What if Form 706 was filed after the estate was already distributed?
It happens more often than you would think, and it complicates the work rather than removing it. The return still has to be prepared as at the date of death, which means reconstructing an inventory for assets that have since moved to beneficiaries in several countries. Beneficiaries are then being asked for records about property they now treat as their own. Exposure on a late return is charged by reference to the form and the delay rather than to any tax finally payable, so a distributed estate with no tax to pay is not a resolved estate. Gather what the executor still holds first, then approach the beneficiaries with a specific list.
Can a portability election still be made on a late Form 706?
The election lives on the return, so an estate that filed nothing has made no election. Whether it can still be made when the return is late is a question to be examined on the facts of that estate rather than assumed in either direction, and the answer depends partly on what the estate looked like at the first death. What is clear is that the position does not improve with waiting. Establish the worldwide inventory as at the first death while records still exist, document the size of the estate, and take advice on the election with those facts in hand rather than as a hypothetical.
Does filing Form 706 late affect the credit for foreign death taxes?
Foreign death taxes paid are brought in on the return, so nothing is claimed until the return is filed. The real damage from delay is evidential. A foreign estate that has been closed and distributed no longer has an open file, and the assessment or clearance showing what was charged, and on what, becomes something you request as a favour. Where a foreign adviser acted, approach them before their retention period expires. Where the family holds only a payment record, say so in the return rather than describing it as an assessment, and keep the distinction between what is evidenced and what is reconstructed.
How do we file Form 706 when foreign assets cannot be valued?
You value them on stated assumptions, and disclose the assumptions. A worldwide base means some assets sit in markets with no ready evidence — a part interest in family land, a private company, a property in a country with no public price record. Waiting for certainty is what keeps estates open for years. Instruct a valuer to opine as at the date of death on assumptions written down in advance, record what evidence was and was not available, and file. A figure with its reasoning attached can be discussed. An unfiled return cannot, and the delay is charged by reference to the form rather than to the difficulty.
Is the executor or the beneficiary dealing with a late Form 706?
The estate carries the return and the executor administers it, so the work and the correspondence sit with whoever is acting — including an executor who inherited the problem from a predecessor. Beneficiaries come into it differently. Once assets have been distributed they hold the records the inventory needs, and they may hold the assets a later liability would look to. That is a reason to bring them in early with a specific request rather than a general appeal, and to give them a written explanation of why a return is being prepared for a death they consider long settled.
Can we distribute an estate before Form 706 has been filed?
Distributing first is what creates most of the late-filing problems we see. For a citizen or resident estate the base is worldwide, and the assets have to be valued and reconciled with foreign probate and any foreign death taxes before the picture is complete — which is precisely the exercise a distribution interrupts. Once property has gone to beneficiaries in several countries, the inventory has to be rebuilt from their records rather than the executor's. Where beneficiaries are pressing, the ordinary answer is a partial distribution with the inventory and valuations already settled, not a full one with the return outstanding.
Are US-listed ETFs US-situs property for a non-resident's estate?
Shares issued by a US company are generally US-situs for estate tax purposes, and a fund domiciled in the United States is a US company however global its holdings. A fund domiciled elsewhere that holds the same underlying stocks generally is not. That distinction — the domicile of the wrapper rather than the location of the investments — is why cross-border portfolios get restructured, and it should be confirmed against your own holdings before anything is sold. See US estate tax exposure for Canadians.
How do families with assets in two countries handle inheritance?
With paperwork built for both systems rather than one. In practice that means wills that work where each asset actually sits, an executor with authority a foreign bank or land registry will accept, clearance certificates before the estate distributes so the executor is not left personally exposed, and an estate tax exposure calculation done while the person is alive and can still act on it. Doing it afterwards costs more and forecloses most of the options. See cross-border wills and trusts.
