tag:blogger.com,1999:blog-58328751787805556222024-03-08T15:00:34.603-08:00McLennan Ross Wills & Estates Law BlogMcLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-5832875178780555622.post-39248445141327440022021-10-19T12:14:00.004-07:002021-10-19T12:17:56.531-07:00Two for One: Bequests to Both the Spouse and the New Partner<p><b>By <a href="https://www.mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a></b><br /></p><p class="MsoBodyText"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">It’s said that about 40% of Canadian marriages will end in
divorce. So does that mean the other 60% remain happily attached until death?
Probably not. It is not uncommon for people to separate and choose never to get
divorced. In some cases, it’s because divorce is too costly. For others, the
spouses may decide or be required to live in separate living accommodations
(e.g., illness or age). In any case, that leaves a portion of married people who
enter the dating scene with “it’s complicated” statuses. This article looks at
the tax-deferred rollovers for when one of those people die and leave bequests
to both their spouse and a new common-law partner. </span></p>
<p class="MsoBodyText"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">A spouse, while not defined, is generally considered the person
that the taxpayer is married to, whether they are separated or not. A
common-law partner is the person with whom the taxpayer has been cohabiting with for
at least 12 months while in a conjugal relationship.</span><a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[1]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> With those
definitions, it is possible for a taxpayer to have both a spouse and a
common-law partner at the same time. </span></p>
<p class="MsoBodyText"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">When a taxpayer dies, all of their capital property is deemed to
be disposed at fair market value.</span><a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[2]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> This can
lead to a hefty tax bill owed by the Estate for all of the accrued capital
gains. However, there is relief available when property is left to the deceased
taxpayer’s spouse, common-law partner, or a spousal trust for the benefit of
either.</span><a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[3]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Subsection
70(6) will deem the capital property to be transferred at cost instead, meaning
no capital gains are recognized. In order to qualify, the taxpayer must have
been a Canadian resident immediately before death, the property must have been
transferred as a consequence of death, and the property must vest indefeasibly
to the spouse or common-law partner within 36 months of the death. On at least
two occasions, the CRA has made it clear that, so long as the transfer meets
the criteria, the rollover provision will apply to bequests to both a spouse
and a common-law partner of the deceased taxpayer.</span><a href="#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[4]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"></span></p>
<p class="MsoBodyText"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">With all that said, this only addresses one (tax) facet when
considering a whole estate plan. Under estate law, a separated spouse will be
deemed to be predeceased in a Will</span><a href="#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[5]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> and spouses
or adult interdependent partners</span><a href="#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[6]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> may claim
support and maintenance from the Estate. This could lead to messy and costly
litigation if the deceased did not ensure their intentions were clearly laid
out and documented. </span></p>
<p class="MsoBodyText"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Our </span><span lang="EN-US"><a href="https://mross.com/law/Practice_Areas/Wills_and_Estates"><span face=""Calibri",sans-serif" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Wills &
Estates team</span></a></span><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> and </span><span lang="EN-US"><a href="https://mross.com/law/Practice_Areas/Tax"><span face=""Calibri",sans-serif" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Tax team</span></a></span><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> can work cohesively to provide
you with a wholistic estate plan. Please contact our office.</span></p><br clear="all" />
<div style="mso-element: footnote-list;"><hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[1]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> <i>Income
Tax Act, </i>subsection 248(1), definition of “common-law partner”.</span></p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[2]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> <i>Income
Tax Act, </i>subsection 70(5).</span></p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[3]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> <i>Income
Tax Act, </i>subsection 70(6). </span></p>
</div>
<div id="ftn4" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[4]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">
2014-0523091C6 and 2010-0373901I7. </span></p>
</div>
<div id="ftn5" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[5]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> <i>Wills and
Succession Act</i>, subsection 63(1).</span></p>
</div>
<div id="ftn6" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 8pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: minor-latin;">[6]</span></span></span></span></span></a><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> “Common-law
partner” is a tax term, defined in the Income Tax Act for tax purposes. “Adult
interdependent partner” (AIP) is a family law term, defined in the Adult
Interdependent Relationship Act (Alberta) and is used for estate law purposes.
