My father died abroad — what do I need to do first?
Before anything tax-related, secure documents. The papers that decide your Canadian position are all generated abroad, in the weeks when the estate is being administered, and they become difficult to obtain once it is closed: the death certificate, the will, the local grant, valuations of each asset at the date of death, and the executor's statement of what is allocated to you. The inheritance itself is a capital receipt and will not be taxed here as income. What you may have to prove years from now is what each asset was worth on the day it passed to you. Start there.
Where do I start if the estate is not settled yet?
With the valuations, and with a clear view of what is coming to you. An estate in administration is the right moment for this work rather than the wrong one: the executor is already gathering values, the local advisers are engaged, and nobody has to reconstruct anything. Ask for asset-by-asset valuations at the date of death and keep them. Ask whether anything is held through a company or a trust, because that changes what you will eventually hold. You do not need to file anything in Canada on account of an estate that has not yet distributed to you.
Which document matters most before I do anything else?
The one that fixes value at the date of death, asset by asset. That figure becomes your cost for Canadian purposes, and every later calculation is measured from it: the gain when you sell, the income you report, the cost shown on your foreign-property schedule. After that, the executor's statement showing what was allocated to you and when, because the date of entitlement decides which tax year everything falls in. Probate papers and the will support both. A bank transfer confirmation on its own proves only that money moved, which is rarely the document that helps.
Should I wait until the money arrives to get advice?
No, and the reason is practical rather than clever. The decisions that shape your Canadian position are made abroad, by the executor, while the estate is open: how assets are valued, whether they are sold by the estate or transferred to you in kind, whether anything runs through a trust. Once the funds land in your account those choices have been made, and your options narrow to reporting what happened. Come in while questions can still be asked of the executor. A call on +1 (416) 619-0068 at that stage is usually shorter than the one that follows a completed distribution.
How do I find out whether a trust is involved?
Ask the executor directly, in writing, whether any asset is held other than in the deceased's own name, and ask for the document that governs it. Families describe structures loosely, and the words used at a kitchen table are not the words in a deed. Signs worth pursuing: assets managed by a firm rather than a person, a nominee or holding company on a title, payments described as distributions rather than transfers, or an executor who cannot tell you what the underlying assets are. If a trust is in the picture it decides the Canadian analysis, so establish that before anything is filed.
What should I tell my bank when the transfer arrives?
Have the estate documents ready before the money moves rather than after. Inward transfers of this size prompt questions as a matter of course, and the answer you want to be able to give is documentary: this payment originates in the estate of a named person, here is the grant, here is the executor's distribution statement. The same pack serves your tax file. What causes trouble is a large arrival explained verbally months later, which is how a capital receipt starts being examined as something else. Keep the documents with that year's records, where you can find them.
Do I pay US tax on an inheritance from abroad?
A bequest is not income, so the receipt itself is not taxed. Reporting is a different matter: a US person who receives large gifts or bequests from a foreign person or estate files an information return for the year, and inheriting a foreign account or an interest in a foreign trust brings the account and asset reports with it. The penalties here attach to the information return, not to tax — which is why people who owed nothing still get letters. See Form 3520.
What is FIRPTA withholding?
FIRPTA is the US regime that treats a foreign person's disposition of a US real property interest as taxable and makes the buyer withhold on the gross proceeds to secure it. Because the deduction is on the price rather than the profit, it routinely exceeds the real tax — sometimes on a sale made at a loss. A withholding certificate applied for before closing can reduce it to something closer to the actual liability. See the FIRPTA withholding certificate.
