USA Inheritance by U.S. Citizen from Canadian former U.S. Perm Resident

Dec 26, 2012
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I am trying to determine whether a prospective, possible inheritance will be subject to U.S. tax, and whether any action can be taken now to influence the situation.

I am a Canadian born dual citizen (Canada and U.S.) and current U.S. resident. My mother is elderly, has significant assets (about $ 1.2 million U.S.) and now lives in Canada. She is a Canadian citizen who lived, worked and held a Green Card in the U.S. between 1979 and 1996. She returned to Canada in 1996 and had a net worth of about $400K-500K U.S. at the time. She had a modest income as a social worker prior to returning to Canada, likely in the mid five figures. I believe that she worked until about 1994. I don't know if she ever formally renounced her U.S. permanent resident status. She never acquired U.S. citizenship. Her purpose in returning to Canada was to be closer to the bulk of her immediate and extended family, and possibly to benefit from Canadian social services.

I am trying to find out whether a possible future inheritance from her would be subject to a 40% tax that I've read about, and whether any action that can be taken now would improve the situation.

The answer appears to depend on whether she is a "covered expatriate" under U.S. law. To help any potential responders answer this, I provided as much data about her status and income in the U.S. as I could.

Thanks in advance for any help this board can provide.

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