Generally, an AIP is a partner whom have an interdependent relationship with
while either cohabiting for 3 years or have a child together. </span></p>
</div>
</div>
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<![endif]--></p>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-40882398642735793542021-10-04T00:00:00.000-07:002021-10-04T07:42:52.100-07:00Dying Without a Will – Intestacy Leads to Inconvenience<p><b>By <a href="https://www.mross.com/law/People/LawyerProfile/Lydia_Roseman.cid2571" target="_blank">Lydia Roseman</a></b></p><p>
</p><p class="MsoBodyText"><span lang="EN-US">Without a valid Will, after you pass, your
estate will be considered “intestate”. This means that no one is entitled to
manage or deal with your assets without permission of the Court, and legislation
will determine who will inherit your belongings.</span></p>
<p class="MsoBodyText"><span lang="EN-US">This is not ideal for a number of
reasons, as will be set out in detail below. Importantly, intestacy can create
significant costs and challenges for family members who would normally expect
to benefit under a Will, and will mean you have no control over the final
disposition of your assets.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Below we set out the circumstances that
will lead to intestacy and exactly what will occur following death if there is
no valid Will.</span></p>
<p class="MsoBodyText"><b><span lang="EN-US">When does intestacy occur? </span></b></p>
<p class="MsoBodyText"><span lang="EN-US">An individual is considered to have died
“intestate” if there is no valid Will at the time of their death. The word “valid”
is important here.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Sometimes an individual will leave behind
a Will thinking that it complies with the legal requirements and will be
binding on the their estate. However, without proper legal assistance, it can
be quite easy to accidentally create an <i>invalid </i>Will. </span></p>
<p class="MsoBodyText"><span lang="EN-US">To create a valid Will in Alberta, you
must comply with the requirements set out in the <i>Wills and Succession Act</i>.</span><a name="_Ref83829758"></a><a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="mso-bookmark: _Ref83829758;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></span></span></span></span></span></a><span style="mso-bookmark: _Ref83829758;"></span><span lang="EN-US"> There are three
types of valid Will under Alberta legislation:</span></p>
<ul style="text-align: left;"><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"> </span></span></span><span lang="EN-US">a formal Will;</span></li><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"> </span></span></span><span lang="EN-US">a holograph Will; and</span></li><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"></span></span></span><span lang="EN-US">a military Will.</span></li></ul>
<p class="MsoBodyText"><span lang="EN-US">To be a formal Will, the will must be
made in writing and must be signed by the testator and two witnesses, all in
the presence of each other.</span><a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[2]</span></span></span></span></span></a><span lang="EN-US"> Generally if a lawyer is involved in the preparation and signing of
your Will, you will have a formal Will.</span></p>
<p class="MsoBodyText"><span lang="EN-US">A holograph Will on the other hand, must
be made entirely in the testator’s own handwriting (it cannot be typed) and
signed by the testator. No witnesses or any other formality is necessary.</span><a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[3]</span></span></span></span></span></a><span lang="EN-US"></span></p>
<p class="MsoBodyText"><span lang="EN-US">Finally, a military Will can be made by a
member of the Canadian Forces on active service by signing it, without
witnesses or other formalities.</span><a href="#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[4]</span></span></span></span></span></a><span lang="EN-US"></span></p>
<p class="MsoBodyText"><span lang="EN-US">An example then of what would <i>not </i>constitute
a valid Will would be a typed Will signed by the testator without a witness or
with only one witness. </span></p>
<p class="MsoBodyText"><span lang="EN-US">While a court may in limited
circumstances validate a non-compliant Will, the applicant would need to
provide “clear and convincing evidence” that the document was intended to be a Will
and sets out the testamentary intentions of the testator.</span><a href="#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[5]</span></span></span></span></span></a><span lang="EN-US"> This would likely involve a lengthy and costly court procedure,
especially if others take an alternate view and argue against the Will’s
validity.</span></p>
<p class="MsoBodyText"><span lang="EN-US"> </span><b><span lang="EN-US">Who can administer your estate?</span></b></p>
<p class="MsoBodyText"><span lang="EN-US">Generally, a valid Will appoints an
executor who is entitled to deal with your estate. Where an individual dies
