Canada: Multijurisdictional And Separate Situs Estate Planning

Last Updated: February 27 2019
Article by Susannah B. Roth and Margaret R. O'Sullivan

Our clients are increasingly mobile and often have connections to multiple jurisdictions. This mobility often entails property ownership in a foreign jurisdiction — clients retain property in their country of origin after they become resident in another jurisdiction or Canadian residents purchase vacation homes in other locations or inherit property abroad.

Owning property in another jurisdiction often means more complexity, and those who do should have a co-ordinated and comprehensive estate plan to deal with their multijurisdictional lives in order to avoid often hidden pitfalls. In this series of articles, we provide a brief overview of the use of multijurisdictional and separate situs wills; summarize a variety of planning points and considerations to be reviewed when creating and implementing an estate plan with assets located in multiple jurisdictions; and highlight the importance of working with a team of experienced advisers from the relevant jurisdictions in order to ensure an estate plan is properly integrated and effective.

The bottom line: estate planning cannot be done in a domestic vacuum.

This article will explain what multijurisdictional wills and separate situs wills are and will discuss the benefits to clients of their use.

A multijurisdictional will is one testamentary document which governs the succession of assets in several different legal jurisdictions. It is important that advice be obtained from foreign counsel to ensure that any provisions relating to foreign assets do not create any issues under the laws of the foreign jurisdiction. A separate situs will is a distinct testamentary document concerning assets located in a particular legal jurisdiction (or "situs") and is typically executed in accordance with that jurisdiction's laws. A separate situs will is used in conjunction with a principal will that deals with all other assets (and possibly other separate situs wills for assets located in other particular legal jurisdictions).

For clients who have assets located in multiple jurisdictions, there are strategic, practical and legal reasons for using a multijurisdictional will or separate situs wills. Depending on the assets and jurisdictions involved, as well as the client's personal circumstances, the advantages may include: (a) ensuring documents will be valid and that intentions are realized and given effect; (b) making the administration of assets upon death more efficient; (c) ensuring clarity by using local language and form; and (d) avoiding unnecessary probate costs. Each of these benefits is briefly discussed in more detail below.

Using either a multijurisdictional will or separate situs will can help to ensure that the will is valid and that assets will be distributed as the client intended. Local formalities can be complied with, which is particularly important when real estate is involved. In many jurisdictions, the local law where the real estate is located governs the formal validity of the will as it applies to real estate. For example, there may be special form and execution rules. Some jurisdictions have unique execution requirements such as the need for more than two witnesses (which is the typical requirement in most jurisdictions with systems based on English law).

The local law of the foreign jurisdiction can be chosen to govern the will dealing with assets in that jurisdiction, which can avoid future legal problems, including confusion regarding which law should govern the interpretation of the will. With the assistance of a local experienced professional adviser, the separate situs will can be drafted so that its provisions are substantively valid under the local law and to ensure that local law will give effect to the content of the will.

A separate situs will can take into account local law on such matters as (a) how long income can be accumulated, (b) the period any trust under the will can last before it must terminate, and (c) mandatory succession or forced heirship rules among family members where the local law requires a division of the estate of certain amounts or percentages. Similarly, the use of local language and local "legal terms of art" can be used, avoiding translation and interpretation problems down the road.

By using a separate situs will, the administration of the client's local estate can be restricted to a smaller and more identifiable group of assets, creating greater efficiency. The administration of the estate can proceed without delay because a separate situs will can usually be directly submitted to probate without waiting for a will to be probated in the client's home jurisdiction and then trying to have it admitted in the second jurisdiction — a two-step process.

If separate situs wills are not used, the local court may require the client's original will. As there is only one original will, problems may arise because the original will may have already been submitted to the home jurisdiction court that granted the original probate. Problems may also arise if the original were retained by a foreign court.

A separate situs will can more easily incorporate local language and local formalities. The use of local language avoids a need for translation when it is time for the will to be used in the jurisdiction. Using local form helps to ensure that the court process and administration of assets in the jurisdiction will proceed efficiently.

Local rules may also dictate certain requirements that are not found in other jurisdictions. For example, local rules may require the executor to be a resident of the jurisdiction or require a foreign executor to post a bond. A separate situs will can be prepared with these jurisdiction-specific rules in mind — such as by appointing a local person to be executor in that particular jurisdiction.

Separate situs wills can reduce the total cost of probate fees payable on death. Separate wills for each of the jurisdictions in which a client holds assets can avoid local probate fees being charged on their worldwide estate and duplication of probate fees being paid in several jurisdictions on the same assets.

Separate situs wills can also ensure greater privacy and confidentiality during the probate process if, based on local rules, only those assets and their values which are governed by the separate situs will need to be disclosed during the probate process (as opposed to having to disclose worldwide assets).

This is the first of a three-part series. Part two will discuss proper preparation of multijurisdictional wills and separate situs wills, as well as what property passes on death and which law governs each will.

Originally published by The Lawyer's Daily.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Susannah B. Roth
Margaret R. O'Sullivan
Events from this Firm
9 May 2019, Speaking Engagement, Toronto, Canada

Speaking at STEP International Tax and Estate Planning Forum: Around the Globe in Laguna Beach on May 9 and 10, 2019

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