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Many of our readers, especially business owners, may be familiar with the concept of having multiple wills in the same jurisdiction, where each will governs different classes of assets – usually used to avoid paying estate administration tax (aka probate fees) on assets that do not require probate to deal with.
But what about assets in different jurisdictions? If you have assets in multiple jurisdictions or spend significant amounts of time in another province or country, having a local or separate situs will and powers of attorney can benefit you.
A local or separate situs document refers to having a distinct document that complies with and applies to a particular legal jurisdiction (or “situs”). A separate situs will is used in conjunction with a principal will that deals with all your other assets on your death. Similarly, separate situs powers of attorney allow one or more named substitute decision makers to make decisions on your behalf while you are alive but unable to do so yourself, prepared under the laws of the situs jurisdiction.
Legal recognition. Each jurisdiction has its own rules as to what makes a document formally valid. Who can or cannot act as a witness, how many witnesses are required, how the document must be executed (in-person, virtually, by counterpart etc.), whether the document may be typed or written by hand, or both are all questions of formal validity. A document that adheres to one jurisdiction’s formal validity may fall short of another’s and thus have no legal recognition; separate situs documents resolve this issue.
Legal terminology and local customs. Separate situs documents can more easily incorporate local language as well as local formalities. The precise terminology used in wills and powers of attorney differs greatly across jurisdictions. Separate situs documents avoid the need for translation services when they are used in the local jurisdiction, but even where there is a common language, terminology can still lead to confusion. Consider that the terms “durable,” “enduring,” and “continuing” are each used by different English-speaking jurisdictions to refer to the same type of power of attorney document that survives a person’s incapacity. Or that the terms “child” or “issue” in a will may only apply to children born within legal marriage in some jurisdictions.
Ease of administration. Having a specific situs will allows for contemporaneous administration of your estate. For example, while your Ontario estate is going through probate, its assets sold and distributions made to your beneficiaries, the same process can occur simultaneously with your Arizona assets under a separate Arizona will. If you only have one will, then your Ontario estate and Arizona estate would need to be administered sequentially and often subject to a second resealing or ancillary probate court process, which is more costly and time-consuming.
Separate situs powers of attorney also ease the administration of your property or personal care. Even if your documents meet all the legal technicalities of another jurisdiction, practically it can still hit roadblocks by third-party representatives (e.g., banks, hospital staff, real estate professionals) who are unfamiliar with your home jurisdiction’s document version – no one wants friends and family arguing with hospital administrators while time-sensitive decisions need to be made for your medical care.
Simply put, if you have assets or spend a significant amount of time in another jurisdiction it is advisable to consider separate situs documents in your estate plan. Further, if the following factors apply to you, then it is particularly important to consider doing so:
Assets in another jurisdiction. Assets must be administered, and if you are incapacitated, then someone needs to have the authority to access them to pay your bills, care and maintenance costs, or transfer or liquidate the assets if necessary. This is especially important if you own real estate, as the authority to deal with real property is particularly scrutinized and subject in general to strict rules in each jurisdiction.
Non-traditional family dynamic. If you have a blended family or another non-traditional family dynamic, such as a same-sex relationship but have ties to more traditionally-minded jurisdictions, then having separate situs documents in which you specifically name persons would allow you greater control over who can make decisions on your behalf if you are incapacitated, or administer or inherit from your estate on your death, without which default legislation in a local jurisdiction would not allow for.
Out-of-country challenges. A secondary residence in a foreign country with different laws, language, and culture poses significant challenges, for example, what if there is catastrophic injury necessitating the use of powers of attorney, or in the worst case, your will. Separate situs documents would allow a more smooth and efficient response in such scenarios.
Trusted local appointees. A friend in your home jurisdiction may not be the best person to manage your business in a foreign jurisdiction. Separate situs documents allow you to appoint additional or different persons under each document for each jurisdiction, while possibly allowing you to consider the logistics, aptitude, and proximity that would make one or more persons best suited for a given role.
In Ontario, an individual can have as many wills as they wish, as well as multiple power of attorney documents for separate jurisdictions; however, the addition of each new document means added complexities and risks to your overall estate plan. When considering separate situs documents, you should not only consider the above factors but engage experienced trust and estate lawyers who will liaise across jurisdictions to ensure that all your documents form a complete estate plan, navigate any conflict of law issues, and avoid accidental revocation of prior documents.
Nicholas André is an Associate Lawyer at O’Sullivan Estate Lawyers. His practice focuses on estate planning, estate administration, and advising executors, trustees, beneficiaries, and attorneys for property and for personal care, as well as matters directly related to these areas of the law. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.
Notes and Disclaimer
Content © 2024 by O’Sullivan Estate Lawyers LLP. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited. Used with permission.
This article is the opinion of the writer and is meant to be general in nature, limited to the law of Ontario, Canada. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.
Image: iStock.com/zimmytws
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