intestate, there is no executor. Instead, someone will need to be appointed as
the “administrator”. </span></p>
<p class="MsoBodyText"><span lang="EN-US">Before any of your assets can be dealt
with or distributed, someone will need to apply to the Alberta Court of Queen’s
Bench to for a grant of administration. The <i>Estate Administration Act</i></span><a href="#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><i><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[6]</span></b></span></span></span></i></span></a><span lang="EN-US"> sets out who can apply and, if more than one person is interested,
who will have priority. </span></p>
<p class="MsoBodyText"><span lang="EN-US">Generally a spouse or adult
interdependent partner (“<b>AIP</b>”) of the deceased will have first priority, then a
child, grandchild, other descendant, parent, sibling, and so on. A person with
priority can also nominate another person, and that nominee will retain
priority. So, for example, a spouse’s nominee would have priority to apply to
administer the estate over the deceased’s child.</span></p>
<p class="MsoBodyText"><span lang="EN-US">While not necessarily particularly
complicated, a court application will add time and expense to the
administration of the estate.</span></p>
<p class="MsoBodyText"><span lang="EN-US"> </span><b><span lang="EN-US">Who will inherit? </span></b></p>
<p class="MsoBodyText"><span lang="EN-US">Without a valid Will, the deceased has no
say in the distribution of his or her estate. Instead, the distribution of
assets will be strictly governed by Part 3 of the <i>Wills and Succession Act</i>.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Under the Act, if the deceased leaves
behind a surviving spouse or AIP but no descendants, the entirety of the estate
will go to that surviving spouse or AIP. If there is a spouse or AIP and all of
the deceased’s descendants are also descendants of the surviving spouse or AIP,
then again the entire estate will go to the spouse or AIP.</span><a href="#_ftn7" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[7]</span></span></span></span></span></a><span lang="EN-US"></span></p>
<p class="MsoBodyText"><span lang="EN-US">Where things get complicated is where the
deceased leaves behind, for example, a spouse and children of a previous marriage.
In that case, there will be a division of assets between the spouse and the
children. The spouse will be entitled to the greater of 50% of the estate or
$150,000.00.</span><a href="#_ftn8" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[8]</span></span></span></span></span></a><span lang="EN-US"> The remainder of the estate will be divided among the deceased’s
descendants “per stirpes” (which is explained below).</span></p>
<p class="MsoBodyText"><span lang="EN-US">It is also actually possible for an
individual to die leaving <i>both </i>a surviving spouse <i>and </i>a surviving
AIP. This would occur where the deceased separated with their spouse</span><a href="#_ftn9" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[9]</span></span></span></span></span></a><span lang="EN-US"> prior to their death but did not actually divorce that spouse, and
then formed a new relationship which satisfied the definition of an AIP set out
in the <i>Adult Interdependent Relationships Act</i>.</span><a href="#_ftn10" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[10]</span></span></span></span></span></a><span lang="EN-US"></span></p>
<p class="MsoBodyText"><span lang="EN-US">In those circumstances, if there are no
descendants, the surviving spouse and AIP will share equally in the estate. If
there are descendants, the surviving spouse and AIP will split the greater of
half of the estate or $150,000.00. </span></p>
<p class="MsoBodyText"><span lang="EN-US">If there is no surviving spouse or AIP,
the estate will be shared among the deceased’s descendants per stirpes. What
does per stirpes mean? It means that the estate will be divided into as many
portions as there are surviving children <i>and </i>predeceased children who
left surviving descendants (that is the deceased’s child passed away but gave
the deceased surviving grandchildren).</span><a href="#_ftn11" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[11]</span></span></span></span></span></a><span lang="EN-US"> Each surviving child of the deceased would then take one of these
portions, and the grandchildren of a predeceased child would share their
parent’s portion. </span></p>
<p class="MsoBodyText"><span lang="EN-US">To illustrate, imagine a deceased had two
descendants, one who survived the deceased and one who died leaving two of his
or her own grandchildren. In that case, the surviving child would receive 50%
and the two grandchildren would each receive 25%. In this way, each “child”
receives an equal share, even if it is through their own descendants.</span></p>
<p class="MsoBodyText"><span lang="EN-US">The final possible situation is that a
deceased dies leaving behind no spouse, no AIP and no descendants. In that
