In March of this year, I wrote about the complications which can arise in administering an estate of an individual who owns a vacation home in a U.S. state such as Florida or Arizona. In that blog, I discussed issues in estate administration which arise from the multi-jurisdictional location of assets and the requirements to obtain probate in different places. Another type of complication which can occur arises from the probate rules in other jurisdictions and the ways they differ from, and are not compatible with, the probate rules in Ontario.
In some cases, the complications will arise because the deceased lived in or owned assets in a civil law jurisdiction, whereas Ontario is a common law jurisdiction. Most Commonwealth jurisdictions and states in the United States are common law jurisdictions based on English common law. Many other jurisdictions, including most European countries, and notably Quebec, are civil law jurisdictions, originally based on Roman law. Due to the major differences between the two systems’ origins, their processes can be extremely different.
For example, in Austria, a civil law jurisdiction, if an Austrian resident dies without naming an executor to administer their estate, the magistrate (or local judge) of the deceased’s local canton (the Austrian equivalent of a county) acts as the administrator of the estate. This system functions well where the deceased’s assets are all in Austria, but can prove problematic if the deceased owned assets in a common law jurisdiction, such as Ontario. Local magistrates will not exercise jurisdiction over, or take any steps to administer, the Ontario assets. The Ontario Rules of Civil Procedure however require that the original administrator of the estate execute court documents to allow an administrator to be appointed to administer the Ontario assets.
This disconnect can leave heirs in legal limbo, requiring additional time and legal work to appoint an administrator of the estate in Ontario, and allow the Ontario assets to be administered. The lack of harmonization between the two systems’ processes has been rationalized to some extent in Canada between Quebec and other provinces by procedural rules designed to deal with such issues. For example, the Ontario Estates Act allows a notarial copy of a Quebec notarial will to be admitted to probate, instead of the usual requirement to submit the deceased’s original will, which avoids additional, otherwise unnecessary, legal steps in Quebec.
Even where the deceased was resident or owned assets in another common law jurisdiction, the different procedures in the foreign jurisdiction can lead to complications and give rise to unexpected roadblocks or results. For example, many common law jurisdictions impose a tax or fee based on the value of the estate to probate a will. In the common law jurisdiction where probate is originally granted, these probate fees will typically be paid on the value of all worldwide personal property (personal effects, bank accounts, investments, etc.), and any real property located in the jurisdiction. Where a probate grant in another common law jurisdiction is necessary, probate fees will typically be paid on the value of all property located in the second jurisdiction. This can include bank accounts, investments or personal effects located in the second jurisdiction, resulting in a duplication of fees on the same assets.
Often advance planning can minimize, and sometimes eliminate, the impact of this lack of coordination among the rules in different jurisdictions, and sometimes these are even opportunities to optimize planning and produce an even better result than would be the case domestically. For example, multiple wills can be prepared which can be independently probated in multiple jurisdictions, assets can be retitled, or trusts or a holding company established to avoid the necessity for probate in multiple jurisdictions. Where advance planning has not been undertaken, patience and the assistance experienced professionals will assist in guiding the estate trustee to navigate the legal quagmire that can arise in our increasingly mobile society.
– O’Sullivan Estate Lawyers
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. In particular, they are not intended to provide U.S. legal or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.