As we are well into the coldest month in Canada, many Canadians seek refuge in warmer climates. For many, a brief escape from the cold and snow is enough. Others might be considering more long-term options. This may include whether to acquire ownership rights over a favorite vacation property.
If you are entertaining such a purchase, careful estate planning is important.
Beware of hidden legal nuances
It is important to be aware of the fact that, on death, real property is dealt with pursuant to the laws of the jurisdiction in which the property is located. What if your dream holiday home is located in a jurisdiction whose statutes dictate the so called “forced heirship rules”? Such laws could substantially limit your testamentary freedom. For instance, if you were to purchase a beautiful vacation property in the Swiss Alps and wish for your favourite caretaker to become the sole beneficiary under your Will, chances are high that your wish will not be honoured. Whether your testamentary freedom is subject to Swiss forced heirship rules depends on the category of relatives that survive you, as well as the nature of the property that formed part of your estate.
Not all Wills are created equal
Across the globe, the basic elements that we find in a Will are fairly similar. This includes the appointment of someone to administer the estate (an executor or estate trustee in Ontario), the description of the estate, and who is to receive it. The Will is then generally signed by the testator in front of one or more witnesses. Despite these common elements, it does not mean that a Will signed in one jurisdiction will be accepted as a valid Will in another jurisdiction.
Are two Wills necessary?
Because real property is dealt with according to the laws of the jurisdiction in which it is located, it may be advisable to have more than one Will. For example, if your principal residence is located in Ottawa but you also own a vacation condo in Florida, you may want to have a Will in Florida dealing only with the condo and a Will in Ontario dealing with all of your other assets.
An International Will may be helpful
In the early 1970s, various countries including Canada held a convention in hopes of creating standards for Wills so that a Will could be accepted across international boundaries. The result was that as long as the Will met these minimum standards, it would be recognized as a valid Will regardless of in which country it was signed. These standards can be found in the Uniform International Wills Act. Only 13 countries have ratified the treaty (Canada is one of them) so having an International Will may be of limited applicability.
Seek advice from a Estate Planning professional
Whether or not you have taken any steps to make the dream of owing a vacation property a reality, we strongly advise you to seek the advice of an experienced estate planning professional. As we have briefly illustrated, there are many issues to be considered. You will want to consider all of your estate planning options before making any decisions.