If clients move, revisit their estate plans

Many advisors don’t realize clients have to revisit estate plans when they move to other provinces and territories. While taxation rules on death are generally the same across Canada, other family laws aren’t. Here’s what to consider.

Will validity

Each province and territory has its own criteria for a valid will. The new jurisdiction may have different rules regarding whether a subsequent marriage or divorce revokes a will. And if your client doesn’t have a will, each has its own intestacy rules.

Probate

Probate fees differ throughout Canada. Nova Scotia and Ontario are the most expensive, at 1.645% and 1.5% respectively, of the estate’s value on the date of death. Minimizing these fees is less of a worry in Alberta and N.W.T., where they’re capped at $400.

Dual wills

If a client relocates to or acquires certain assets in Ontario, such as shares in private corporations, it may be possible to minimize probate fees using multiple wills (different assets are allocated to each will). This strategy may also be available in B.C. under the soon-to-be-in-force Wills, Estates and Succession Act. For real property in Quebec, like a cottage, clients may be able to execute notarial wills to avoid the probate process.

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Dependant’s relief

This type of legislation ensures support to a deceased person’s dependants if she failed to provide for them in her will. The Supreme Court of Canada has confirmed that B.C.’s legislative requirement to provide “proper maintenance and support” includes not only the basic necessities of life, but also moral obligations. This requirement can lead the court to redistribute an estate, even to the extent of providing for an adult independent child who was excluded from the will.

Children, their spouses and property division

Depending on the province, a client’s child may be forced to divide inherited property with his spouse if their marriage breaks down. Ontario and Saskatchewan generally exclude the value of gifts and inheritances from marital property—but income on those gifts may be treated differently.

Powers of attorney for property

Some provinces, including Alberta and New Brunswick, don’t have internal laws addressing foreign powers of attorney for property, while other provinces, including Ontario and Manitoba, do.

If a client relocates or has extended stays, ask a lawyer in the new jurisdiction to review all PoAs for property and personal care to ensure those legal documents will remain enforceable. If it turns out they won’t, prepare new ones.

Property division on marriage breakdown

Most provinces and territories have a statutory default regime for property division between spouses when a marriage ends.

Some, like Ontario, make certain property rights available to a surviving spouse. Local laws also contain their own definitions of spouse, rules around spousal and child support, and treatment of the matrimonial home.

Due to recent amendments to Alberta laws, death now triggers a matrimonial property claim for a surviving spouse there. Unlike in Ontario, though, the surviving spouse could be entitled to both a property claim and any gifts in the will.