Canada repealed its federal estate tax in 1972, a fact Canadians tend to recite with the quiet satisfaction of people who consider the matter closed. Washington was not consulted. US estate tax for Canadians is very much alive: a Canadian resident who is not a US person can owe US estate tax at rates up to 40 percent on their US-situated assets at death, and the filing obligation starts at just US$60,000 of those assets. The Canada-US tax treaty offers meaningful relief, but only to estates that claim it properly, on a return most Canadian executors have never heard of. For families with wealth spread across Canada, the United States, and Asia-Pacific, this is one of the most common and most expensive blind spots in an estate plan.

This article does one job: it names the exposure, explains how the mechanics work, and sets out the questions worth putting to a cross-border estate-tax lawyer and a cross-border tax accountant. It does not prescribe a structure. It exists so that the first time your family hears the phrase “Form 706-NA” is not from a US brokerage refusing to release your late parent’s account.

Where the US Estate Tax Reaches

The United States taxes the worldwide estates of its citizens and domiciliaries, but for everyone else it taxes property with a US “situs” at death. The categories that matter most to cross-border families are US real estate, shares of US corporations, US retirement accounts such as IRAs and 401(k)s, and certain debt issued by US entities.

The detail that surprises families is that US corporate shares are US-situs regardless of where they are held. Apple stock in a Canadian RRSP or TFSA counts. Nvidia shares in a Taipei or Hong Kong brokerage account count. The account wrapper and its location are irrelevant; the tax follows the asset. Registered-plan tax deferral in Canada offers no protection against a different country’s death tax.

Some holdings fall outside the net. Units of Canadian mutual fund trusts are generally treated as non-US-situs even when the fund itself holds US stocks, because the estate owns the fund, and the fund is not a US corporation. American Depositary Receipts of non-US companies and ordinary US bank deposits unconnected to a US business are also generally excluded. The classification is asset by asset, which is precisely why an inventory belongs in every estate review. Families weighing how their holdings should be organized across jurisdictions in the first place will find the fuller treatment in our guide to cross-border wealth structuring for Asia-Pacific families.

The US$60,000 Threshold and Form 706-NA

If a non-US person dies holding US-situs assets worth more than US$60,000, together with certain historical taxable gifts, the executor must file IRS Form 706-NA within nine months of death. A six-month extension is available on Form 4768. The US$60,000 threshold dates from decades ago and has never been adjusted for inflation, so an exposure that once implied real wealth now catches a single vacation condo or a modest portfolio of US shares.

Missing the filing is costly in ways that compound. Penalties and interest accrue on any tax owed. Treaty relief that would have reduced or eliminated the tax can be forfeited. Beneficiaries may be left without a supportable US cost basis in the assets, setting up a second tax problem when they eventually sell. And in practice, US custodians typically will not release a deceased non-resident’s assets without an IRS Transfer Certificate, which is only issued after the estate-tax question is resolved and which can take twelve to eighteen months to arrive.

The person carrying this risk is the executor. An executor who distributes the estate without settling the US liability can face personal exposure, which is a bracing discovery for the family member who accepted the role as an honour. Choosing and preparing the people who will administer the estate is a core part of family office succession planning, and cross-border filings belong on their briefing list long before they are needed.

Treaty Relief Worth Claiming

By default, a non-US person’s estate gets a unified credit of US$13,000, which shelters exactly that first US$60,000. US citizens, by contrast, enjoy a basic exclusion of US$15 million for deaths in 2026, made permanent by the One Big Beautiful Bill Act and indexed for inflation after 2026. The gap between those two numbers is where the treaty earns its keep.

Article XXIX B of the Canada-US tax treaty lets a Canadian resident’s estate claim a prorated share of the full US exclusion instead of the flat credit. The proration follows the ratio of US-situs assets to the worldwide estate: if US assets are 10 percent of the worldwide estate, the estate may claim roughly 10 percent of the US$15 million shelter. One practical consequence is that where the worldwide estate is worth less than about US$15 million, the prorated credit often eliminates the US estate tax entirely. The estate still has to file Form 706-NA to claim it, and the return requires disclosure and certified valuation of worldwide assets, not just the US ones.

