This blog has been written by Darren Lund, partner at Fasken LLP

Cross-border estate planning is undoubtedly a complex affair. When clients have assets in a foreign jurisdiction[1], are resident or have citizenship in a foreign jurisdiction, or wish to benefit individuals who are resident in a foreign jurisdiction, planners must navigate a myriad of tax, succession, and estate administration rules, among others, in multiple jurisdictions – rules that often don’t play well together in the sandbox, as the expression goes.

In addition to the elements of cross-border planning noted above, an element that should not be overlooked is the impact of different matrimonial property systems on wealth and estate planning. For example, matrimonial property systems may significantly impact approaches to intergenerational wealth planning, planning for blended families to preserve estate value for children of a prior relationship, among other matters. The cross-border implications of matrimonial property systems may be most evident where spouses have an existing marriage contract based on the law of one system and subsequently move to another jurisdiction, or they are negotiating a marriage contract and at the time of the negotiation there is a known or foreseeable connection to another jurisdiction.

In a previous blog How Separate is “Separate as to Property”? – All About Estates I discussed the Ontario Court of Appeal decision in Torgersrud v. Lightstone, 2023 ONCA 580. In that case, a couple executed two Quebec marriage contracts and later moved to Ontario, where they had lived for over 20 years when they separated. Under Ontario’s conflict of law rules for matrimonial property, Ontario law applies if Ontario is the jurisdiction where the parties have their last common habitual residence at the time of a separation. Although the Quebec contracts were formally valid and enforceable in Ontario, the Court of Appeal set them aside on the basis of insufficient financial disclosure and the wife’s lack of understanding of the contracts when they were signed.

In the Torgersrud case, there was no obvious connection to Ontario when the spouses executed the Quebec contracts. If they had reviewed the Quebec contracts when they moved to Ontario, there may have been an opportunity to execute a new marriage contract under Ontario law. This highlights the importance of fresh advice if there is a change of jurisdiction, including of course where a couple executes an Ontario marriage contract and later leaves Ontario. To take one example, under Ontario law a family home that qualifies as a “matrimonial home” provides a non-titled spouse with certain rights, such as the right of possession and a requirement that the non-titled spouse must consent to any sale or encumbrance of the matrimonial home. Those rights, or even analogous rights, may not exist in the jurisdiction to which the couple moves. If preserving those rights is an important element of the contract, steps may need to be taken to address that by other means.

Of course, if there is an obvious connection to another jurisdiction when a couple is negotiating a marriage contract, then advice should be obtained in that jurisdiction during the initial negotiation. If one of the parties in the Torgersrud case had been from Ontario such that there was a foreseeable possibility of returning there, and if Ontario advice had been part of the original process, a more robust process including financial disclosure that met Ontario standards and independent legal advice may have saved the Quebec contracts.[2]

To illustrate the point, the matrimonial property law that applies to a couple is determined by conflict of laws rules, and those rules vary between jurisdictions, sometimes in surprising ways. For example, in some countries the matrimonial property law that applies is determined not by the last common habitual residence of the parties at the time of a separation, as in Ontario, but rather by the jurisdiction in which the first matrimonial domicile is established, even if it later changes. For a couple with connections to both Ontario and such a jurisdiction, it is important to understand this at the outset. If, for example, it is crucial to the enforceability of an Ontario marriage contract in both jurisdictions (e.g. if the couple later moves to the other jurisdiction) that Ontario be the jurisdiction of the first matrimonial domicile, and that is known at the outset, additional steps can be taken to document the facts which support that, and to avoid creating facts that do not (e.g. spending too much time in the other jurisdiction).

Amid the uncertainty that often comes with cross-border planning, two things can be said to be constants. First, expect the unexpected. The answer to the question “How different could their laws be?” is always “They could be very different!”. The second constant – and this follows logically from the first – is that advice is needed in all relevant jurisdictions to avoid unwelcome, and potentially costly, outcomes in the future. These constants most definitely hold true for matrimonial property systems in the cross-border context. Given the impact that matrimonial property systems can have on estate planning, it is always prudent to consider them as an important element of cross-border estate planning.

[1]      A “foreign” jurisdiction in this context may refer to another country or to a different sub-national jurisdiction within the same country.

[2]      There were other grounds in the trial decision by which the judge set aside the Quebec contracts.