The Mixed Family with US Estate Planning Needs

By Bryant Andrus

Profile: The Mixed Family with US Estate Planning Needs

TL;DR

The One Big Beautiful Bill Act became law on July 4, with some provisions effective immediately and others on January 1, 2026.
The US estate and gift tax exemption rises permanently to $15 million per person ($30 million per couple) in 2026, but large cross-border estates can still approach the threshold.
Non-citizen spouses still need a QDOT drafted in advance, and the now-permanent Section 199A deduction is a reason to revisit US business structures.

If your family includes both US and Canadian members — parents who are Canadian snowbirds, an adult child who is a US citizen or green card holder, or a household where one spouse holds a US passport and the other doesn’t — July 4, 2025 changed your estate planning landscape in real and immediate ways.

President Trump signed the One Big Beautiful Bill Act into law on July 4. Several provisions took effect that same day. Others become effective January 1, 2026. For mixed-nationality families, the most important changes are in estate and gift tax, business income, and international tax rules.

The Estate Tax Exemption Is Now $15 Million — Permanent

Beginning January 1, 2026, the federal estate and gift tax exemption rises to $15 million per person, indexed for inflation. For a married couple where both spouses are US citizens or US-domiciled, the combined exemption reaches $30 million; a nonresident non-citizen spouse is limited to a much smaller exemption, though the Canada–US treaty can help. This is permanent legislation, not a temporary provision subject to another sunset. For most cross-border families, this removes the immediate estate tax pressure. But ‘most’ is not ‘all.’ A Canadian business owner who becomes a US permanent resident and holds a CCPC with $5 million in retained earnings, a $2 million RRSP, $3 million in real estate, and US investments is still approaching the threshold — particularly as those assets continue to grow.

The Non-Citizen Spouse: Still the Most Common Gap

The higher exemption does not eliminate the non-citizen spouse problem. If a US citizen dies and leaves assets to a Canadian spouse who is not yet a US citizen, the unlimited marital deduction is still unavailable without a Qualified Domestic Trust. The QDOT must be established before the estate tax return is filed — a post-death QDOT is possible, but it is far better drafted and ready before death. With a $15 million exemption per person, fewer couples will need it — but every mixed-nationality family should know whether they are above or below the threshold, and have a plan either way.

Section 199A Is Permanent: Good News for US Business Income

The 20% qualified business income deduction under Section 199A, previously scheduled to expire, is now permanent. For US-resident Canadian business owners who have structured a US operation as an LLC or S corporation, this materially improves the after-tax return on US active business income. If your US business structure hasn’t been reviewed since 2017, the permanence of 199A is a reason to look again.

Ready to Talk?

Cross-border planning is time-sensitive and highly fact-specific. If any of the topics in this issue apply to your situation, we would welcome the conversation. State Bird Corp specializes in US–Canada cross-border tax, estate, and immigration planning for families and businesses on both sides of the border. Our team works with clients across the US and Canada — wherever your cross-border life takes you.

Sources

Sincerely,

The State Bird Corp Team

State Bird Corp

P: (602) 641-5996 · E: Info@statebirdcorp.com · W: statebirdcorp.com

To schedule your initial consultation, please contact us at info@statebirdcorp.com so that we can help you create a plan as unique as your fingerprint.

State Bird Corp is a management and financial consulting firm. State Bird Corp is not an accounting, legal or investment advisory firm. Cross-border planning is highly fact-specific. The strategies and topics described are general in nature, and readers should consult qualified specialists before taking any action. Any recommendation, inferences, or other guidance contained herein is meant for educational or general purposes and should not be relayed upon as specific advice for any person or business. Consult your legal, tax, and investment advisor for specific recommendation to your situation.