A second layer of relief applies to married couples. Where US property passes to a surviving spouse resident in Canada or the US, the treaty provides a non-refundable marital credit, broadly up to the amount of the unified credit, which can effectively double the shelter. The executor must elect this treaty benefit on the return and waive the standard US marital deduction, and the computation must be attached. None of this happens automatically; the treaty rewards estates that are administered by people who know it exists.

The Canadian Side of the Same Death

Canada does not levy an estate tax, but it does deem a resident to have disposed of worldwide capital property at death, triggering tax on accrued gains. A Canadian who dies owning a Florida condo can therefore face two tax events on the same property in the same year: US estate tax on its value and Canadian tax on its gain.

The treaty softens the double hit. US estate tax paid can generally be claimed as a credit against Canadian federal tax on US-source income and gains in the year of death, including the deemed gain on the US property itself. The credit is capped at the Canadian tax on those US-source amounts, so it is partial relief rather than a refund, and it has to be claimed correctly on the Canadian side. Add ancillary probate in the US state where real property sits, and the estate administration quickly becomes a two-country project with two professional teams.

Liquidity deserves its own line in the plan. Estate tax is due in cash while the Transfer Certificate process can freeze the very assets that might have paid it. Families and their advisors often discuss holding structures, lifetime gifting programmes, or insurance sized to the projected liability; which of those fits, if any, is a question for the professionals named below, decided years before it matters. Treating a known future liability as a risk to be funded rather than a surprise to be absorbed is the difference between estate administration and estate crisis, and it is one strand of the broader work of multi-generational legacy planning.

Asia-Pacific Families Without a Treaty

The same US rules apply to a family in Taipei, Hong Kong, or Singapore, with one critical difference: no treaty cushion. The United States has death-tax treaty arrangements with roughly fifteen countries. Japan and Australia are on the list. Taiwan, China, Hong Kong, Singapore, South Korea, and India are not.

For those families, the shelter really is US$60,000, full stop. There is no prorated exclusion, and no treaty marital credit; spousal relief is generally available only where the surviving spouse is a US citizen or the property passes through a qualified domestic trust. A Taiwanese investor holding US$2 million of US shares directly has a materially larger US estate-tax exposure than a Canadian in the identical position, and the 40 percent top bracket arrives quickly. Home-country death taxes can stack on top: Taiwan levies its own estate and gift tax, and how the two regimes interact is a coordination question that deserves professional attention on both sides of the Pacific.

Residency itself is frequently the ambiguous variable for these families. Where a principal splits time between Vancouver and Taipei, which country’s rules govern the estate, and which treaty (if any) applies, depends on residency and ties analysis that should be done while everyone is alive to answer questions. Our companion piece on the cross-border residency and tax ties checklist covers how to get that determination onto solid ground.

The Questions to Put to Your Advisors

An awareness article should end with questions, not prescriptions. These belong on the agenda for your next estate review:

  • Which of our holdings are US-situs, asset by asset, including anything inside registered accounts, foreign brokerages, and pooled vehicles?
  • Does the total exceed US$60,000, and does our worldwide estate exceed US$15 million, the two numbers that determine filing and exposure?
  • Do our wills and our executors’ briefing documents mention Form 706-NA, the nine-month deadline, and the Transfer Certificate process?
  • If we are Canadian residents, has anyone modelled the prorated unified credit and the marital credit against our actual asset mix, and confirmed what worldwide disclosure the claim requires?
  • If we are resident in a non-treaty jurisdiction, what is the unsheltered exposure above US$60,000, and what would our advisors propose to review about how those assets are held?
  • Where will the cash come from if the tax falls due while US accounts are frozen pending a Transfer Certificate?

