If you own a vacation home or other assets outside of Canada, there are some circumstances where you may want to consider having a Will as well as Powers of Attorney documentation that account for these assets. Mindi Banach, Tax and Estate Planner, TD Wealth, joins Kim Parlee to discuss what to know when it comes to estate planning for your international assets.
* Today on Ask MoneyTalk, if you own assets outside of Canada, you're going to want to hear the answer to this question from Ask MoneyTalk. Mindi Banach, Tax and Estate Planner at TD Wealth, joins me now to weigh in. It is lovely to see you.
* Lovely to be here.
* So the question is, do I need a foreign will and foreign powers of attorney if I own assets outside of Canada?
* So my answer is going to be different when we're talking about a will versus talking about powers of attorney. So let me focus on the will. Despite common advice that suggests a blanket need for a foreign will if you own assets outside of Canada, in my opinion, my opinion kind of more closely aligns with the typical legal answer of it depends on the unique facts and circumstances of each case.
- And more specifically, I do think it really depends on two factors, number one, the specific jurisdiction that you're looking at, as well as number two, the specific assets that you own. Now, in that other jurisdiction, if they do not recognize a Canadian will, I think the argument for drafting a foreign will becomes more compelling. But I then do think you need to look at the two factors that I mentioned, again, the specific jurisdiction, the specific assets. Because in other jurisdictions, they may have alternative strategies available to transfer specific assets after death, rendering the need for any will, whether it's a Canadian will or a foreign will, unnecessary.
- So for example, I'm thinking of certain states in the United States, Florida being one of them. They have a specific strategy available in Florida that allows you to transfer real estate property after death, rendering the need for any will, whether it's a Canadian will or a US will, unnecessary.
- Now, whether or not you should utilize that strategy or whether or not you should draft a will in that foreign jurisdiction, again, look at those two factors, the specific jurisdiction, the specific asset. Because practically, it may make more sense to, again, draft a foreign will. Again, you want to look at those two factors.
- Switching focus to powers of attorney, I think that the best practice is that you should be drafting a power of attorney in every single jurisdiction where you own assets. And this is based on practical nature. If you own assets in Ontario, what Ontario bank is going to readily accept a power of attorney that was drafted outside of Ontario? Likely before they accept that foreign power of attorney-- and Ontario does recognize foreign powers of attorney.
- Before they accept that, they may demand an Ontario legal opinion. And because of that, it likely becomes more time and cost effective to just draft, again, a power of attorney in every jurisdiction where you own assets. One other point that I do want to highlight that is vital is that you want to ensure that if you do end up drafting multiple jurisdictional powers of attorney or multiple jurisdictional wills, you ensure that the documents don't unintentionally revoke each other. So you would not want your Ontario documents to revoke your Florida documents and vice versa.
* What happens if you-- what happens-- I guess that example you just gave-- because I think it comes with a cautionary tale, something you know about. So the question is, what happens if you don't put the proper paperwork in place for foreign assets? Or you unintentionally put something that contradicts?
* Let me share a cautionary tale. There's actually a documented case on this where there was a Canadian man who set up a fairly complex Canadian estate plan. And in his Canadian will, he distributed assets to his biological children from his first marriage, as well as distributed assets into a spousal trust for his second wife, who was significantly younger than him.
- After he had signed and set up his Canadian will, he subsequently purchased property in Florida. It's always purchasing property in Florida. And he thought he did what was right. And he drafted a Florida will. And in that will that only covered his Florida property, he did distribute the Florida property specifically and exclusively to his second wife. Now, the mistake that ended up happening was that Florida will included what I call a general revocation clause, which indicates, I revoke all prior wills. So what that Florida--
* Which is common, right?
* It is common to include. But what that Florida will did was it revoked the Canadian will. So what ended up happening is that when this man passed away, all of his Canadian assets ended up getting distributed under intestacy laws, which is the laws that govern if you don't have a will. And he didn't have a valid Canadian will. And the intestacy laws did not align with his original intention that he had included in his Canadian will. Again, cautionary tale. I'm not saying it was a mistake to draft a Florida will. It was a mistake not to get the right cross-border advice.
* Wow. That's so hard because someone who's gone to the work to create something to have not what his wishes that he wanted carried out, that's hard. Who should people speak to to understand the appropriate steps for them?
* It's not only important to go to a lawyer who has special expertise in estate planning. You need to go to a Canadian estate-planning lawyer who has familiarity or a deeper understanding of the law in that other jurisdiction and vice versa. Again, you want to ensure that your documents are done the right way. If you can find a dual-licensed lawyer, great. But it could be like finding a unicorn, nearly impossible and arguably may not exist, depending on that other jurisdiction. So again, best to find a Canadian lawyer who has familiarity with that other jurisdiction and a foreign lawyer who has familiarity with Canadian law.
* Mindi, thank you so much.
* My pleasure.
* That's Mindi Banach, Tax and Estate Planner at TD Wealth. And if you have a question, please send it in to firstname.lastname@example.org.