Two wills solve one pesky problem

Hugh MacDonald immigrated to Canada from England some 50 years ago. His English relatives keep dying off. None of them had children and he has inherited a substantial amount of money in the U.K. He has left it there. It is invested with U.K. investment firms.

He has also acquired wealth of his own here in Canada. He worked hard at a good job and was a "saver."

What happens when a person dies with assets in different jurisdictions and only one will? The will is put to probate where the deceased resided at death. For MacDonald, that would be Calgary. After a grant of probate is issued, the Canadian executors could start dealing with Canadian assets. That would mean collecting them in one spot and transferring them to beneficiaries under the will. They would also have to make an effort to deal with the U.K. assets. That would mean sending the probated will to the U.K. and asking whether the U.K. financial institutions would be willing to send the money along to Canada. Sometimes, the answer is no.

The U.K. financial institution often demands that the order of probate and last will and testament be "resealed." That means launching a separate probate proceeding with the English courts. The English court would look hard at the will and might not like what it sees. The laws in the U.K. differ from the laws in Canada. Sometimes the courts demand proof that the will was validly signed under Canadian law. All this can be time-consuming and expensive. That is particularly the case if the poor executors live in Canada and have to deal with solicitors in the U.K. while wrestling with a seven-hour time change.

The delay is made worse because the executors cannot tackle the U.K. investments until they have succeeded in getting the Canadian grant of probate. That can take months. Everything in the U.K. simply sits on ice while that happens. After successfully resealing, they have to collect all the U.K. assets and send them to Canada. The Canadian estate cannot be finalized until the U.K. assets have been received by the Canadian executors.

From an income tax perspective, they will also be dealing with a Canadian estate holding foreign investment assets. They need a good accountant.

MacDonald hopes to avoid most if not all of those problems. He signed two wills. One will was prepared and signed here in Canada to deal with his Canadian assets. It appoints a Canadian executor.

The other will was signed here in Canada, but was prepared by a lawyer in England. It deals exclusively with his assets in the U.K. It appoints a U.K. resident executor.

When he dies, the Canadian executor will deal with the Canadian assets under the Canadian will. The U.K. executor will deal with the U.K. assets under the U.K. will.

How is that better?

First, the U.K. will does not have to be "resealed." Instead, it is simply put to probate. As it is prepared to comply with U.K. laws, it can be put to probate easily. There will be no questions relating to its validity. The application is simple. It is cheap. The U.K. executors can hire a lawyer who lives down the block and pop in from time to time to sign papers.

Second, the executors in the U.K. can tackle the U.K. assets immediately. The U.K. executors can bring an application for probate without waiting for anything from Canada. Both estates can be handled concurrently rather than consecutively.

Third, the tax situation will be clearer. The Canadian estate will be handled by a Canadian accountant under Canadian income tax law. The U.K. estate will be handled by a U.K. accountant under U.K. income tax law.

MacDonald's name and other details have been changed to protect his identity.

Do you have assets in a different country? If so, this might be an idea for you, particularly if you have land. It should be custom-fitted to your situation. The legal fees can be high, so it is not for everyone. Sometimes one will is better.

There is another solution that never caught on. A special and standardized format for wills has been developed that could be used in a wide range of countries. The "international" will can be resealed without question or challenge. It only works if the country has signed on. Here is the problem: Very, very few countries have signed on. Until more do, using a two-will strategy will often be the right solution.

John E.S. Poyser is a lawyer with the Wealth and Estate Law Group. Contact him at 947-6801 or jpoyser@inksterchristie.ca.

Republished from the Winnipeg Free Press print edition May 18, 2011 B8