The Globe and Mail – How life insurance gets complicated for cross-border clients
You rely on life insurance when you need it most. Make sure you understand the complexities that cross-border planning has on your life insurance so that it is there when you need it. Recently, Matt Altro, our President & CEO, spoke with The Globe and Mail to get his take on the complexities cross border planning has on life insurance.
You can see part of Matt’s answers to this interview below, or for those with a subscription to The Globe and Mail you can click here to view it on the The Globe and Mail website.
How life insurance gets complicated for cross-border clients
Alison MacAlpine
The Globe and Mail
September, 2024
In addition to tax issues with cross-border life insurance policies, currency fluctuations can affect the cost of premiums and the death benefit.
Life insurance introduces an extra layer of complexity into financial planning for Americans who move to Canada or Canadians who move to the U.S., whether they have an existing policy or are considering buying a policy in their new home jurisdiction.
“Top of the list is the U.S. estate tax issue,” says Matt Altro, president and chief executive officer of MCA Cross Border Advisors Inc.
When a U.S. citizen who is insured on a life insurance policy dies, the death benefit is added to that person’s taxable estate, no matter where they were living at the time. In 2024 and 2025, the amount of the estate’s worldwide net worth that exceeds $13.61-million is subject to a 40 per cent estate tax. (After that, the temporary exemption increase passed by Congress in 2017 will sunset, halving the exempt amount, unless new legislation passes.)
The “go-to solution” for a newly purchased policy, Mr. Altro says, is to leverage the use of an irrevocable life insurance trust so the death benefit is excluded from the taxable estate.
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