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Estate planning tricky when holding assets outside Canada

Working on an estate plan can get pretty complex depending upon the assets of an individual. Estate planning can get even more complicated when some of those assets are located outside Canada. More people are holding assets outside their home jurisdictions. 

Some Canadians have jobs that have taken them to more than one country. As a result, some have purchased real estate in those countries. Snowbirds, for instance, may have bought a home or land in Florida or the Carolinas. Different areas have different tax structures, so if they clash, problems can arise.

There are differences between income and estate taxes, and the problems arise when a jurisdiction levies taxes on a person's estate. Depending upon the country, they can be called inheritance taxes, death taxes, estate taxes or succession duties. In Canada, when someone dies, it is assumed that most of what he or she owned was sold, so income taxes are owed on capital gains on assets that have risen in value. 

The issue is that a deceased may owe income taxes in Canada upon his or her death and estate taxes to the country in which the asset is located. There is no relief for being taxed twice or even three times in some instances. There may be a little relief in Canada, the U.S. and France, but not in other countries. Double taxes may also happen if the deceased person's heirs live in other areas or they inherit assets from other areas.

To navigate the legalities of holding assets in other countries when it comes to estate planning, people would be wise to consult with an Ontario lawyer seasoned in wills and estates law. A lawyer would be able to point his or her clients in the right direction when it comes to filling out documents and would help to explain legal language associated with those documents. Educating a client about the tax laws of the countries in which assets are located is another way a lawyer would be helpful.

Source: theglobeandmail.com, "Holding assets outside Canada? Estate planning can get tricky", Tim Cestnick, Accessed on Sept. 4, 2017

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