situation the estate will go in its entirety to the following individuals, in
descending priority:</span></p>
<ul style="text-align: left;"><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"></span></span></span><span lang="EN-US">the deceased’s parents;</span></li><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"> </span></span></span><span lang="EN-US">any descendants of the
deceased’s parents;</span></li><li><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7pt "Times New Roman";"></span></span></span><span lang="EN-US">the deceased grandparents or
their descendants.</span></li></ul><span lang="EN-US"> </span><b><span lang="EN-US">Conclusion</span></b><span lang="EN-US"></span>
<p class="MsoBodyText"><span lang="EN-US">As you can see, dying intestate means a
lack of control over the distribution of assets. Beyond simply not being able
to choose their heirs, the deceased also loses out on all the potential
advantages that come with a good estate plan. </span></p>
<p class="MsoBodyText"><span lang="EN-US">For example, when planning ahead of time,
an individual can strategically decide how to distribute his or her assets on
death to minimize taxes and maximize the benefit to their heirs. When dying
intestate, there is no flexibility to do this kind of preemptive tax planning.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Intestacy also adds potential stress and
cost to family members by requiring them to apply for a grant of
administration. Until a grant is obtained, no one can deal with the deceased’s
assets. This can be a serious issue where the deceased held all the family
assets solely in his or her name and family members depended on that person for
financial support. That time lag could have serious consequences.</span></p>
<p class="MsoBodyText"><span lang="EN-US">We therefore strongly recommend that all
individuals prepare Wills, especially where they have a complicated family
situation or have dependants who rely on them for financial support. As
discussed above, a lawyer can help make sure you meet all the necessary legal
requirements for creating a <i>valid </i>Will, avoiding all of the issues that
come along with intestacy. Early and well-advised estate planning can also have
a myriad of other benefits.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Any of the members of our <a href="https://www.mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">McLennan Ross
Wills & Estates team </a>would be happy to discuss your estate planning needs
with you. </span></p>
<div style="mso-element: footnote-list;">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></span></span></span></span></a><span lang="EN-US"> SA 2010, c W-12.2 [<i>W&S Act</i>].</span></p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[2]</span></span></span></span></span></a><span lang="EN-US"> <i>Ibid</i>, s 15.</span></p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[3]</span></span></span></span></span></a><span lang="EN-US"> <i>Ibid</i>, s 16.</span></p>
</div>
<div id="ftn4" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[4]</span></span></span></span></span></a><span lang="EN-US"> <i>Ibid</i>, s 17.</span></p>
</div>
<div id="ftn5" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[5]</span></span></span></span></span></a><span lang="EN-US"> <i>Ibid</i>, s 37.</span></p>
</div>
<div id="ftn6" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[6]</span></span></span></span></span></a><span lang="EN-US"> SA 2014, c E-12.5, s 13(1)(b).</span></p>
</div>
<div id="ftn7" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref7" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[7]</span></span></span></span></span></a><span lang="EN-US"> <i>W&S Act</i>, s 61(1)(a).</span></p>
</div>
<div id="ftn8" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref8" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[8]</span></span></span></span></span></a><span lang="EN-US"> <i>Ibid</i>, s 61(1)(b); <i>Preferential Share (Intestate Estates)
Regulation</i>, Alta Reg 217/2011, s 1.</span></p>
</div>
<div id="ftn9" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref9" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[9]</span></span></span></span></span></a><span lang="EN-US"> Note, however, that if the spouse and deceased were separated for
more than 2 years prior to the deceased’s death, the <i>W&S Act</i>,
section 63, deems that spouse to have predeceased the deceased. </span></p>
</div>
<div id="ftn10" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref10" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[10]</span></span></span></span></span></a><span lang="EN-US"> SA 2002, c A-4.5, ss 1(1)(a), 3. </span></p>
</div>
<div id="ftn11" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref11" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[11]</span></span></span></span></span></a><span lang="EN-US"> <i>W&S Act</i>, s 66.</span></p>
