There are important decisions that need to be made when parents with young families prepare their wills, including who will act as guardian of their minor children should both parents die. Not only do parents want to ensure they are providing for their children financially, they also want to be confident their children will be cared for and raised by appropriate individuals. What are the specific issues that arise if the proposed guardian does not live in the same jurisdiction?
By way of background, in Ontario, the Children's Law Reform Act deals with testamentary custody and guardianship of minor children (individuals under 18 years of age) and parents have the authority to appoint a "guardian" for custody of their minor children under their individual wills. However, this appointment is only valid for 90 days from the date of death of the deceased parent. Please see our previous blog for further details on the appointment process.
When appointing a guardian for minor children, here are some general considerations:
- Appointing an alternate guardian(s) or co-guardian(s);
- If appointing a couple, what would happen on separation;
- Whether an adult child is suitable to act as a minor child's guardian;
- Appointing the same guardian(s) under each of their wills;
- The relationship between the children and proposed guardian(s), as well as the relationship between the proposed guardian(s) and named executors;
- Payments of expenses for the appointed guardian(s);
- Compensation for the guardian(s) to recognize their efforts for acting; and
- The values, emotional and financial capabilities, age, and willingness of the appointed guardian(s).
While consideration should be given to keeping children in the same jurisdiction, where possible, there are situations where family members or those most trusted by the parents do not live in the same province, let alone the same country. Parents have the freedom to appoint whomever they wish, but there are certain additional factors to consider when doing so.
First, it is important to clearly indicate in their will the intention that if the guardian does not live in the same jurisdiction as the children, the children are permitted to leave the jurisdiction in which they reside. The court may question whether uprooting children is in their best interests, but indicating this in their will is important to evidence the parent's intention.
It is also important to consider the implications that changing jurisdictions could have on children, as they will be leaving their friends, a familiar home, their school and their usual extra-curricular activities, as well as moving to an entirely different setting, which may also involve significant cultural, linguistic and other changes beyond the norm. These changes, without proper consideration, could be traumatic for children who have just lost a parent or both parents.
In addition, consideration should be given to the tax implications that could arise if children move outside of Canada, and a Canadian resident trust has been established for their benefit under their parent's Will. For example, the trustees would be required to withhold tax (25%, subject to reduction by treaty) before the distribution of any taxable income for the benefit of a non-resident child. As well, additional planning should be considered for children who will be living with a non-resident guardian in order to protect the assets they inherit from local tax, including inheritance and estate tax and additional income tax, taking into account local rules. Without proper planning in place, having children move outside the jurisdiction could create unintended tax consequences.
Lastly, if parents are appointing a guardian outside of the jurisdiction they reside in, they should consider preparing a "Letter of Wishes", which could provide additional instructions to the appointed guardian regarding their childrens' care, family and personal values, marriage, education, religion, extracurricular activities, goals and wishes, and reasons for having their children leave their current jurisdiction so this is clear to the guardian, as well as the court should the matter ever become an issue.
Regardless of where the guardian resides, parents should make a concerted effort to ensure the proposed guardian is willing to act and should revisit guardianship appointments every few years to confirm they are still appropriate. Proper planning and advice is needed to ensure all factors are considered and appropriate choices and provisions are made for families in these complex situations.
-O'Sullivan Estate Lawyers LLP