It may be hard to imagine, but this year’s harsh winter in Canada could provide you and your business with new opportunities. But in order to take advantage of them, it’s vital to be knowledgeable and prepared to meet the specific needs of clients.

As the boomer generation ages and makes retirement decisions, more and more people are choosing the “snowbird” option, leaving winter behind and heading south.

A show of hands at this year’s Canadian Institute of Financial Planners (CIFPs) conference emphasized the growing importance of understanding cross-border financial planning. The casual survey showed a good majority of advisors in the audience had clients that spend a significant amount of time south of the border.

“You have a bit of a moving target, from a planning perspective,” Terry Ritchie, financial planner and author, told the Orlando audience this morning. Specifically, he was referring to the evolving estate tax situation in the United States.

There are currently seven bills before the U.S. House and four before the Senate all related to repealing the estate tax. There are also a whole host of bills in process aimed at modifying it. In this regard, advisors are forced to plan for the unknown, in a sense.

However, Ritchie said a full repeal of the U.S. estate tax is unlikely due to the current weak economic situation, the decline of charitable donations in general and the potential loss of capital gains revenue that would occur if the elderly chose to hang on to assets, rather than sell them before death.

Ritchie, a partner with Transition Financial Advisors Group Inc., said it’s important to find out where a client was born right from the get-go. Those born in the U.S. are considered U.S. residents for income, estate and gift tax purposes, regardless of where they may live or die.

When it comes to will planning, Ritchie outlined a series of possible scenarios that could occur for married couples of mixed citizenship, and strategies for tax planning to best benefit such clients. For example, in the case of a Canadian married to a U.S. citizen, a limited Spousal Trust can be used to avoid the U.S. estate tax on the Canadian citizen’s assets upon his or her death.

“This is some relatively easy planning, which is often overlooked,” Ritchie told the CIFPs crowd. “But it can cause some significant problems for our clients that have these issues.”

Ritchie’s new book, The American in Canada, will be released in the next couple of weeks. Also available are The Canadian in America and The Canadian Snowbird in America, all dealing with financial issues related to buying, selling, living, dying, and being taxed across the U.S.-Canada border.

One way to help meet clients needs more directly is to find a cross-border affiliate in the U.S. city where clients spend time, suggested Amin Mawani, an associate professor of taxation at the Schulich School of Business at Toronto’s York University. For example, Mawani said, it would be beneficial to find an advisor that client‚s can meet with when they need immediate assistance in their secondary home.

With the varying requirements and rules between the U.S. and Canadian taxation systems, it can be overwhelming for clients. Whether a classic snowbird, who simply wants to enjoy warmer climes for a few months each year, or a person who has moved their residence over the border permanently, Ritchie said there is an array of potential problems that that good dose of financial planning can help avoid.

A few examples:

  • repercussions for U.S. citizens that don’t file tax returns if they reside in Canada;
  • legislative changes that make cutting loose U.S. citizenship to avoid certain taxes is new legislation a bad idea;
  • tax trade-offs when buying and selling U.S. real estate; and
  • problems associated with jointly held assets when children are involved.

“What we do as planners is sort of run the numbers to see what will be more beneficial for our clients,” he said. And with more of the boomer population taking leave of those cold Canadian winters, it’s the perfect time to brush up on cross-border concerns.