Even as the pandemic rages on, the world has never been smaller than it is now.
Technological developments and ease of travel have allowed many of us to make and retain lifelong connections to locations all over the globe, whether or not we have family roots there.
As a result, more and more Ontario testators have beneficiaries or property based abroad, which can add some wrinkles to the estate planning process.
In addition to language barriers, cultural and legal differences of the foreign jurisdictions engaged, can come into play.
Here are some of the issues you may wish to consider when it comes to estate planning and distribution with an international dimension:
For Canadians with assets abroad, it’s the local law that kicks in when their real estate or other property changes hands on their death, and an Ontario will is not always going to be recognized in other jurisdictions.
For this reason, many people draft a second will specifically to deal with their foreign assets. If that’s the option for you, it’s a good idea to have your legal professionals coordinate, so that the instructions in each make sense when read together, and to ensure that neither one accidentally revokes the other.
The practical challenge of physically getting money and assets to a foreign-based beneficiary may be the least of an executor’s worries if the testator has given no thought to the tax consequences of such gifts.
There are different rules for capital gains when the beneficiary is based abroad, while some non-residents of Canada will need a clearance certificate under s. 116 of the Income Tax Act before disposing of property located here.
Requirements differ depending on where exactly in the world the beneficiary lives and which of Canada’s international tax treaties is engaged.
Another thing to consider is your executor’s country of residence. It is possible to appoint someone who lives outside Canada, but if they’re based in a non-commonwealth country, courts typically require estate trustees to put up a bond covering twice the total value of the estate. Depending on the amount of assets at play, that can be costly, not to mention time consuming.
It may be worth considering an Ontario-based alternate or even a corporate trustee to do the job, just in case your original choice is scared off by the prospect of a bond requirement.
Whatever your individual circumstances, an experienced lawyer can guide you through the process and connect you with any other professionals you need to get your international estate in order. Disclaimer: The content on this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this website are advised to seek specific legal advice by contacting members of Laredo Law (or their own legal counsel) regarding any specific legal issues.