investment of the inheritance is taxable though the inheritance, in itself, is not taxable, briefs vice president of high net worth planning services, RBC Wealth Management, Prashant Patel.