Estate Planning for Snowbirds (Canadians With US Winter Homes)

A 72-year-old retired engineer from Burlington dies of a heart attack in late February at the Florida condo he and his late wife bought in 1998 for US$140,000. The condo is now worth US$420,000. His worldwide estate, including the Ontario house and his investment accounts, is just under CAD $4 million. His Ontario will leaves everything to his three adult children. The US estate-tax filing his executor faces is not trivial — and the Florida probate to retitle the condo runs in parallel with the Ontario probate of the will itself. The travel insurance he bought for the winter does cover repatriation; without it, his children would have been writing a five-figure cheque to bring the body home.

The Canadian snowbird estate plan looks like a domestic plan from the outside and operates as a cross-border plan in practice. Two tax regimes apply to the same US property. Two probates run in parallel. Two sets of residency rules apply to days of presence on either side of the border. The point of this guide is to walk the moving parts in order, so the documents the snowbird signs today actually work the way they are intended to on the eventual final winter trip.

We will cover US estate tax exposure and the treaty relief, US residency days and the Substantial Presence Test, how the US property is probated, the Canadian deemed-disposition piece, the snowbird-specific document checklist, and the medical-coverage and repatriation realities.

US estate tax — the part that catches Canadians off guard #

The United States imposes a federal estate tax on the value of US-situs assets owned by non-US persons at the time of death. US-situs assets include real estate located in the US, tangible personal property located in the US, shares of US corporations held in a non-registered account, and certain US-issued debt instruments.^[2]

The default non-resident unified credit shelters only a small base amount of US-situs assets — roughly US$60,000 without treaty relief — which is well below the value of most snowbird-owned winter homes. Without treaty relief, the US estate tax on a US$420,000 Florida condo (in the example above) would be calculated on roughly US$360,000 of taxable value at graduated rates topping out in the high-30%-of-marginal range.

The Canada-US Tax Treaty mitigates this exposure substantially. Article XXIX B of the treaty allows Canadians to claim a pro-rata share of the much larger US unified credit (which shelters multi-million-dollar US estates from federal tax).^[1] The pro-rata share is calculated as:

Available US unified credit × (US-situs assets ÷ worldwide gross estate)

For a Canadian snowbird with a worldwide estate well below the US unified credit threshold (which is in the multi-million-dollar range, indexed annually), the pro-rata credit often eliminates the US estate tax entirely. For larger Canadian estates, the pro-rata credit shelters only a fraction of the US-situs value, leaving a real US estate tax bill payable to the IRS.

Two important nuances:

• The treaty credit must be claimed on a US Form 706-NA filed with the IRS. The form is generally required for any deceased non-US person with US-situs assets above the US$60,000 threshold, even if the treaty eliminates the tax.
• The treaty offers a marital credit that can effectively double the pro-rata share for assets passing to a US-citizen surviving spouse. Most Canadian snowbird couples are both Canadian citizens, so the marital credit does not generally apply.

For more on this specifically, see our companion piece on US estate tax exposure for Canadians.

US residency days — the Substantial Presence Test #

The other piece of US tax exposure that catches snowbirds is the possibility of becoming an unintentional US tax resident by spending too many days in the US.

The Substantial Presence Test counts days present in the US using a weighted formula:^[3]

Current year days + (Prior year days ÷ 3) + (Year before prior year days ÷ 6)

If the total reaches or exceeds 183, the snowbird is generally treated as a US tax resident for the current year. The practical implications:

• The snowbird becomes subject to US tax on worldwide income, not just US-source income.
• US filings (Form 1040, FBAR for Canadian accounts above the threshold) become required.
• The Canadian-US tax treaty's tie-breaker rules generally still favour Canada for snowbirds with their primary home and family in Canada, but the protection requires filing.

The practical defence is IRS Form 8840 — Closer Connection Exception Statement for Aliens.^[4] A Canadian snowbird who:

• Was present in the US for less than 183 days in the current year,
• Has a tax home in Canada,
• And has a closer connection to Canada than to the US

can file Form 8840 annually and remain a Canadian-only tax resident. The form is short and uncomplicated, and snowbirds spending more than approximately 120 days per year in the US should consider filing it routinely.

The Canada Revenue Agency has its own residency rules that the snowbird must continue to satisfy on the Canadian side as well.^[6] The two regimes need to be considered together.

Canadian tax — the deemed disposition still applies #

The US property is also subject to the Canadian deemed-disposition rule on the owner's death. Under section 70(5) of the Income Tax Act, the property is treated as sold at fair market value on the date of death.^[5] A capital gain is computed in Canadian dollars (with foreign-exchange conversion applied to both the cost base and the fair market value), and the gain is included in income on the deceased's final T1 return.

