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Fun in the Sun, Until the Probate Court Comes?

While this winter in Toronto has been blessedly mild, colder weather makes many of us wonder why we live in a cold climate, or at least envy those who have vacation homes in warmer climates. While a vacation home in Florida or Arizona or other southern destinations may be a wonderful thing, planning is usually necessary to prevent it from becoming a burden after death for your family and executors. As an example, directly owning a vacation home in Florida or Arizona may give rise to the onerous process to probate a will in those jurisdictions. This is in addition to any U.S. estate tax exposure your estate may face due to direct ownership of U.S. real estate.

For example, in Florida the probate process requires that your executors either be your spouse or another relative, or be a resident of Florida. Unrelated non-resident executors are not eligible to apply for a Florida probate grant. This can limit your choice of executors where a Florida probate grant is necessary. If your chosen executors are not qualified for Florida probate purposes, the Florida court can appoint another qualified person instead, including a local professional or trust company.

Also, the Florida probate process requires a myriad of documents, for example direct witness statements or court-certified copies of all of the documents submitted to probate in Ontario, not just a court-certified copy of the Ontario probate certificate itself. This can create a problem if the witnesses aren't available or willing to swear the necessary statements or a delay while the necessary documents are obtained.

The Arizona probate process presents it's own challenges. For one thing, the probate process takes a minimum of four months from start to finish, and likely longer in many cases. As part of the process it will also be necessary for your executor to run an official notice to creditors for three consecutive weeks in a row in a local newspaper.

In both jurisdictions, probating the Will or obtaining an additional probate certificate does not just involve obtaining a certificate from the court, as it does in Ontario, and other Provinces in Canada. It also involves court supervision of the executors' administration of the estate. The executors must also "close" probate and obtain the court's sign-off at the end of the process, which requires a good deal of additional paperwork to be submitted to the court as well as expense and delay.

Further, if an Ontario probate certificate must be obtained first, as will often be the case, there will be an additional delay because the probate process in another jurisdiction cannot be started until the Ontario probate process is completed.

Fortunately, there are ways to plan your estate which will minimize or even eliminate the necessity for probate in the jurisdiction where you own a vacation home. Owning the home through a special Canadian-resident trust may be a possible option. Preparing a second Will to deal just with your vacation home and property in the other jurisdiction is another, and as well there are other options. For best results, consult a professional with cross-border experience in planning ownership of your vacation home to ensure your ownership structure provides maximum protection and optimizes your situation. Then sit back and relax in the sun.

- Susannah B. Roth

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. In particular, they are not intended to provide U.S. legal or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.

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