cross-border-us-canada

Many of our clients may be planning escapes to warmer climates. But if a client becomes incapable (temporarily or permanently) of making personal care decisions while travelling outside their home province or country, or of making financial decisions about their foreign assets, would the proper documents be in place to allow someone else to act on their behalf in that jurisdiction?

While multiple will planning is a familiar strategy to deal with foreign assets on death, preparing multiple powers of attorney for use in jurisdictions where clients spend time and hold assets is less common.

Read: Ask better questions to protect clients’ estates

Clients may be surprised to learn that few international jurisdictions will automatically recognize and accept a POA that was prepared elsewhere. Many jurisdictions do not even have POAs that survive incapacity.

The situation in Canada and the U.S.

Most Canadian provinces and territories, as well as some U.S. states, have laws that recognize POAs that have been validly created elsewhere. Yet despite such legislation, practical limitations on the actual use of POAs in a foreign jurisdiction arise frequently.

Read: Watch for elder abuse

For example, legislation for the recognition of foreign POAs in Florida and Arizona only applies to instruments executed in another U.S. jurisdiction. Moreover, organizations like banks and title companies may insist that POAs conform to local law (e.g., some jurisdictions require that a notary public be a witness, which is not a requirement in Ontario, for example). And financial institutions often want their own forms used.

Will there be better cross-border acceptance in future?

The European Union is attempting to address the issue of using POAs in foreign jurisdictions with the entry into force of the Hague Convention on the International Protection of Adults (“Convention XXXV”) in 2009. This Convention tries to harmonize the law across borders for POAs.

The following example, taken from the Hague Conference on Private International Law’s Outline of the Convention (September 2008), illustrates how Convention XXXV might be applied:

A Scotsman has been living in Argentina since his retirement 10 years ago. He owns property in Scotland and Argentina. He now suffers from age-related dementia and is not capable of managing his affairs. The properties need to be sold to provide funds for the care of the man living in Argentina. He has a son living in Scotland. Some years ago, the man granted his son extensive powers of attorney to be exercised in the event of incapacitating illness certified by a Scottish medical practitioner. If the Convention were in force between the countries, the powers of attorney would be recognized in Argentina and the son could act on the man’s behalf to make the necessary arrangements to manage his father’s affairs. The powers of representation would be exercised in accordance with the law in Argentina.

To date, Austria, Czech Republic, Estonia, Finland, France, Germany, Scotland and Switzerland have each ratified Convention XXXV. Cyprus, Greece, Ireland, Italy, Luxembourg, Netherlands, Poland and the U.K. (excluding Scotland) have all signed, but have not yet ratified it.

Read: Cross-border concerns for athletes

Some non-EU members have prepared model legislation based on Convention XXXV, including Canada in 2001, but no province or territory has implemented it to date.

Closer to home, the Canadian and U.S. law reform commissions recently worked on a joint project to facilitate the portability of POAs from one U.S. or Canadian jurisdiction to any other province, territory or state. This past summer, each commission approved its own version of the model legislation and it is now up to individual states, provinces and territories to adopt the laws internally.

How to help clients

Despite growing efforts to achieve harmonization, there still remains uncertainty of success—not to mention potentially incurring expense and delays—in using a POA over foreign borders. A practical approach is to prepare local POAs in each jurisdiction where a person has assets and/or spends a significant amount of time.

Read: Prepare for client incapacity

With our aging population, more attention than ever needs to be paid to the challenges of incapacity planning, and in particular for our clients who have multijurisdictional assets and connections.

Margaret O’Sullivan is a Toronto lawyer and principal of O’Sullivan Estate Lawyers, a boutique trusts and estates firm.
Originally published on Advisor.ca

Add a comment

You must be logged in to comment.

Register on Advisor.ca