It is not uncommon for Canadian estate trustees to make distributions to beneficiaries living in the U.S. In doing so, the U.S. Customs and Border Patrol (the “US CBP“) could be involved in a myriad of ways.
A recent story from CBC News is an example of what can go wrong if estate trustees are not aware of their US reporting obligations. An estate trustee in Ottawa mailed a bank draft worth $500,000.00 to a beneficiary in the U.S. U.S. border officials seized the bank draft because it was mailed without filing the appropriate customs declaration form. Almost a year later, the bank draft is still held at the border while the unfortunate beneficiary is sick and in need of money for his medical bills.
According to the U.S. Customs and Border Protection website, any time money exceeding $10,000.00 is sent to the U.S. from a foreign country, the sender is required to file a “Report of International Transportation of Currency or Monetary Instructions” (FinCEN Form 105) with the CBP before the money is sent. This applies regardless of whether the sender is acting personally or on behalf of another legal entity. This applies to money in the form of coins, currency notes, travellers checks, money orders, etc. This also applies to money sent by mail, courier, personal delivery, etc.
However, this particular US reporting requirement does not apply where the method of transfer does not involve physically transporting money over the border, such as wire transfers through banking institutions. If a wire transfer is used, the bank is responsible for satisfying the necessary reporting requirements.
In course of sending money worth $10,000.00 or more from Canada, there are corresponding Canadian customs requirements as well. If money is sent by mail, be sure to visit a Canada Post location and inquire about the necessary requirements. The applicable reporting form must be filled out and enclosed within the envelope or package and a copy of the same form must be submitted to the Canada Border Services Agency. If money is sent by courier, the courier is responsible for filing another reporting form while the individual sender is still responsible for providing the courier with the general reporting form.
Like the US CBP, Canada Border Services Agency has the authority to seize the funds and charge penalties if the Canadian reporting obligations are not satisfied.
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