The Foreign Account Tax Compliance Act (FATCA) has now been in force for about a year now. Its goal: to prevent millions of U.S. taxpayers, and the global financial institutions that serve them, from evading U.S. tax on income and assets held outside the United States.
As our Terry Ritchie explains in an article at ADVISOR.CA, the law affects seven million Americans who live or work abroad, including 1 million in Canada. “U.S. cross border tax and financial planning ” must file annual tax returns on worldwide income and disclose interests in accounts or other foreign entities outside of the United States. And under FATCA, non-U.S. financial institutions have to report certain information to IRS about U.S. persons’ bank, investment and other accounts.
The New York Times has documented examples of unfavorable treatment of U.S. persons by FFIs in Europe and elsewhere. But Canadian foreign financial institutions (FFIs) don’t appear to have turned away U.S. persons or closed their accounts due to concerns over FACTA.
FATCA still faces challenges, including a Canadian lawsuit charging that the cooperation agreement between that country and the United States violates the Canadian Charter of Rights. And in the United States, Congressional Republicans may look to repeal the law if a Republican succeeds Barack Obama as president.
But FATCA may also be applied on a global scale—in what’s being dubbed GATCA. The Organisation for Economic Co-operation and Development is promoting it as a way to curb tax evasion through automatic exchange of information between FFIs around the globe.
Many people believe that estate planning is something done only by the wealthy or by the elderly. The fact is, this could not be further from the truth. Whether you are young or old, it is important to meet with estate planning attorneys so you can have your affairs in order in case something goes wrong.
When most people think of estate planning, they think of making a will. It is true, of course, that planning attorneys assist with the creation of a valid will that will stand up in court and that will prevent your heirs from fighting over your assets and possessions at the time of your death. However, real estate lawyer do much more than simply help you to draft a will.
Estate planning attorneys can recommend comprehensive strategies to help you to protect your assets and your wealth not only from being subject to high estate taxes but also from being lost if you become ill or incapacitated. Estate planning attorneys can do this by helping you to create trusts to protect your assets, or by helping you to make appropriate plans for long-term care insurance.
Estate planning attorneys will also help to make sure that you are taken care of if something happens to you so you are not at the mercy of family members to act on your behalf during their time of grief. Some of the different things that estate planning attorneys can do that you may not be aware of include:
Helping you to establish a power of attorney
If you are ever unable to speak for yourself or to access your own bank accounts or manage your own money, you will need to have a trusted person doing these things for you. If you do not name a power of attorney, your family may be unable to access your bank accounts or to make decisions on your behalf without getting a court order granting them the right to do so. Don't put your family through this, and don't leave the handling of your affairs to chance. Establish a power of attorney so that someone you trust looks out for you when you no longer can.