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Estate planning abroad

When estate planning, Canadians with family and investments abroad often fail to think of several important elements, according to a recent study from BMO Harris Private Banking.

While about one-quarter of Canadians have family members or assets outside of Canada, the study found that more than 36 per cent of international asset holders are not familiar with the taxes and laws pertaining to wills that include assets or properties abroad.

Sara Plant, vice president, national director wealth services, BMO Harris Private Banking, says it's important investors inform their advisors about family members or other beneficiaries outside the country, as well as foreign investments, such as real estate, bank accounts and investments. Otherwise, they may end up with unintended consequences or extra costs.

"It may be that where they have their family or their assets, there are no implications--and that's all good--but at least they should approach it with open eyes," says Plant. "They may have beneficiaries in jurisdictions where there is some kind of restriction for funds going in and out of the country."

Here's what you need to know to make sure your estate is handled properly beyond Canadian borders:

Do your paperwork: Simply put, be sure your will deals with assets abroad. In addition, Plant suggests an international will. "They aren't used quite as often but it is a valid solution for certain countries." As well, it's a good idea to examine whether it's worth appointing someone in another jurisdiction to deal with specific assets.

Beware the tax man: Each country approaches taxes in a different way so it's important to do your homework. The tax Plant sees most frequently is the U.S. Estate Tax, which can be imposed on a loved one's assets. "For example, if you want real estate to be transferred to somebody for their enjoyment, you really want to make sure there are funds available to pay those taxes so they don't have to sell the real estate in order to raise funds for the taxes."

Communication is key: Ensure your family is aware of your plans, advises Plant. "Communicating to your family is not necessarily about the value but what your intentions areā€¦This helps prevent surprises and it helps prevent extra costs in trying to deal with the court system or beneficiaries with unmet expectations."

Keep it current: While it is a good habit to review your will every time you file taxes, most people revisit their will every seven to 10 years. "It's just prudent financial management to make sure that your estate plan is current and still makes sense for the people you want to benefit and the assets you have," she says.

Vanessa Santilli is a freelance writer in Toronto.

-- Posted March 11, 2013
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