Note from Coleman Wealth: We work with a network of Canada’s best cross border experts, and are fortunate to have connected with Michael Kennedy, an American estate lawyer at Ingenuity Counsel. Michael has worked with a number of our clients who have cross border legal issues and understands the complexity of cross border investing. To contact Michael, please email us at coleman.wealth@raymondjames.ca.
As the calendar turns from summer to autumn, Canadian snowbirds begin to plan for their annual pilgrimage south escaping the inevitable Canadian winter. Whether you own property in Florida or are thinking of purchasing your own piece of southern paradise now is a good time to evaluate your estate plan to ensure it protects your interests in the United States.
One important issue to consider is whether you have the appropriate Power of Attorney documents in place. Many Canadian snowbirds already have an Ontario Power of Attorney for Property and/or a Personal Care Power. However, do you also have the Florida equivalents of these important documents?
Powers of Attorney are used to make important decisions that affect your assets and medical treatment. In many cases, these decisions are incredibly time sensitive. For example, if you were admitted to a Florida hospital, your spouse would not be able to make decisions related to your care under an Ontario Personal Care Power. Under Florida law, your Ontario Personal Care Power will not be valid and therefore not effective with the medical provider. In that case, a guardianship proceeding would have to be commenced in the Florida courts. Clearly, this could take time, significant money and ultimately delay your spouse’s ability to make timely decisions related to your care.
In addition, to the health care problem above, let’s assume you had a stroke and are unable to make decisions regarding your affairs. Your spouse wants to sell your Florida home but since you own the property as joint tenants with right of survivorship, you must consent to the transaction. Your spouse presents the buyer with your Ontario Power of Attorney for Property naming her as your agent but because it was executed under the laws outside the United States, the buyer and the title company will not accept it and therefore it will not be effective.
Another critical cross border estate document for the snowbird is the last will & testament covering property in the USA. Many problems arise for your estate if you dispose of property in the United States using your Ontario last will & testament. By using a state specific last will & testament for your property in the USA, your executor can save time, confusion, stress & money.
The good news is that you are permitted to have estate-planning documents under both Canadian and United States law. You can have Ontario estate documents to address matters in Ontario (and throughout Canada) and Florida estate documents to protect your interests in the USA. Therefore, you should consider adding United States documents to your estate plan to provide you with an extra layer of protection while in the USA.
With or without an up to date United States estate plan, there will be estate administration that must be done with respect to your property situated in the United States. Whether it’s probating the estate in the USA, clearing title to the property (even if jointly owned), transferring property to the rightful heirs or filing an estate tax return with the Internal Revenue Service and the state department of revenue, there is work to be done with respect to your property situated in the USA. Knowing that this will be the case is half the battle.
If you want to avoid many of these problems, a trust can be the answer, but it takes advance planning and working with the proper attorney to ensure compliance with all relevant United States laws & regulations. The Florida Land Trust is one particular trust that must be used with careful cross border planning – it is not the silver bullet you may think.
In the end, you should strongly consider discussing your activities in the United States with an experienced cross border tax & American estate lawyer.
To find out more about cross border estate planning, please contact Michael Kennedy at mk@ingenuitycounsel.com, 519-252-3888 or www.ingenuitycounsel.com. Michael Kennedy provides representation and counseling related to all facets of estate planning and business enterprise throughout the United States.