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<![endif]--> <br /></p>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-4747267469841958942021-03-30T06:00:00.000-07:002021-03-30T08:37:37.402-07:00The Pitfalls of Using Joint Ownership as an Estate Management Strategy<p> By <a href="https://www.mross.com/law/People/LawyerProfile/Lydia_Roseman.cid2571" target="_blank">Lydia Roseman</a></p><p>
</p><p class="MsoBodyText"><span lang="EN-US">One of the goals of estate planning is
the management of assets while an individual is still alive but has lost the
ability to manage their assets on their own (commonly referred to as losing
capacity). We recommend coming up with a plan as to who will manage your assets,
and how, long before capacity becomes an issue.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Commonly, an individual getting close to
this stage and wanting help managing their assets will simply add a child, or
another trusted individual, as a joint owner of their assets. While this may
seem like a simple solution, this strategy is rife with issues. </span></p>
<p class="MsoBodyText"><span lang="EN-US">This article will address some of the
issues with using joint ownership as a strategy for managing assets, both
during the original owner’s life and upon their passing. It will then discuss an
alternate asset management tool: the Enduring Power of Attorney or “EPA”, a
specialized legal document designed for precisely this situation. </span></p>
<p class="MsoBodyText" style="text-align: left;"><span style="font-weight: normal;"></span></p><p class="MsoBodyText" style="text-align: left;"><b><span lang="EN-US">Joint Ownership</span></b></p><p style="text-align: left;"><i><span style="font-weight: normal;"><span lang="EN-US"><span> </span>Issues
during the original owner’s life</span></span></i></p>
<p class="MsoBodyText"><span lang="EN-US">What do we mean by joint ownership? Joint
ownership occurs when assets are held jointly in two or more individuals’
names. For example, if a senior individual has a bank account and adds their
child to that bank account, they will become joint owners. </span></p>
<p class="MsoBodyText"><span lang="EN-US">While the intent of this might simply be
to allow the child to pay bills on their behalf or make deposits or withdrawals,
the reality is much more complicated. Once both names are listed as “owners” of
the account, the legal assumption is that the account is equally owned by the
two individuals. The child then has equal authority to deal with those funds.
There is no automatic requirement that the child must use the funds solely for
the benefit of the parent.</span></p>
<p class="MsoBodyText"><span lang="EN-US">This means that the child could
theoretically remove all funds from the bank account and it would be very
difficult or impossible for the parent, or another interested party, to reverse
these transactions.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Joint ownership also opens the asset to
potential claims of third parties as against the additional owner. For example,
if the joint owner declares bankruptcy, creditors may be able to realize
against the asset held jointly. Or, more commonly, if the joint owner goes
through a divorce (or a separation from an adult interdependent partner), their
partner may have a family property claim against the asset. </span></p>
<p class="MsoBodyText"><span lang="EN-US">It is also extremely difficult to undo
the joint ownership as a whole. Once you have added someone to your bank
account, or title of your house, you cannot simply elect to remove them without
their consent. For all intents and purposes, they are an equal owner of the
property.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Finally, it can take significant time to transition
all of one’s assets into joint ownership. There is no one call to make or form
to submit to add another individual as a joint owner on <i>all </i>of one’s
assets. Each bank account, house, vehicle, or other investment or physical
asset would need to be dealt with individually.</span></p><i><span lang="EN-US"><span> </span>Issues
following the original owner’s death</span></i>
<p class="MsoBodyText"><span lang="EN-US">The other point to consider is what will
happen to the assets held jointly upon the original owner’s passing.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Once the original owner passes away, the
“right of survivorship” applies to make the other named individual the sole
owner of the asset. This means that the funds in the account will not form part
of the deceased’s “estate” and will not be distributed in accordance with the
Will. Instead, the property will become entirely the property of the joint
owner.</span></p>
<p class="MsoBodyText"><span lang="EN-US">This means that an individual using the
joint ownership strategy can unintentionally cut a beneficiary out of a very
substantial part of their estate. </span></p>
<p class="MsoBodyText"><span lang="EN-US">It may be possible for the remaining
beneficiary(ies) to argue before the Court that the deceased’s intent was <i>not
</i>to leave the asset entirely to the named individual but rather that the
