This blog post was written by: Derek Hambly, Estate and Trust Consultant, Scotiatrust London
When it comes to estate planning, there are a number of assets that ring an alarm bell. The “family cottage” is a big one, and I have written a few articles about dealing with family cottages. Another is the “Florida condo”, and this type of asset has come up many times in recent years as more and more Canadian residents who used to winter in Florida as “snowbirds” are rethinking where they spend their winters. However, not every snowbird has an opportunity to sell their Florida condo before they pass away and, as a result, an increasing number of Canadian estates now include a Florida condo.
As most of us know, the best practice is to have a Will in place wherever a testator owns property. However, best practice is rarely the reality. The laws of succession, probate, and property differ from country to country, state to state, and jurisdiction to jurisdiction, so it’s often best for a testator to have a Will in each legal jurisdiction where they own property. Importantly, however, a foreign Will dealing with foreign assets should not be treated as a standalone Will. Careful planning to help ensure that an Ontario Will and a foreign Will do not revoke, contradict, or undermine each other is very important. In most cases, this boils down to ensuring that the newest Will does not revoke a previous Will and that the foreign Will only speaks to the specific assets located in the jurisdiction in which it was drafted.
In situations where a Will was not executed in Florida, an Ontario Will can be used to deal with the Florida condo through a process known as “ancillary probate”. Just as probate is a provincially controlled process in Canada, probate rules also differ state by state in the USA. When property is owned in Florida by a non-resident of Florida, the state requires ancillary probate. To receive a grant of ancillary probate, an executor generally must first secure probate in the jurisdiction where the testator resided. At that point, Florida allows for a secondary probate process through which the Florida courts appoint a personal representative who is qualified to act in Florida and who has authority to deal with the property for the purposes of transferring title to the beneficiaries or selling the property. The purpose of ancillary probate is to ensure that creditors have had an opportunity to make claims against the property before legal title is transferred in compliance with state law.
The ancillary probate process in Florida is similar, in many respects, to the probate process in Ontario. The appropriate documents, including an authenticated copy of the Will, a death certificate, an asset list, and beneficiary information, need to be provided, along with an authenticated copy of the grant of probate from the jurisdiction where the deceased was a resident. The grant of ancillary probate is a limited-scope grant of authority, but it is still a very time and document-intensive procedure. Over and above the time and inconvenience of ancillary probate, there are the costs. Florida’s court filing fees are modest, but Florida law presumes legal fees of roughly 3% of the value of the Florida estate assets to be reasonable for a Florida attorney’s ordinary services. The personal representative may also be entitled to compensation calculated on a similar scale.
The Florida condo is not going away as an estate planning issue. Whether it is still a winter home or a property the family has been meaning to sell, it is worth dealing with during the owner’s lifetime rather than leaving it for the estate trustee to sort out. A Florida Will, carefully coordinated with the Ontario Will, can help simplify the process and help reduce the time and cost involved. It is equally important to name someone who is legally able to act in Florida. For anyone who owns property outside Ontario, a conversation with their advisor, and with local counsel where the property is located, is time well spent.
