With the rising popularity of remote work and a growing list of countries offering digital nomad visas (currently more than 50), the digital nomad lifestyle has become an inextricable part of the global work culture. Even Canada is offering a new immigration program for digital nomads.
It’s easy to see why it’s an attractive alternative to traditional jobs. Whether you’re working on projects for clients halfway around the world, making connections with travellers and locals alike, or thinking of your next destination, life as a digital nomad can be full of adventure. But have you considered the more practical side of living and working abroad?
One thing that might have not crossed your mind but is critically important to your life, is estate planning. Estate planning is the process of outlining a plan for your estate–the total assets and liabilities you own–when you die or if something major happens to you while you’re still alive.
As a digital nomad, estate planning requires special considerations due to the fact that you’re living and working outside of your home country. Digital nomad or not, life can be unpredictable, but preparing for major events as best as we can makes things easier for our loved ones.
Essential Elements of Estate Planning
Estate planning can seem intimidating at first, but it’s a lot simpler than people think it is. By breaking down the fundamental aspects of estate planning, you’ll have an easier time understanding what actions you should take.
Your Will
A will is a legal document that outlines how you wish to distribute your assets and who will look after your dependents, for example, minor children and pets after you die. Think of it as a piece of the bigger estate planning puzzle. In it, you’ll answer the question, “Who will get what I have when I pass away?” Your will is also where you appoint an executor who will be in charge of settling your affairs on your behalf. By doing this, your executor gains access to the necessary accounts and property to settle your estate.
If you're living the digital nomad lifestyle, it's wise to connect with an estate lawyer where you're currently living, as the laws around estates can vary from place to place.
Some folks living abroad may decide to create a secondary will in their country of residence to cover assets they’ve acquired in that country. For instance, you might have one will in Ontario for your Canadian assets, and another in Florida for your U.S. assets.
At this time, Willful doesn't handle the creation of secondary wills in other countries. That's because these wills typically need to reference each other. So if you're considering a secondary will in another country, you'll likely want to chat with estate lawyers in both places to make sure your assets are taken care of, no matter where your adventures lead you.
Powers of Attorney (POA)
A Power of Attorney (POA), is a legal document that gives someone you trust the authority to make important decisions on your behalf and represent you to other people or entities. Despite the name of the document, this person, or the “attorney”, doesn’t have to be a lawyer. There are two types of Powers of Attorney, and there are different requirements and names for these documents in different provinces.
Power of attorney for personal care
A Power of Attorney for Personal Care document allows you to give a person(s) the authority to make personal care decisions on your behalf if you become incapable. This individual can make decisions regarding your health care, housing, meals, and clothing. This person will also communicate which life support measure you have outlined in your Power of Attorney for Personal Care.
Power of attorney for property
Your attorney for property will make decisions about your property and financial affairs, such as paying your bills, managing your bank accounts and investments, and signing a lease. Your attorney can do almost everything with your finances and property that you’re able to do (unless you limit their authority). However, your attorney can’t make a will for you or make changes to your existing will. Your attorney also can't change your designated beneficiary on your life insurance or make a power of attorney for you.
These two main types of power of attorney can be divided into two subcategories; a general power of attorney and a continuing power of attorney.
If you're a digital nomad living outside of Canada, it's a smart idea to check in with an estate lawyer in your current country. They can help you confirm if the Powers of Attorney you've created are valid there. If not, you may need to have new Powers of Attorney drawn up in the country where you now reside. It’s possible to have Powers of Attorney in two jurisdictions, but they would be carefully worded not to revoke each other. An estate lawyer can help.
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Healthcare Directives (also called Personal Directives, Advanced Directives or Living Wills)
Your health and safety are of utmost importance wherever you are. However, it can get more complicated as a digital nomad since you’re out of the country. If you become seriously ill, for example, if you have a stroke or are in a coma while abroad, who has the authority to make important healthcare decisions on your behalf? How do you ensure that your healthcare directives will be followed if you fall ill while away from your primary place of residence?
A personal directive, commonly referred to as a living will, is a document written while you’re able to communicate and make decisions that outlines instructions for future medical or non-medical care in the event that you become incapacitated. The name of this document varies across provinces and territories. For example, in Alberta, it’s called a Personal Directive.
Protecting and Managing Digital Assets
Naturally, as a digital nomad, you’re going to own some digital assets. Perhaps you’ll have more than someone who isn’t a digital nomad. These files are important to your life and work, so ensuring you have your affairs in order should be at the top of your mind.
Step 1: Organize Your Digital Assets
It’s important that you organize your digital assets so you know where to find them at all times. Make sure they’re in a secure location, like a reputable cloud storage platform. This allows you to access them whenever you’re travelling from one place to another. You might also want to store assets on a hard drive if you’re sure that you won’t need to access those particular files remotely.
