Estate Planning in Canada
In this blog we will talk about different aspects of estate planning in Canada
Wills are a primary tool in Canada to govern your estate affairs.
In U.S. living trusts are common because they are “flow through” entities taxed at your personal rates. This makes them a popular and effective estate planning tool in the United States.
Trusts are taxed as a separate entity in Canada and are subject to Canadian trust tax rates.
Last Will
A last will provides instructions to your executor on what to do with your financial affairs in the event of your death.
If your children are residents of the U.S. it is not a good idea to make them executor as it can delay in settling your affairs.
If you have beneficiaries in both Canada and the United States, they can add complexities and potential delays.
Try choosing an executor a person you trust and who is located near you in Canada.
For American wills to be valid in Canada, these have to be properly signed and witnessed. If provisions in your will are not clear, missing or violate Canadian laws, it may be valid but the provisions may not be executable.
If provisions are not specified clearly in your will, they can cause long delays in court, and your estate can incur heavy legal costs to sort it out. Also, during this time, accounts can be frozen leaving heirs struggling to meet daily living expenses.
If you have an American will and Canadian will at the same time, it can cause confusions in treatment of some expenses. For example, if your will has similar provisions in both the wills it will become hard to decide which will to follow.
Proving your American will as valid in a Canadian probate court can become expensive and be ineffective in the end.
General Power of Attorney
This document outlines your wishes in managing your financial affairs in the event of your incapacity and gives power to your agent to implement your wishes.
Power of attorney may include giving a power to someone to pay your bills, vote on corporate stocks, file your taxes, check your mail, take care of your pets, talk to your financial advisor, and conduct banking on your behalf when you are unable to do so.
Health Care Directives
A health care and mental power of attorney gives the person of your choice the power to implement your health-care wished as outlined. If you are a U.S. resident and go to Canada with U.S. health care directives, you should replace them with documents that suit to your province of residence.
To know more contact The Accounting and Tax