Two professionals should be in the room for these conversations. A cross-border estate-tax lawyer, qualified on the US side, addresses situs classification, treaty elections, ancillary probate, and executor liability. A cross-border tax accountant handles the Form 706-NA preparation, the certified valuations, and the Canadian foreign-tax-credit claim in the year of death. Zephyr does not provide legal or tax advice; our role is to make sure the right questions reach the right specialists before the nine-month clock starts, and to keep the answers coordinated with the rest of the family’s plan.

Frequently Asked Questions

Do Canadians pay US estate tax on US stocks?

Potentially, yes. Shares of US corporations are US-situs assets for US estate-tax purposes regardless of where they are held, so US stocks in a Canadian brokerage account, RRSP, or TFSA all count toward the exposure. If a Canadian resident dies holding more than US$60,000 of US-situs assets, the estate must file Form 706-NA even if no tax ends up payable. Whether tax is actually owed usually turns on the Canada-US treaty: the estate can claim a prorated share of the US$15 million exclusion based on the ratio of US assets to the worldwide estate. Canadian mutual fund trusts that hold US stocks are generally treated differently from direct holdings, which is why an asset-by-asset review with a cross-border tax accountant matters more than any rule of thumb.

What is the US estate tax exemption for Canadians in 2026?

Under US domestic law, a non-US person’s estate receives a credit sheltering only the first US$60,000 of US-situs assets, against a top tax rate of 40 percent. Under Article XXIX B of the Canada-US treaty, however, a Canadian resident’s estate may instead claim a prorated share of the full US basic exclusion, which is US$15 million for deaths in 2026 following the One Big Beautiful Bill Act, indexed for inflation in later years. The proration follows the ratio of US-situs assets to the worldwide estate, and where the worldwide estate is below roughly US$15 million the treaty credit frequently eliminates the US tax altogether. The relief must be claimed on a timely filed Form 706-NA with worldwide asset disclosure; it is not applied automatically.

What happens if the executor does not file Form 706-NA?

Several bad things, in sequence. Penalties and interest can accrue on any unpaid US estate tax. The treaty benefits that might have reduced the tax to zero can be lost, because they must be elected on the return.

Beneficiaries may be denied a supportable US cost basis in the inherited assets, exposing them to tax on the full proceeds when they later sell. US custodians will generally refuse to release the decedent’s accounts or transfer title without an IRS Transfer Certificate, which is issued only after the filing question is resolved and commonly takes a year or more. The executor can also face personal liability for distributing the estate before the US obligation is settled, which is why cross-border filing obligations should appear in every executor briefing, not just the lawyer’s file.

Does the US estate tax apply to families in Taiwan, Hong Kong, or Singapore?

Yes, and with less relief than Canadians receive. The US applies the same situs rules and the same US$60,000 filing threshold to every non-US person, but treaty relief depends on the decedent’s country. The US maintains death-tax treaty arrangements with roughly fifteen countries; Japan and Australia are included, while Taiwan, China, Hong Kong, Singapore, South Korea, and India are not. A family in a non-treaty jurisdiction gets no prorated exclusion and no treaty marital credit, so US-situs holdings above US$60,000 face the graduated rates up to 40 percent with minimal shelter. Home-country death taxes, such as Taiwan’s estate and gift tax, can apply in parallel, making coordinated advice from professionals on both sides essential.

Blind spots earn the name because nobody chooses them; they accumulate quietly while attention is elsewhere, usually inside a portfolio that performed well enough that nobody questioned it. If your family holds US assets across borders and no one has yet modelled the exposure, mapped the filing obligations, or briefed the executors, that review is a conversation worth having early, while every option is still open and the nine-month clock has not started. It also sits naturally inside the wider work of family office legacy planning, and for families still building the machinery to manage questions like this one, our complete guide on how to set up a family office covers where cross-border tax coordination fits in the operating model.