One of the first questions to answer when preparing your Will is: Who will be my Executor? Choosing an executor is often about appointing someone you trust. But, what if that person lives in another province or outside of Canada? Can you still name that person as your executor?
Generally, yes. An executor does not have to live in Alberta. But, where your executor lives can affect the cost, complexity, and tax consequences of administering your estate.
Living Elsewhere in Canada vs. Living Abroad:
An executor residing in British Columbia or Manitoba faces a different set of challenges from an executor living in another country. For an executor residing elsewhere in Canada, the main challenges may be travel, signing documents, coordinating local assets, and meeting the requirements of institutions where the estate assets are held.
An executor living outside of Canada may face additional identity-verification requirements, document authentication, banking restrictions, currency issues and foreign tax or reporting obligations. A non-Canadian resident executor can also raise questions about the estate’s tax residency.
Living outside of Alberta is not the same as being a non-resident of Canada for tax purposes. Citizenship also does not determine tax residency. These distinctions are important when assessing whether your preferred executor is a practical choice.
Security:
Security is intended to protect the estate’s beneficiaries and creditors against improper estate administration. A bond is one form of security and obtaining one can involve the payment of premiums, underwriting and sometimes giving collateral.
Not every executor living outside of Alberta has to post a bond. Equally, naming a person in your Will does not eliminate the possibility of the Court ordering security for them to act.
If security is required, the availability of a reduction or dispensation must be considered under the relevant grant procedure. A direction in your Will requesting the executor act without security can express your preference, but it does not override a mandatory requirement or the court’s authority. Unanimous consent of the beneficiaries may support an application, but does not necessarily resolve concerns affecting creditors, minors, or beneficiaries who cannot consent.
If you are considering a non-resident executor, ask your lawyer about possible security requirements while preparing your Will rather than leaving the issue to be addressed after your death.
Tax Issues:
An estate’s tax residency is not determined solely by the deceased’s last address, the location of the estate assets, or the law governing the Will. The Canada Revenue Agency (CRA) generally determines the residency of an estate (for tax purposes) based on where its central management and control are exercised—this is typically the place where the executor resides. If the executor is a non-Canadian resident, the estate may be considered a foreign trust by CRA, resulting in higher taxes payable by the estate.
A Canadian mailing address or an Alberta lawyer handling the paperwork will not necessarily resolve a tax-residency concern. If your proposed executor lives outside of Canada, Canadian and foreign tax advice can help you assess the pros and cons of the appointment before finalizing your Will.
Options:
Depending on your estate and your wishes, some alternatives to a non-resident executor may include:
- An Alberta-based person: a suitable relative, friend or professional who can manage the estate administration;
- Appointment of an Alberta-based co-executor to act jointly with your non-resident executor;
- Appointment of a trust company offering estate administration services in Alberta; or
- An alternate executor: someone who can act if your first-choice declines, dies before you, loses capacity or cannot carry out the role.
If you are considering appointing an executor who lives outside of Alberta, contact Pritchard & Co. Law Firm, LLP to discuss your executor choices and how your Will can address the practical needs of your estate. Reviewing your executor options now can help your executor and your beneficiaries avoid unnecessary complications later.
Hilary Pritchard helps you navigate the turning points of life. She is a Student-at-Law with Pritchard & Co. Law Firm, LLP.
Contact Hilary at (403) 527-4411 or at hpritchard@pritchardandco.com
