In Ontario, appointing an executor (or “estate trustee”) who resides outside of the province can complicate estate administration. Ontario’s probate rules and requirements for non-resident executors are stricter, affecting the process for dealing with assets, probate requirements, and the need for security bonds. This blog outlines key considerations for Ontario residents thinking of appointing a non-resident executor, including practical examples and best practices.
- Understanding the Role of a Non-Resident Executor
A non-resident executor, also known as an estate trustee, is someone who lives outside Ontario and is responsible for administering the estate. While Ontario law allows non-resident executors, they typically face extra challenges:
- Probate Requirements: A non-resident executor must often obtain a probate grant in Ontario to confirm their authority over the deceased’s Ontario-based assets.
- Security Bonds: Non-resident executors from non-Commonwealth jurisdictions are generally required to post a bond, which can be challenging and costly.
- Asset Holder Preferences: Financial institutions and other asset holders may require an Ontario probate grant before releasing assets to a non-resident executor, even if a Will exists.
Example: Consider an Ontario resident with significant assets in the province who names their sibling, a U.S. resident, as the executor. Without a local presence, the sibling may need to go through extra probate steps and provide a bond to act as executor, increasing the complexity and costs of estate administration.
- Probate Requirements for Non-Resident Executors
Under Ontario law, foreign or non-resident executors generally need an Ontario probate grant to handle estate matters involving Ontario assets. This is especially true for real estate, as the Land Titles Act requires an Ontario Court probate grant for any transfer of property in the province, subject to a few uncommon exceptions.
Example: If an Ontario resident leaves a house to a non-resident executor, the executor would usually need an Ontario probate grant to transfer the property. However, if the property qualifies under the “first dealings” exemption (e.g., the first property transaction after conversion to Land Titles), the requirement might be waived.
- Bonding Requirements for Non-Resident Executors
A significant hurdle for non-resident executors from non-Commonwealth countries (like the U.S.) is the requirement to post a security bond. Ontario law mandates that non-resident executors provide a bond worth double the value of the estate’s Ontario-based assets. This bond protects the beneficiaries and creditors by ensuring funds are available if issues arise in the estate administration. The Ontario court may waive or reduce the bond requirement if “special circumstances” apply, such as when the executor is also the sole beneficiary or when all beneficiaries provide their consent.
Example: An Ontario resident names their adult child, a U.S. citizen and non-resident of Canada, as the executor and sole beneficiary of their estate. The child may request a waiver of the bond requirement, citing sole beneficiary status. However, they must file an affidavit and obtain the consent of all beneficiaries to increase their chances of approval.
- Using an Ancillary Grant for Executors in Non-Commonwealth Jurisdictions
If the executor resides in a non-Commonwealth country, such as the U.S., they may apply for an Ancillary Appointment of Estate Trustee with a Will in Ontario. This process requires the non-resident executor to submit two certified copies of the foreign court’s probate grant or the original document with one court-certified copy.
Ontario courts often require these documents to be certified within six months of filing the Ontario application, to ensure they reflect the most current probate status.
Example: An executor who has been granted authority in a U.S. court to administer the estate of an Ontario resident would need to apply for an ancillary grant in Ontario. By providing certified copies of the U.S. probate documents, they can establish their authority to manage Ontario-based assets.
- Appointing an Ontario-Resident Nominee for the Foreign Executor
If obtaining a bond is too challenging, or the foreign executor lacks the required certification, appointing an Ontario resident as a nominee for the non-resident executor can be a viable alternative. Ontario’s Rules of Civil Procedure allow the foreign executor to nominate an Ontario resident as the estate trustee in the province, facilitating estate administration.
This process involves submitting a nomination form, along with the foreign probate documents and a certificate from the foreign court confirming that the foreign grant remains valid. These documents should be certified within six months.
Example: If a U.S.-based executor cannot obtain the necessary bond, they could nominate an Ontario resident, such as a family member or attorney, to act as the estate trustee in Ontario. This nominee can then handle the estate’s Ontario-based assets under the foreign executor’s supervision.
- Challenges with Foreign Financial Institutions as Executors
Ontario generally restricts estate trustee appointments to individuals or Ontario-registered trust companies. Foreign banks or trust companies are usually not eligible to act as executors in Ontario unless they are locally authorized or act solely for non-public purposes.
In rare cases, a foreign financial institution may obtain an Ontario probate grant if they meet certain criteria. However, this option is typically limited to specific circumstances and requires judicial approval.
Example: If an Ontario resident appoints a U.S. trust company as the executor, the company may need special approval to administer assets within Ontario. Alternatively, the trust company could appoint a local representative or a Canadian subsidiary to act on its behalf.
- Conflict of Laws in Multi-Jurisdictional Estates
When an estate spans multiple jurisdictions, conflicts can arise regarding which country’s laws apply to different aspects of estate administration. Ontario courts generally have jurisdiction over the assets of Ontario residents, regardless of where the assets are located, but they respect the law of the asset’s situs (location) for immovable property like real estate. Therefore, Ontario courts will typically recognize the law of the deceased’s domicile for movable property (such as personal effects) and the law of the asset’s situs for immovable property.
Example: If an Ontario resident with a vacation property in Florida dies, Ontario law will typically govern all of the assets, except for the vacation property in Florida, which should be governed by Florida law. It is important to have estate documents in each location where there is immovable property.
As you can see, there is great complexity in Ontario’s probate rules and requirements for non-resident executors. You should consider these challenges if you are a resident of Ontario choosing your executor. At Cardinal Point, in collaboration with an estate attorney, we help you with these important estate planning decisions. If you’d like to discuss your unique situation, please contact Cardinal Point.