London, England - some time around 1942. Wartime.
Smartly attired in her fresh-pressed uniform, a handsome twenty-six year old brunette negotiates the crowded room. Canadians, dozens of them mill around, but not in celebratory form. Some are nursing injuries, others, like my aunt, have nursed the injured - but that's not their purpose here today. With the convoy now safely in harbour, the new lists are out.
A few folding wooden tables line three of the four walls, earnest looking clerks sitting behind each one, thumbing through alphabetic bundles of binders. Soldiers wait their turn, fidgety, daring against grief. As an officer, she outranked the enlisted men who were also clamouring for crumbs, but she never pulled rank. Devastation -- even the whiff of it -- has a leveling effect.
He's not on the list.
She holds her emotion back somewhere shy of gratitude. That he is not on the list of the certain dead doesn't guarantee much during a ground campaign. She makes her way to the fourth wall in the room, the one without the tables and clerks. There are a few bulletin boards there with lists of the hospitalized soldiers stationed on the continent.
Ryan, Lawrence. Cunio, Italy. Condition: stable.
Stunned, she stands there for a moment with her finger on his name. Depending on the severity, this was perhaps good news. Away from enemy fire, injured but stable had a ring of certainty to it, and uncertainty too.
At this moment a younger enlisted man brushes up against her from the right, running his finger down the same list until it reaches the name, then he whispers it to himself: "Lawrence."
"Who?"
"Lawrence Ryan, ah... sir. (She outranked him, and her tone of voice startled him back in to formality), He's my brother."
"Nice try private. Lawrence Ryan is my brother."
Something passed between them as they made eye contact.
"Halifax?"
"St. Joe's."
They were only vaguely aware that each other existed, separated by the horrific Halifax explosion 26 years earlier. With the death of her father, (my grandfather) poverty and an orphanage, these two strangers with the same mother met in the most unlikely serendipity an ocean away from home.
Non-Resident Executors
Loved ones, move around. Sometimes the people we love most dearly are those we entrust with the duty of executing our life's savings through our Last Will and Testament. But if they reside in other jurisdictions there might be some unintended consequences of that assignment.
Residency Status of the Estate - Tax Concerns
In Canada, the Tax Act (Act) provides that an estate is also a trust for tax purposes. A trust is considered to be resident where the central management and control of the trust takes place. From a tax perspective, this means that if your executor/liquidator is a non-resident, the estate could be considered to be a non-resident too.
To further complicate matters, there are rules in the Act that may deem a trust to be a Canadian resident trust even though the central management and control takes places in another country. Therefore, it is very important to seek the assistance of a qualified tax advisor to determine the residency of the estate.
Potential Tax Implications of Non-Canadian Residency
The non-resident estate could lose the preferred tax treatment for capital gains and Canadian source dividends that flow through to Canadian resident beneficiaries.
A non-resident estate may not have the option, which is otherwise available to a Canadian estate, of splitting the tax burden between the estate and its Canadian resident beneficiaries.
If the estate becomes a non-resident estate at any point during its administration, it will be deemed to have disposed of its assets at fair market value, potentially exposing the estate to a capital gains tax liability.
Potential Solutions
When appointing a sole executor/liquidator, choose one who is likely to remain resident in Canada. This may be achieved by choosing a professional estate and trust services provider such as a Canadian trust company.
When appointing co-executors/liquidators, keep in mind that the residency of the individual who clearly exercises a substantial portion of the management and control of the estate will generally determine the residency of the estate. If there is equal management and control, the residency of the majority of the executors/liquidators will be the deciding factor. If this factor cannot determine the residence of the trust, the CRA will consider other factors, such as the location of the estate assets and where the legal rights with respect to the estate assets are enforceable.
Appointing more than one executor/liquidator can help avoid the risk that the estate may become a nonresident estate should one of the executors/liquidators move from Canada.
If an executor/liquidator is set to become a non-resident of Canada, they could renounce their appointment prior to departure from Canada to avoid negative tax consequences for the estate.
This article outlines several strategies, not all of which will apply to your particular circumstances, and is not intended to provide legal or tax advice. You should obtain professional advice from a qualified tax and/or legal advisor before acting on it.
Mark Ryan is an advisor with RBC Wealth Management, Dominion Securities, and can be reached at [email protected].
