Your Wills and Estate Planning Questions Answered
A number of the more common questions I get asked by my Wills and Estate Planning clients are answered here...
What is the difference between a Will and a Power of Attorney for Property? Why do I need both?
A Power of Attorney for Property is used when the person granting the Power of Attorney is still alive. For example, the person may be out of the country and cannot travel to where his property is located. He may appoint an attorney under a Power of Attorney for Property to sign documents on his behalf and handle matters relating to his property while he is away. A Continuing Power of Attorney for Property would allow the attorney for property to exercise his powers even after the grantor becomes mentally incapable of doing so himself.
A Will, on the other hand, becomes effective only upon the testator's death. An Executor under a Will will not have the ability to manage and handle the testator's affairs while the testator is still alive, even if the testator is incapable of doing so himself.
Therefore, both a Will and Power of Attorney for Property is required to appoint someone to manage your property both after death and while you are still alive, in particular, when you are either physically or mentally not able to do so yourself.
Can I appoint someone who is a non-resident of Canada to be an Executor under my Will?
The short answer is yes. There is nothing in the law that requires a testator to appoint a resident of Canada to be an Executor under his Will.
The real question is whether it is advisable to do so, given that appointing a non-resident as an Executor would result in a number of issues for your estate. There are 3 such issues to consider:
1. Appointing a non-resident as an Executor will most likely result in your estate being treated as a non-resident under the Income Tax Act. Additionally, your estate may then be subject to the tax laws of the jurisdiction of which the Executor is a resident or citizen of. This could result in unintended tax consequences for your estate and should be discussed with your tax advisor.
2. A foreign or non-resident Executor of a Will will also most likely be required to post a bond before a court will issue a Certificate of Appointment of Estate Trustee (probate). The bond will be purchased from and issued by an insurance company, which will require the Executor to provide extensive personal and financial information before it will issue the bond. The premium payments for the purchase of the bond will be an additional expense that will be borne by the estate.
3. The third issue with appointing a foreign or non-resident Executor can arise if the deceased's estate contains investment assets. Under the regulations that govern investment dealers in Canada, investment dealers that take instructions from non-residents must comply with a myriad of additional laws and regulations that govern financial and securities transactions both in Canada and in the jurisdiction of which the Executor is resident of. As a result, many investment dealers may decline to work with a non-resident Executor due to the potential legal and regulatory risks involved.
Due to these issues, it may be better to appoint an Executor who is a resident of Canada. If this is not possible or appropriate in your circumstances, a Canadian-resident lawyer or trust company may be appointed instead. Note that a trust company or professional trustee will usually require a minimum value of the estate before it will act as an Executor, which is typically $300,000 or more.
To be continued...
The above article is written by Angeline Gallivan, a Barrister and Solicitor with Chan-Gallivan Law Professional Corporation (changallivanlaw.com), is provided for information purposes only and does not constitute legal advice.
To obtain legal advice that is specific to your circumstances, please call my office at 289-291 3977 or email me at firstname.lastname@example.org.