Tips for estate planning across borders
By Rob Lamberti, AdvocateDaily.com Contributor
People should update their wills and powers of attorney if they move to another province or country, says Toronto wills and estates lawyer Elinor Shinehoft.
The provinces govern estate documents and each jurisdiction is different in terms of probate rules and taxes, she tells AdvocateDaily.com.
Also, powers of attorney could pose potential logistical issues if the people live in other provinces or outside the country, says Shinehoft, principal of Shinehoft Law.
If a move is planned, changing executors would simplify matters. She says estate planning is complicated enough, but the addition of borders separating executors, powers of attorney and assets makes it more intricate.
"People don't realize you get into all sorts of legalities where you can technically have more than one will and you have to know how to draft each one that doesn't invalidate the others," Shinehoft says. "You have one will dealing with your assets, but if you have foreign property, I would suggest having two wills."
One could deal with the Canadian assets and another would focus on foreign assets or property, she says.
"Just make sure the lawyers and executors know about each will," says Shinehoft. "You want to make sure one doesn't invalidate and nullify any previous documents. It should say something along the lines of ‘This will does not nullify all previous wills dealing with my Canadian assets.’"
There are many complexities in this area of law — not to mention potential tax breaks — so using a knowledgeable lawyer is an advantage, she says.
"I always tell my clients, if you have a decent-sized estate and you want to leave things in a certain way and make sure your family and friends are taken care of, you might want to take that extra step to ensure everything is going to be distributed as you intended," Shinehoft says.
"With a power of attorney for personal care, you're naming someone who is able to make medical and personal decisions if you become incapable of making decisions on your own," she says. "It's always best to have that person live close by because if there’s an emergency, you want them to answer, respond and attend right away."
And there could be delays if authorities want to review powers of attorney documents and the person doesn’t live nearby, Shinehoft says.
"Financial issues are not as urgent as medical emergencies,” she says. “You're not going to have as many problems if you filed the power of attorney for property with a bank. They'll have it on file."
Shinehoft says "bigger issues" arise when moving to another jurisdiction.
"There are different tax implications and rules for probating wills," she says. "So if your estate planning was done for a specific purpose — like to save taxes — it won’t necessarily be as effective in a different province."
For example, Shinehoft says property in another province won't fall into probate with an Ontario will.
"You wouldn't be paying tax on it and it wouldn't form part of your estate," she says.
"But if the majority of your assets are held outside Ontario — whether in a different province or country — I recommend doing a will in each jurisdiction,” says Shinehoft.
"I recommend speaking to a lawyer in that jurisdiction and having another will prepared to ensure the laws are complied with. And, if the executor has any issues, he can deal with that lawyer locally.”
She says owning a cottage in another province most likely won't require a separate will, but the situation should be discussed with a financial planner or an accountant to appreciate potential tax issues.
"You do get into other issues if the executor of your estate is from another province," Shinehoft says. "For example, they will have to post a bond with the court of equal value to that of the estate. Generally, people don't have that kind of money hanging around, but there are options like buying insurance for the executor. It’s an extra step, an extra cost and an extra hassle.”
She says the testator can include a clause saying the bond isn’t necessary because the person is trusted, "but it's still the court's discretion whether it is going to ask for the bond."
The executor would then be required to file a motion to get the bond waived, Shinehoft says.
"You're not around to comment or give advice if something goes wrong. We're doing everything based on the interpretation of your will, but if it's not clear, we can't ask you.”
She says estate planning deserves the extra effort to ensure the language is unambiguous, the testator’s wishes are clear and that they comply with local tax laws.
"Take the extra step and get it done properly," says Shinehoft.