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What happens when Canadians name non-Canadian executors?

When picking an executor, it is common practice to select a trusted family member and someone who lives nearby. However, for Canadian residents from immigrant families, this can be tricky advice to abide by. 

Your preferred executors are typically your most trusted family members or friends. If they all live outside of the country, it may be worth reconsidering your options to prepare for a smooth administration process.

Tax implications

Picking someone outside of the province, or especially the country, can have significant tax implications. If your estate is managed out of the country, it may be considered as the asset of a non-resident during the administration process. This can result in a much higher tax bill, as non-resident assets could be subject to capital gains taxes, among other complications.

Despite the fact that this warning is often shared with estate planners, sometimes an out-of-country executor is still named. In these cases, there are some legal options that may be available. Ultimately, this depends on the tax conventions and foreign tax credits that apply to your executor’s place of residence.

Executors outside of Ontario seeking to manage an estate from this province face a particularly challenging task, and one that carries a great deal of legal complexity. They may face increased obstacles in accessing investment accounts, or managing tax reporting and compliance in multiple countries.

For this reason, if you are planning to name an out-of-country executor, it is advisable to speak and work closely with an estate lawyer in your home province. Executors, too, should seek legal counsel in the home province of the testator to understand how the province addresses these complexities legally.

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