funds are held in trust by that individual for the estate. However, without
some written documentation of the testator’s intent, this can be an extremely
challenging argument to make. Even if the spurned beneficiaries are ultimately
successful, this would mean a lengthy and expensive court battle and
unnecessary conflict between beneficiaries.</span></p>
<p class="MsoBodyText"><span lang="EN-US">As the old saying goes, only two things
in life are certain, death and taxes. But what does death mean <i>for </i>taxes
when property is held as joint owners? </span></p>
<p class="MsoBodyText"><span lang="EN-US">Let’s use the example of an individual
with two children whose substantial assets are a house and a bank account, both
of which are worth roughly the same value. The individual decides to put the
house in both his and his daughter’s names so that the daughter can help with
management of the house. To compensate for this, the individual is leaving the
entirety of the contents of the bank account to the son in his Will.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Upon the individual’s passing, Canada’s
tax rules deem the testator to have sold the house at its current fair market
value. There will likely be a large capital gain on the house, assuming it has
gone up in value since its purchase. These tax consequences will belong to the
deceased’s estate; they do not attach to the house. </span></p>
<p class="MsoBodyText"><span lang="EN-US">This means that there will likely be a substantial
tax burden that must be paid out the estate’s remaining property, i.e. the bank
account. The end result is that the daughter gets the full value of the house
without paying any of the tax consequences, while the son is left only with the
funds in the bank account <i>after</i> the taxes have been paid. The tax
consequences could erode a substantial portion of the value left for the son.</span></p>
<p class="MsoBodyText"><span lang="EN-US">This leads to the unintentional result of
a very unequal division of assets.</span></p>
<p class="MsoBodyText"><b><span lang="EN-US">The Enduring Power of Attorney</span></b></p>
<p class="MsoBodyText"><span lang="EN-US">An EPA is a legal document under which an
individual appoints an attorney to manage all their assets. The EPA is drafted
by a lawyer and is signed by an individual either to immediately take effect or
to take effect at some later date, once the individual has lost capacity.</span></p>
<p class="MsoBodyText"><span lang="EN-US">We typically recommend drafting these
documents well in advance of loss of capacity with a future “triggering event”
which will bring the EPA into effect. This “triggering event” can be a
statement in writing of the testator intentionally bringing the document into
effect, or it can be a statement from one or more doctors that the testator no
longer has capacity to deal with their assets.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Following the coming into effect of the
EPA, the attorney is able to manage <i>all </i>of the owner’s assets. The most
important benefit is that the EPA will not affect the underlying ownership of
the assets. While the attorney has the ability to manage the estates, dispose
of them, buy new investments, etc., everything remains the property of the
original owner. </span></p>
<p class="MsoBodyText"><span lang="EN-US">Further, the attorney owes a fiduciary
duty to the original owner meaning that the assets must be managed solely for
the benefit of the original owner. </span></p>
<p class="MsoBodyText"><span lang="EN-US">There are also clear mechanisms for the
individual, or other family members or interested parties, to bring forward an
application to the Court if they believe that the attorney is mismanaging the
funds. The attorney is statutorily obligated to maintain records of how they
have dealt with the assets and the EPA can even build in reporting requirements
whereby the attorney has to keep other family members appraised of his or her
decisions. There is therefore much clearer and more substantial protection for
the original owner.</span></p>
<p class="MsoBodyText"><span lang="EN-US">It is also possible to undo the coming
into force of an EPA. For example, if an individual temporarily loses capacity
due to a car accident, the EPA could come into effect. However, once that
individual regains capacity, if a medical professional declares that individual
competent, that individual can regain control over their assets. </span></p>
<p class="MsoBodyText"><span lang="EN-US">Finally, the EPA will not impact the
distribution of property on the individual’s passing. As the assets never
become the attorney’s property, the assets will entirely be dealt with under
the deceased’s Will. This avoids unintentional unfairness between
beneficiaries.</span></p>
<p class="MsoBodyText"><b><span lang="EN-US">Conclusion</span></b><span lang="EN-US"></span></p>
<p class="MsoBodyText"><span lang="EN-US">In conclusion, there are many potential
issues when it comes to using joint ownership as a tool for asset management.
