The Huffington Post reports that over a third of foreign buyers of real estate in Florida are Canadians. Another article reports that Canadians are the leading buyers of US real estate. In earlier blogs I’ve talked about the specter of US estate taxes that arises when a Canadian dies owning US situs property, like real estate. Besides this complexity, the ownership of foreign property raises the potential for challenges in the administration of an estate. As a result, when developing an estate plan that includes foreign real estate it is important to consider a number of issues, some of which are:
- Will a Will you prepare in your “home” jurisdiction be recognized as valid by the foreign jurisdiction.
- What probate process will be required to deal with your foreign assets. For example, is it sufficient for your executors “home” probate grant to be “resealed” by the foreign jurisdiction or will they have to obtain an “ancillary” grant from the foreign jurisdiction. Each process raises its own complexities that will need to be addressed.
- Will your executor named in your Will be recognized under the laws of the foreign jurisdiction to deal with your foreign assets or will they have to appoint a local agent. The latter will typically entail additional expense.
- Will your executor be required to post a bond with the foreign court. Again, this will typically entail added expense and ultimately delay in the closing out of your estate when your executors will then have to have the bond released.
Often the solution to the complexities that can arise with foreign property is to consider using a separate Will to deal with that property. The use of a separate Will, will facilitate the administration and transmission of your foreign proeprty. Ultimately the benefits of using a separate Will are the following:
- It increases the chance that your foreign assets will be disposed of in accordance with your wishes;
- It allows for greater confidentiality of your estate;
- It prevents delays in the administration of your overall estate;
- It avoids conveyancing difficulties, as local laws are more likely to be complied with when using a local Will;
- It may minimize applicable taxes;
- It will avoid the need for either, or both of, the translation and judicial interpretation of a foreign document; and
- It will allow for you to choose the applicable law and thereby avoid any issues as to which law is applicable.
Recently though I was reminded of the need to consider more than just a separate, local Will to deal with foreign assets. In particular, I was reminded that when you own assets in another jurisdiction, it may also be necessary (and wise) to have powers of attorney for property that are compliant with the laws of the foreign jurisdiction.
The recognition of foreign powers of attorney for property raises similar challenges as the recognition of foreign Wills but with the added challenge that you are still alive but incapable. As a result, issues surrounding confirming your capacity may need to be addressed within the regime of the foreign jurisdiction and, depending on the circumstances, it may be more exigent circumstances that need to be addressed. The solution again is to consider having powers of attorney for property prepared by local counsel in the jurisdiction in which you own foreign assets.
Stay tuned next time when I hope to return to some themes from earlier blogs.