Examples of digital assets and properties include, but are not limited to:
- Photos saved online
- Bank accounts
- Social media accounts
- Loyalty points and coupons
- Websites
- E-commerce and marketplace accounts
- Cryptocurrencies, NFTs and other blockchain investments
Step 2: Protect Your Digital Assets
What do you do after you’ve organized your digital assets? As a digital nomad, you’re likely going to be accessing and using digital files regularly so security is of utmost importance. You should secure your digital files and properties for your personal and professional safety. Here are a few ways you can do that:
- Use secure cloud-based storage
- Use a reputable password manager
- Make sure your assets are password protected where applicable
- Use 2-factor authentication
- Do regular backups
- Anti-virus and malware software
- Avoid insecure FTP for transferring files
Step 3: Leave Instructions About Your Digital Assets
Consider how your digital assets will be incorporated into your estate plan. You can choose to leave instructions for your executor that describe your preferences for digital accounts without giving direct access or compromising security by sharing your passwords. You can record your specific wishes and pair them with your will by writing a letter to your executor.
Designate Beneficiaries, Guardians, and Attorneys
Careful thought should be put toward choosing the people or entities that you’ll designate as executors, beneficiaries, guardians, and attorneys. These roles are critical in ensuring your assets go where you want them to go and the right decisions are made for your life and legacy as well as your loved ones.
Beneficiaries
A beneficiary is an individual or entity whom you can assign within your will (or with your financial institution or life insurance company) to receive your property or assets after you pass away. You can have more than one beneficiary. They could be parents, children, family members, a spouse, friends, or other important individuals in your life. You can even list organizations, such as nonprofits, as beneficiaries.
For example, if you have investment accounts, like a TFSA, you can designate your father as a beneficiary to receive half of the money and your sister to receive the other half when you die.
While there is no tax on inheritances or gifts in Canada, there are two types of taxes that your estate will incur when you pass away: your final income tax return and probate fees, otherwise known as estate administration taxes. To learn more about how you can pay these taxes in advance or minimize probate fees so your beneficiaries will end up with more money, read our guide Estate Planning and Taxes: What You Need To Know.
Guardians
A guardian is a person who will assume legal, moral, and financial responsibility for your minor children (and pets) in the event you and the other parent are unable to care for them. Keep in mind that if you aren’t currently with the other parent of your child and they’re still alive, they may be entitled to guardianship before anyone else, barring some exceptions.
This can be a very difficult task so it’s best to take ample time to consider these factors before choosing a guardian:
- At this stage in their life, is this person ready to take care of children or pets?
- If they already have children or pets, are they prepared and willing to take care of more?
- Does this person’s values align with yours?
- Do they have a stable home life and financial situation?
- Do you wholeheartedly trust them to make sound decisions for your children and pets?
- Will they be able to take care of all your dependents in a way that ensures they aren't separated?
Make sure to get this person’s full consent before designating them in your will.
Note that in Ontario, the guardian will only be appointed for 90 days. After that, it has to be approved by the court.
Choosing a guardian: resident or non-resident?
Whether or not your dependents are currently living or travelling with you abroad, we suggest choosing a guardian who is a resident of Canada and also lives there. If it isn’t possible, for example, the only people you trust to be guardians are non-residents of Canada, you’re allowed to designate a non-resident guardian. However, they will have to work through tax and administrative complications. It may be difficult for children to adjust to a new city or country when moving in with their guardians.
All in all, whomever you choose as a guardian, the most important thing is to maximize your dependents’ health, safety, and happiness.
If your dependents live abroad with you
What happens if your dependents are physically with you abroad and you die or fall seriously ill? We suggest assigning a person (or people) you trust who also live in the same city to inform important people in your life, including your guardians, of major events so that the appropriate next steps can be taken.
Powers of Attorney
As mentioned above, an attorney is a person you trust that has the authority to make decisions on your behalf about your property, finances, personal life, and medical care.
Make sure the person or entity you choose has the capability to make tough decisions about your health, finances, and overall well-being. Ideally, it would be someone that has some experience with these types of decisions. Furthermore, they should understand you as a person and act in accordance with your values and wishes.
Regularly Update Your Estate Plan
For many, part of the allure of the digital nomad lifestyle is the excitement of living through a lot of life changes, small and big. While it’s great to bask in the adventure and fun times, it’s also important that any relevant changes in your life are reflected in your estate plan. We’d suggest reviewing your estate plan every few years, or after a major life event, but since everyone’s circumstances are different, it might be appropriate to do it less or more often than that.
Consider the following when it comes time to review your estate plan:
- Have you gained or lost any assets or properties, digital or physical?
- Did you have children?
- If you already have children, have they become adults?
- Which country do you live and work in now?
- Do you plan on moving back to Canada at any point?
- Are your executors, beneficiaries, guardians, and attorneys still willing and able to take on their respective responsibilities?
- Do you want to change who your executors, beneficiaries, guardians, and attorneys are?
- Did you get married?
- Did you sell or buy a business?
- Are you retiring?
Get Peace of Mind in Estate Planning as a Digital Nomad
As a digital nomad, it’s reasonable that you may acquire assets in the jurisdiction you’re living in while abroad. For any assets acquired abroad, it’s important to seek legal advice from an estate lawyer in the country where you’re residing, since the estate laws could be different in that jurisdiction. An estate lawyer can also provide advice about whether your Ontario Powers of Attorney are valid in that jurisdiction.
It may not be what you had in mind when you became a digital nomad, but it’s so important that you be proactive in securing your assets and the future of your loved ones.
