How one cross-border advisor manages the whipsaw of American politics

Cross-border work is challenging and technical in any year, but when a US election approaches and the heat of US politics ratchets up Matt Altro sees a growing push to move to one side of the border or another. In periods where the climate gets intense and long-term plans are tinged with emotional and rational concerns about the state of either Canada or the US, the President and CEO of MCA Cross Border Advisors focuses on first principles. He highlights the complex tax, estate, and investment implications of any long-term moves and works to execute on a challenging set of changing circumstances.

Altro explained to WP some of the circumstances he is now helping his clients navigate. From tax traps to sunsetting legislation, he talked through the myriad concerns that cross-border advisors need to manage. He highlighted the importance of training and expertise in these complex areas and emphasized how crucial it is for advisors to partner with cross-border experts as the election season only gets noisier.

“It’s sort of like 2016 all over again,” Altro says. “There’s a swath of American residents — some of whom are Canadian citizens — who are contacting me saying that if Trump does get re-elected, they need an escape hatch. So we’re developing plans for them in advance.”

Altro is quick to emphasize with these clients that their US status will drive the planning. He notes that US citizens in Canada have ‘the worst of both worlds’ in terms of tax status, because the US taxes on citizenship while Canada taxes on residency. Canadian taxes paid should produce a credit for the higher rate of Canadian tax that the US IRS will accept. However, ‘should’ and ‘will’ have different meanings and Altro says these situations don’t usually work out as cleanly as they ought to.

There are also plenty of rookie mistakes advisors can make around investment management for US citizen clients in Canada. Setting up and maxing out a TFSA for Canadian clients is a no-brainer, but if that client is a US citizen Altro notes that they may be subject to a very complex tax filing and US tax to pay on income within a supposed tax free account.

As some clients angle to leave the US in the case of the election outcome, Altro also cautions them against any rash decisions that may compromise their US status. A Canadian citizen with a green card, for example, could lose that green card if they move away. Given how challenging it is to obtain that status, Altro often sometimes recommends securing US citizenship if possible before contemplating a move.

That is not to say all the cross-border traffic is one way. Whether driven by better job prospects in the US, a more positive view of its politics, or the higher tax rates — both for income and capital gains — here in Canada, Altro is seeing many of his clients push to move south of the border. The upcoming election plays a key role in these decisions. Given Trump’s avowed anti-immigration stance and past history of using executive orders to slow the rate of US immigration, Altro is encouraging those clients who want to obtain US status to move quickly and get on that path now in case Trump wins and snarls up the system again.

A number of Trump’s tax cuts from his first term, too, are on course to sunset in 2026 such as lower personal income tax rates. Perhaps most notably, the Trump-era doubling of the US estate tax exemption is very likely to sunset and may be hard to re-establish in law no matter who wins in November. The current exemption rate of $13 million per person or $26 million per couple may fall to around $7 million in 2026. In anticipation of this change, Altro is working with estate lawyers to develop strategies around gifting up to the exemption while it remains high.

In the midst of changing circumstances and the risk of unforeseen outcomes, Altro and his team build contingency plans. Based on client goals and objectives they work to put together plans that can be triggered if and when something occurs. As advisors work with clients in similar situations, Altro emphasizes the importance of clear communication, planning, and expertise.

“It's important to keep the clients abreast to what may occur, and explain the different scenarios accurately,” Altro says, “Most of the time a nightmare scenario doesn't apply to them so by pointing that out, it puts their minds at ease. If it could apply to them, we remind them that these are just potential scenarios and we talk about our contingency plans of how we would look at a particular issue if it were to come to be and what we would do to address it.”