What can go wrong if your will executor lives abroad

Q: I previously had named my two children as co-executors of my will. My eldest child has since moved to the United States. Will this make management of my will more difficult in any way other than in location? Do both executors have to sign all documentation or is there a wording that can be made in the will to adjust this?

—Jay G.

A: Dear Jay, you want both of your adult children to be your executors. Is this a good idea? One executor is a non-resident who lives in the United States. There are pros and cons for having one non-resident estate executor for Canadian tax purposes. This may become a complication when they act as your executors. You should consider addressing some issues now.

Your non-resident executor can have trouble operating Canadian bank accounts. Their U.S. residency may create tax issues on both sides of the border. If non-resident executors are deemed to control foreign bank accounts, they may need to file additional state and federal returns in the United States. Your foreign executor will need advice from a cross-border tax advisor to confirm possible tax exposure. This advice is challenging to find and costly.

If your sons get along, they can make unanimous decisions as executors. Having both your adult children collaborate as executors is positive. The non-resident has equal rights as executor to make estate decisions. Participating in distributing your personal items may sound trivial. However, the process can trigger personal memories. Collaborating in this process may also help your sons grieve together.

Non-resident executors can always decide to renounce their position. This is a simple process. They sign renunciation forms. Before renouncing, non-resident executors can obtain legal advice about any concerns they have. Both sons can agree on important decisions about how specific estate issues are handled.

You should consider naming an extra backup executor in your will. Your Canadian resident executor could predecease you or become unable or unwilling to serve for health or other reasons. Having backup executors is important. Also, discuss with your will lawyer the issue of dispensing with non-resident executor bonds.

Ed Olkovich is a Toronto lawyer and certified specialist in Estate and Trusts Law



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