The joint ownership strategy puts the original owner at the mercy of the joint
owner, is almost impossible to unwind, and can lead to unintended consequences
for the ultimate beneficiaries of the individual’s estate.</span></p>
<p class="MsoBodyText"><span lang="EN-US">We therefore strongly recommend using an
EPA as an estate management tool instead of relying on joint ownership. While
there is some up front cost to preparing an EPA, it gives the individual much
more control over how their assets will ultimately be managed. Importantly,
there are significant built in protections which require the attorney to manage
the assets for the benefit of the individual. Finally, the EPA does not impact
the underlying ownership of the assets avoiding any unintended consequences
upon the individual’s passing.</span></p>
<p class="MsoBodyText"><span lang="EN-US">Our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills & Estates team</a> would be
happy to prepare an EPA for you and to answer any questions you may have. Remember,
it is never too early to start thinking about estate planning.</span></p>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-60763042996845661402020-10-14T12:37:00.005-07:002020-10-15T12:26:15.874-07:00Planning for Death in Business: Capital Dividends and Unanimous Shareholders Agreements<p class="MsoBodyText"><!--[if gte mso 9]><xml>
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</xml><![endif]--> By <a href="https://www.mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403">Michelle Fong</a> and <a href="https://www.mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a><br /></p><p class="MsoBodyText">Making a plan for the storm when the weather is still good
is the fundamental basis of estate planning and business succession planning. It
allows everyone involved to set out their intentions, have open and clear
communications, and set a plan in place that they feel will allow their
successors to succeed.</p>
<p class="MsoBodyText">One of the key tools used for this planning is a unanimous
shareholders agreement (“<b>USA</b>”). Where estates and businesses intersect is often
in the buy-sell options upon death and life insurance clauses in a USA. </p>
<p class="MsoBodyText">The buy-sell upon death clause typically requires the
estate to sell the shares of the corporation back to the corporation at a fair
or agreed price. But how will the corporation fund the repurchase? That is
where life insurance and capital dividends come in. </p>
<p class="MsoBodyText">Corporations may take out life insurance on the lives of
the shareholders. Upon the death of a shareholder, the insurance proceeds will
be paid to the corporation and be added to the capital dividend account
balance.<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></span></span></span></span></a>
The capital dividend account represents amounts that a private corporation<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[2]</span></span></span></span></span></a>
may pay out to shareholders as tax-free dividends, called “capital dividends”.<a href="#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[3]</span></span></span></span></span></a>
The capital dividend account is maintained “on-paper”. It is not a dollar
balance that appears on financial statements or tax returns. </p>
<p class="MsoBodyText">The corporation will then use the insurance proceeds to repurchase
the shares. However, in fairness, the corporation should elect that the
addition to the capital dividend account as a result of the insurance proceeds
should be used to repurchase the shares. This allows the estate to then
receive those funds as tax-free capital dividends. If the life insurance
proceeds are insufficient to cover the entire repurchase price, the difference
will usually be treated as a taxable dividend. </p>
<p class="MsoBodyText">This is helpful for the corporation, as it provides a
means to deal with the shares of deceased shareholders, and it is helpful for
the estate, as it provides a tax efficient way to deal with the shares of a
private corporation.</p>
<p class="MsoBodyText">However, unless a USA obligates the corporation elect that
capital dividends be paid out as part of the repurchase, under corporate law,
the corporation can theoretically keep the capital dividend account balance for
the other shareholders, leading to significantly worse tax results for the
estate. Since this is usually not the parties' original intention, this
regularly leads to expensive litigation.</p>
<p class="MsoBodyText">Therefore, when estate planning for individuals who own
shares in private corporation, not only will the individual’s will be
important, but also a USA for the corporation. You should contemplate including
in a USA clauses that:</p>
<p class="MsoBodyText" style="margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; margin: 12pt 0in 0in 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;"><span style="mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font: 7pt "Times New Roman";"> </span></span></span>require
or permit the corporation to maintain life insurance on the lives of the
shareholders;</p>
<p class="MsoBodyText" style="margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; margin: 12pt 0in 0in 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;"><span style="mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font: 7pt "Times New Roman";"> </span></span></span>gives
the corporation an option to repurchase any shares owned by the deceased
shareholder at the time of his/her death from his/her estate; </p>
<p class="MsoBodyText" style="margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; margin: 12pt 0in 0in 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;"><span style="mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font: 7pt "Times New Roman";"> </span></span></span>set
outs a formula or definition for the repurchase price for the above-mentioned
option that is reasonable for both the estate and the corporation;</p>
