Canada: Multijurisdictional And Separate Situs Estate Planning: Wills

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.

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.

Our first article in the series explained what multijurisdictional wills and separate situs wills are and discussed the benefits to clients of their use. This article 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.

While well-drafted multijurisdictional and separate situs wills are powerful planning tools, proper preparation is necessary to realize their benefits. In particular, the planning and drafting of the documents need to be coordinated by professional advisers located in each of the relevant jurisdictions. If using separate situs wills, a will plan should be integrated among a principal will and any separate situs wills.

In conjunction with professional advisers, the client should consider the following issues:

  • Is it advantageous to choose parallel groups of executors and trustees in each jurisdiction?
  • Will a pre-existing principal or separate situs will be accidentally revoked if changes are subsequently made to one of the wills, given the use of a general revocation clause in most wills? Great care needs to be taken to ensure there is no accidental revocation of a prior will.
  • Can the payment of double probate fees on worldwide assets in both the home jurisdiction and in the jurisdiction where the foreign assets are located be avoided by having the foreign assets dealt with under a separate situs will?

Investing in proper advice, preparation and administration may avoid costly litigation and interpretation issues in the future in any estate plan but is of particular importance where multiple jurisdictions are involved.

Frequent review of an estate plan is necessary to ensure that it is up to date, that it reflects the client's wishes, and that there are no conflicts or irregularities, such as the same assets being left to different beneficiaries in each will. As well, if the client changes their assets or disposes of them at a later date, reviewing their plan is important to ensure that the beneficiaries under the various wills are not unintentionally adversely affected.

When it comes time to administer an estate with assets in multiple jurisdictions, one key issue may be which law governs the property rights of the spouses on death and the validity and effect of a spouse's will. Family law rules may affect the succession of property upon death, depending on the specific jurisdictions and governing law involved.

If one of the applicable matrimonial regimes is a form of community of property (i.e., spouses' property and earnings are considered community property during marriage and are divided equally between them on marriage breakdown), there may be limitations on what property each spouse may dispose of by will. Problems can arise where spouses are subject to one legal regime for matrimonial property, and another legal regime governs succession to property on death.

When creating a succession plan for assets in multiple jurisdictions, it is also important to be aware of the legal rules to determine succession of property. These rules are complex, often confusing, and unpredictable in how they will be applied to assets in jurisdictions outside the court of the jurisdiction where a principal will is interpreted. Careful drafting and professional advice can address some of these uncertainties.

In common law jurisdictions, the formal validity of a client's will (which relates to its physical form and its manner of execution) is governed by: (a) the law of the client's domicile at date of death for personal property; and (b) the law of the jurisdiction where the property is located for real estate.

Further, the construction of the client's will is interpreted according to the law he or she intended. At common law, there is a rebuttable presumption that this is the law of the client's domicile at the time of the execution of the will. It is important to note that in some jurisdictions, statutory law may modify these rules.

In civil law jurisdictions, assets and liabilities are directly transmitted to the heirs, as opposed to vesting in the personal representatives who "administer" the estate by collecting in assets, paying liabilities and distributing the remaining property to the beneficiaries. Regarding the governing law, some civil law systems have a separate rule for personal property and the law of the location of the property for real estate, while other civil law systems are "unitarian" — applying the client's personal law to all estate assets. All of these laws contribute to complications, regarding which issues expert advice can be crucial.

This is the second of a three-part series. Read part one here. Our next article will discuss considerations in preparing multijurisdictional wills and separate situs wills.

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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