We live in a fast-paced world where people move freely between countries and sometimes, marriages. As a beneficiary of an estate, making sure you receive your share can, depending on your location, marital status and surrounding circumstances, feel like chasing a moving target. Even when the terms of a will seem clear with regard to specifying the beneficiaries and their entitlements, the possibilities for pitfalls are endless.
This is especially true when multiple jurisdictions are involved. For example, a person who lives in Ontario may be entitled to an inheritance from a family member who resided in the United States or Israel. This creates issues as to where the taxes should be paid, how many taxes should be paid and more generally, how to manage income and assets in foreign jurisdictions.
Subtle differences can exist in jurisdictions between simple definitions like “spouse” and “dependant”, meaning one may be entitled to dependant support in one jurisdiction but not another.
To illustrate this point, it’s worth noting that the definition of a spouse in the Succession Law Reform Act (SLRA) was recently changed. While the previous definition of spouse included an ex-spouse as a dependant, the new definition does not explicitly state whether a former spouse qualifies for dependant support. The intention of the SLRA amendment was to make uniform the definition of spouse under overlapping statutes, and the effect of this change could be far-reaching. As the SLRA definition of spouse is now derived from the Family Law Act, treatment towards ex-spouses as dependants will have to wait for a court to rule on the matter and bring clarity to the many divorcees waiting to receive dependant support.
‘each legal jurisdiction has its own nuances when it comes to interpreting the law’
Another issue is the definition of “common law” relationships across various jurisdictions. Israel, for example, recognizes the rights of a surviving common law spouse to receive dependant support, while Ontario law doesn’t explicitly allow for entitlements to common law spouses. Exceptions do apply, like when the common law spouses have a child together.
Even though countries like Israel and Canada both adopted a British-influenced common law legal system, the laws in both countries have developed independently, shaped by unique cultural and judicial dynamics. While today we use more egalitarian definitions than in past eras, each legal jurisdiction has its own nuances when it comes to interpreting the law. While differences in definitions can appear minor, they might, in practice, mean the difference between receiving an inheritance and being barred from one.
Unfortunately, many people don’t make adequate plans for their estates, often leading to expensive and time-consuming litigation, or a situation where loved ones are denied dependant support after overlooking what appeared to be a minor technicality. To avoid delays and a complicated estate dispute, it’s best to plan ahead and tackle as many issues as possible beforehand.
Knowing what taxes should be paid and who’s entitled to what in advance could make a significant difference in the lives of your loved ones during a difficult time. As mentioned above, consideration should be given to the laws of all jurisdictions, namely the residence of the beneficiaries as well as that of the estate. In most cases, a lawyer qualified in both countries needs to be consulted.
Only through holistic estate planning can ones wishes truly be carried out.
The article above is provided for general information purposes only and does not establish a lawyer-client relationship or constitute legal advice. Avi J. Charney is a qualified lawyer living in Israel and is being called to the Ontario bar in September. He currently works at Garfin Zeidenberg LLP.