US Estate Taxes

Canada-U.S. Tax Treaty Article XXIX B Taxes Imposed by Reason of Death
A U.S. federal estate tax return must be filed if a deceased Canadian resident who is not an American citizen owned U.S.-situated assets exceeding $60,000 US in fair market value at the time of death.  A US estate tax return may also be required if the deceased made substantial lifetime gifts of U.S. property, even if the U.S. assets do not exceed $60,000 at the time of death.  If your total worldwide estate in 2017 is less than $5.49 million US at the time of death, you will probably not have to pay any US estate tax.  If the estate is passing to a spouse, a marital credit may also be available to reduce the tax payable.

The total worldwide estate includes:

• proceeds of insurance on the deceased's life, generally including proceeds receivable by beneficiaries other than the estate
• full value of property the deceased owned at the time of death as a joint tenant with right of survivorship, unless the surviving spouse is a U.S. citizen, in which case only half of the value is included
• property the deceased and a surviving spouse owned as community property
• several kinds of transfers the deceased made before death
• certain annuities to surviving beneficiaries
• property in which the deceased either held a general power of appointment at the time of death, or used or released this power in certain ways before death

The deceased is subject to U.S. estate taxation on the fair market value of their U.S. assets at the time of death, including:

• American real estate
• tangible personal property in the U.S. (furniture, cars, boats, etc.)
• stock of corporations organized in or under U.S. law, no matter where the stock certificates are physically located, even if they are registered in the name of a nominee (in street name) 
• certain debt obligations within the U.S.

U.S. stocks are not always subject to U.S. estate tax:  Canada - U.S. Tax Treaty
Canadians are protected by Article XXIX B (8) of the Canada - U.S. Tax Treaty which provides that:
If, at the time of death, the entire worldwide estate of a Canadian resident (other than a U.S. citizen) does not exceed $1.2 million US, the U.S. will only impose estate tax on property for which, on disposal by the owner, any gain would have been subject to income taxation by the U.S.  This includes:

• American real estate
• personal property which is part of the business property of a permanent establishment or fixed base in the U.S.This means that shares in U.S. corporations would not be subject to U.S. estate tax when the entire worldwide estate of the Canadian resident does not exceed $1.2 million US.​