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LEGAL REPORT: WILLS AND ESTATES million in 2009, says Reynolds. While the U.S. estate tax is set to be re- pealed for 2010, it will then revert to the law in effect in 2001, which had only a $1-million exemption and a top rate of 55 per cent. While each case is different and de- pendant on facts, "planning is not at all straightforward where a client has as- sets in excess of the exemption amount and some of those assets consist of U.S. property," notes Reynolds. Altro says that there are many clients who are not aware of these types of is- sues. "The majority are not aware of it and even the Canadian tax lawyers or general lawyers, and accountants gener- ally, are not familiar with it because they don't specialize in U.S. [law]." He says his firm always works with the local accoun- tants or lawyers to explain what goes on so everybody understands and they can create the best structure for the client based on their situation. Mary Anne Bueschkens, a lawyer with Heenan Blaikie LLP in Toronto and deputy chairwoman of STEP Canada (the Society of Trust and Estate Practi- tioners), says a lot of Canadian clients are buying property in places like Arizona at the moment. "Normally when they come to see you, the buzzword that they're still thinking about is the single-purpose cor- poration for purchasing property, which really doesn't work anymore," she says. Join our Legacy Circle ownership of choice right now for clients . . . purchasing U.S. real property is to use a trust." — MARY ANNE BUESCHKENS, HEENAN BLAIKIE LLP The single-purpose corporation used to be the "mechanism of choice" for Ca- nadians purchasing U.S. real property, says Bueschkens, as the underlying prem- ise was that Canadians would avoid U.S. estate tax when they passed away through owning shares of a U.S. company rather than the property. The problem is that there was always an underlying issue in that there was a "shareholders benefit" to Canadians under a section of the Income Tax Act, says Bueschkens, and the relief was taken away in 2005, with a grandfa- thering for structures already in place. "The type of ownership of choice 519-253-3000, Ext. 2097 agellman@uwindsor.ca www.uwindsor.ca 64 A UGUST 2008 www. Law ye rmag.com right now for clients that are Canadian citizens and residents who are purchas- ing U.S. real property is to use a trust," says Bueschkens. In addition to trusts, one way that clients deal with this issue is through a non-recourse mortgage, which Bueschkens says is difficult to get. Clients also have to be careful of owning things jointly. Such ownership is popular north of the border, says Bueschkens, but "a lot of people from Ontario, they'll just buy a house jointly "The type of