RBC Wealth Management has advice for Canadian snowbirds to ensure they take all U.S. tax and estate issues into account, before they head off to the southern United States this winter.

Failing to adhere to applicable U.S. laws may have serious implications if not followed carefully.

“Canadians who spend more than four months in the U.S. every year should file a U.S. tax form each year to avoid being deemed a U.S. resident for tax purposes,” says Prashant Patel, vice president, RBC Wealth Management.

“In addition, Canadians who own U.S. real estate should consider if U.S. estate tax or state probate tax will affect them.”

“It is important to consult with a qualified U.S. tax advisor to discuss all these issues,” he adds.

Canadian snowbirds should also make sure their affairs are in order well before they plan their trip. For example, any Power of Attorney would need to be valid in the U.S. as well as in Canada. In addition, if a Canadian personally owns U.S. real estate at the time of their death, their estate could be subject to U.S. estate taxes based on the market value of their U.S. real estate.

“After 2012, the maximum U.S. estate tax rate is scheduled to increase to 55% and the value of a Canadian’s worldwide estate need only exceed US$1 million to expose them to U.S. estate tax on their U.S. assets,” says Patel.