Estate Planning For Non-Residents Storing Gold and Other Precious Metals in Canada

Objective:

For a non-resident ("NR") of Canada who holds precious metals, it can make a great deal of sense to store some of these assets in Canada.

One of the principles of wealth preservation is asset diversification, and holding assets in a different jurisdiction can offer:

1. protection from political or economic instability in one's home jurisdiction; and
2. protection from any currency controls (which could be invoked by one's home government during times of strife or conflict, etc.).

Specifically, Canada, a member of the British Commonwealth and strategically located in North America:

1. has a highly regulated and internationally respected banking system;
2. has a proud history of embracing democracy, free markets, and international trade and commerce; and
3. has no history of gold confiscation (i.e. as occurred in the U.S. under President Roosevelt in 1933), or of making the physical holding of gold forbidden.

Problem:

Although owning a safety deposit box with a Canadian chartered bank in the personal name of the NR will still carry out the Objective listed above, problems arise for the beneficiaries of the NR's estate if the NR were to pass away.

When dealing with more than nominal amounts (usually over $10,000 Cdn), banks will normally require probate of a deceased's Will in British Columbia before releasing the contents. Alternatively, the bank will require a foreign Will which has been previously probated in another jurisdiction to be "resealed" here (this is where the Probate Registry formally recognizes a foreign grant of probate). Matters become even more problematic when there is no Will at all, as then the intestacy provisions must be followed, which can lead to further complications.

Whichever method is required, the following are the consequences:

1. Delay. The probate process requires waiting periods of six months to a year before assets may be distributed, and delays in the process are common. Of course, if probate is delayed in the NR's home jurisdiction for whatever reason, this will necessarily delay matters here as well
2. Expense. The probate process can be costly. Probate fees, currently set at 1.4% of the gross estate for assets over $50,000.00, apply to the gross value of all assets that pass through an estate. Additionally, obtaining probate involves legal and accounting fees, and as a result the expense to an estate can be quite significant (several thousand dollars).
3. Privacy is compromised. Probating a Will is a public process and the probate application must list all of the specific assets of the deceased NR in this jurisdiction along with their values. These estate documents may be accessed and photocopied at the Court house by members of the general public.

Estate Planning Solution:

A BC Company will be incorporated, owned by the NR. The NR will attend at a bank and open a safety deposit box under the Company's name. The NR will then simply store their personal valuables in the Company's safety deposit box.

Benefits:

1. No Probate Required. Company shares can be transferred in BC without probate being required. After following appropriate safety and due diligence measures, the Company shares would simply be transferred to the named personal representative of the NR, who would then be able to access the safety deposit box as the new Company director, later distributing the contents according to the NR's Will. Accordingly, all of the delay, expense and privacy concerns associated with probate in British Columbia would be avoided.
2. Control. The same level of control is achieved as though the NR owned the safety deposit box directly:
   • the NR is the sole shareholder, director and executive of the Company;
   • the NR has full and sole control over the safety deposit box, with no one else having access to, or knowledge of, the contents without the NR's approval; and
   • the NR has full discretion and authority as to what form of valuables are placed or removed from the safety deposit box.
3. Consistency with NR's estate planning and taxation in home jurisdiction. The documentation is structured so that the NR still claims ownership of the valuables, even though the Company might control them. Accordingly, the valuables will still flow according to the NR's own Will. Furthermore, any taxable gains or losses would still be claimed in the NR's home jurisdiction, again as though the NR held these assets personally, so the planning is tax neutral.
4. Incapacity issues are dealt with by our planning. If you become mentally incapacitated, a person you have chosen will be able to deal with the Company and therefore the valuables.

Please contact Rick Montens at 604.682.3664 or by email at pmontens@rbs.ca to review your personal situation and to discuss whether this planning would be beneficial or feasible for you.