Do you Wish to Appoint a Foreign Executor? Three Things to First Consider
A critical decision when making your estate plan is deciding who will administer your assets after your demise. Given the importance of appointing someone you trust, some find it to be a painstaking decision, at times complicated for those having loved ones living outside of Canada. The attached article speaks to three things to first consider before naming a foreign executor:
- Bond Requirement – If the executor is a non-resident he/she will generally need to post an administration bond equal to the value of the estate when applying for probate. The process to obtain a bond is time-consuming and costly. Bringing a motion asking the court to dispense with the bond requirement also adds expense.
- Tax Implications – An estate may be deemed to be non-resident for tax purposes as a result of a foreign executor in control. The ensuing added cost to the estate could include losing preferential capital gains and Canadian dividend tax treatments. An estate’s reporting and tax withholding obligations are also increased. Further, even if the estate is considered Canadian, there lies a risk that it will be subject to the tax laws of the executor’s country.
- Practical Challenges — Among an estate trustee’s duties are the obligations to gather the assets, inventory them, preserve them and distribute them. Such administrative tasks take time and are made more challenging when the executor is in another jurisdiction. If there is no trusted local individual, one work-around is to appoint a professional trust company, which has the added bonus of eliminating the bond requirement and tax risks noted above.
It may be prudent depending upon one’s individual circumstances to get the comfort of legal advice on the issue.
Thanks for reading and have a great day,