FOREIGN EXECUTOR BOND
Some provinces require an executor whom resides outside the jurisdiction of the court overseeing the estate, to post a foreign executor bond, ensuring that they will carry out all the duties required, in good faith.
Foreign executors may need to file a Surety Bond before the court will grant Letters of Probate. In Ontario they are called a Certificate of Appointment of Estate Trustee. The foreign executor bond will hold the executor accountable in case the assets are misappropriated outside of Canada, to the detriment of the beneficiaries.
If the estate is large and/or complex and there are a number of beneficiaries, the testator, or the court, may still require a foreign executor bond to be posted to protect those who inherit.
The estate will normally bear the cost of surety bond and approval requires that the executor is of sound financial position.
Once the estate administration is completed, the executor must file sufficient evidence to the court in order for the bond to be released.
Canadian common law regards a trust as being resident where the trustee resides. The Income Tax Act considers the residency of a trust in Canada to be determined on a case by case basis.
The act states that an estate is a trust for tax purposes, and is generally considered to be resident where the trustee, executor, heir or legal representative, who manages or controls the trust assets, resides.
So, if your sole executor is a non-resident of Canada, your estate may be considered non-resident.
Should your executor or trustee move from Canada while the estate's trust is in existence, or before the estate administration is complete, the estate would be subject to a deemed disposition.
If there is more than one executor or trustee, the residency of the person who clearly exercises a substantial portion of the management and control of the assets, will determine the residency of the estate or trust. If, however, there is equal management and control, the residency of the estate or trust may be located where the majority of the trustees reside.
If the above cannot determine the residence of the trust, the Canada Revenue Agency will consider other factors, such as location of the assets and where the legal rights of the estate or trust's assets are enforceable.
There are no requirements that an executor be a Canadian resident -a foreign executor can hire a Canadian lawyer, accountant or financial professional to help administer the estate.
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