If the same property is also subject to US estate tax, there is potential for double taxation. The Canadian Income Tax Act and the Canada-US Tax Treaty provide for foreign tax credits that can mitigate this in some cases, but the credit mechanics are technical and the result is not always full relief. A cross-border tax accountant should run the projected numbers years before death rather than at it.

Florida probate (or Arizona, or California, or wherever) #

Real estate is governed by the law of the state where it sits. A snowbird who dies owning a Florida condo will typically face a Florida probate, in addition to the probate in their Canadian province of residence. The Florida probate is technically called an ancillary probate when it is processing assets of a deceased non-resident.

The Florida ancillary probate generally:

• Requires Florida counsel.
• Uses the Canadian will as the operative document (Florida courts will generally honour a properly executed Canadian will).
• Runs in parallel with the Canadian probate timeline.
• Adds court fees, legal fees, and timeline — often six to twelve months.

Some snowbirds avoid Florida probate using one of two structures:

1. A Florida revocable trust that holds the Florida property during life. On death, the trust avoids probate; the trustee distributes the property under the trust terms. This is the most common Florida-side workaround.
2. A Lady Bird deed (enhanced life estate deed), available in Florida, which transfers the property automatically on death without probate. Less flexible than a trust but simpler.

Both options should be set up with a Florida estate-planning lawyer and coordinated with the snowbird's Canadian planner. A Canadian will alone does not avoid Florida probate.

For the broader provincial probate context, see our pillar what is probate in Canada.

The snowbird document checklist #

A Canadian snowbird's estate-planning set generally needs:

1. A current Canadian will that covers all assets, including the US property.
2. A Canadian Power of Attorney for Property and Power of Attorney for Personal Care (or provincial equivalent) — these may not be recognised in the US, so a US-side equivalent should be in place.
3. A US healthcare power of attorney / advance directive that satisfies the relevant US state's requirements — Florida has its own form; other states have theirs.
4. A Florida revocable trust or Lady Bird deed for the US property, if probate avoidance is desired.
5. Travel medical insurance with explicit repatriation coverage for each trip.
6. A US tax filing structure — annual Form 8840 if days in the US are in the 120+ range, US Form W-8BEN with brokers holding any US-issued securities.
7. A written list of US-side advisors — Florida lawyer, US accountant, condo association contact, US bank — that the Canadian executor will need.

A note on US bank and brokerage accounts #

A Canadian snowbird who opens a US bank account or a US brokerage account is adding to their US-situs asset base. Cash on deposit in a US bank account is generally not a US-situs asset for estate tax purposes, but shares of US public companies held in a US brokerage account are. A snowbird with substantial US-listed stocks held in a Canadian non-registered brokerage account also has US-situs exposure — the location of the broker does not change the situs of the underlying security.

Two practical workarounds:

• Get US-market exposure through Canadian-listed funds rather than US-listed securities. US-listed stocks remain US-situs for estate-tax purposes even when held inside a Canadian RRSP, RRIF, or TFSA — the registered account does not change their situs. (Separately, US dividends earned in an RRSP are exempt from US withholding tax under the treaty, but that is a different tax from the estate tax.) A Canadian-domiciled fund that invests in US markets is generally not US-situs.
• Hold US-listed exposure through Canadian-listed ETFs that hold the US securities — the Canadian fund is the security, not the underlying.

A Canada-US tax accountant should review the snowbird's full investment portfolio with this in mind.

What we focus on at It's Simple Will #

It's Simple Will captures the Canadian-side documents and the practical "where is everything" map that any cross-border estate needs. The Will Creator handles the Canadian will, including specific bequests of US property and tax-burden allocation. The Life Discovery Kit records the US property address, the Florida lawyer or trustee, the US bank and brokerage contacts, the travel-insurance carrier with repatriation coverage, and the location of US-side documents (revocable trust, advance directive, healthcare proxy).

The US-side legal documents — Florida revocable trust, Lady Bird deed, US healthcare directive — need to be drafted by a US estate-planning lawyer in the relevant state. The Canadian-side documents need to coordinate with them. The snowbird whose plan is set up this way generally produces an estate that closes in 12 to 18 months across both jurisdictions; the snowbird whose plan is Canadian-only generally produces an estate that drags into year two or three while the US-side ambiguity gets resolved.

See also our companion piece on US estate tax exposure for Canadians for the deeper dive on the treaty mechanics.