<p class="MsoBodyText" style="margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; margin: 12pt 0in 0in 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;"><span style="mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font: 7pt "Times New Roman";"> </span></span></span>sets
out that the repurchase price paid will be designated as a capital dividend to
the extent that the capital dividend account balance was increased by the
receipt of life insurance proceeds related to the deceased shareholder. </p>
<p class="MsoBodyText">It is worth remembering that the cost of establishing a
proper USA prior to death can save the estate and corporation significant
litigation and/or tax costs after death. McLennan Ross has an experienced and
talented <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates">Wills
& Estates Team</a> as well as a skilled <a href="https://mross.com/law/Practice_Areas/Tax">Tax
Team</a> able to assist you with estate and business planning and its related
tax implications. </p>
<div style="mso-element: footnote-list;"><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></span></span></span></span></a>
<span lang="EN-US" style="mso-ansi-language: EN-US;">Income Tax Act (“ITA”),
subsection 89(1). Other items that are included in the capital dividend account
include the non-taxable portion of capital gains, and capital dividends received from other
corporations.</span></p>
</div>
<div id="ftn2" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[2]</span></span></span></span></span></a>
<span lang="EN-US" style="mso-ansi-language: EN-US;">ITA, see definition in
subsection 89(1). Generally, a Canadian resident corporation and not controlled
by one or more public corporations, prescribed federal Crown corporations, or
any combination thereof.</span></p>
</div>
<div id="ftn3" style="mso-element: footnote;">
<p class="MsoFootnoteText"><a href="#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="font-size: 8pt; mso-bidi-font-size: 11.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span face=""Arial","sans-serif"" style="font-size: 8pt; mso-ansi-language: EN-CA; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[3]</span></span></span></span></span></a>
ITA, section 83.<span lang="EN-US" style="mso-ansi-language: EN-US;"></span></p>
</div>
</div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com2tag:blogger.com,1999:blog-5832875178780555622.post-61455269894086775902020-07-30T10:43:00.003-07:002021-03-30T07:31:44.774-07:00Were My Parents Right? – Implications of the Family Property Act<p class="MsoNormal"><span style="font-family: "Times New Roman",serif;"><b>By <a href="https://mross.com/law/People/LawyerProfile/Moe_Denny.cid2177" target="_blank">Moe Denny</a></b></span></p><!--[if gte mso 9]><xml>
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<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><a name="_GoBack"></a><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">My parents have
always harped about not moving in with a partner until we’re married. Recent
changes to the <i>Family Property Act </i>(the “<i>Act</i>”), suggest they may
have been on to something as long term dating may trigger entitlement to
property.</span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">The <i>Act</i>, which
replaced the <i>Matrimonial Property Act</i>, governs the division of property
when a relationship breaks down and makes all property subject to “division” unless
it is exempted by legislation or it is excluded by agreement.<span style="mso-spacerun: yes;"> </span></span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">The former <i>Matrimonial
Property Act</i> applied only to “spouses”; however, the <i>Act</i> now applies
to both “spouses” and “adult interdependent partners” (“<b>AIP</b>”), which
means that a wider group of individuals are captured under the legislation. </span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">So what is an AIP?
Generally, people become AIPs when they live together in a relationship of
interdependence:</span></p>
<ul type="disc"><li class="MsoNormal" style="mso-list: l1 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">for a continuous
period of 3 years or more; or </span></li><li class="MsoNormal" style="mso-list: l1 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">of some permanence, if
there is a child of the relationship by birth or adoption;<a href="#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="mso-special-character: footnote;"><span style="font-family: "Calibri",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">[1]</span></span></a></span><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"></span><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;"></span></li></ul>
<p class="MsoNormalCxSpMiddle"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">Generally, a relationship will be deemed interdependent when two people
are not married to one another but still share one another’s lives, are
emotionally committed to one another, and function as an economic and domestic
unit.</span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">A few things that AIPs can
apply for though the <i>Act </i>include:</span></p>
<ul type="disc"><li class="MsoNormal" style="mso-list: l0 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">a family property
order to have property distributed;</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">exclusive possession
of a family home and/or exclusive use of household goods; and</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">disclosure of
property.</span></li></ul>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">For the most part, division
of property under the <i>Act</i> is based on the market value of the property
and not the actual physical property, which means you won’t be splitting or
sawing anything in half, but rather giving the fair market value of the
property. The applicable date when market value is calculated is either the
date the relationship of interdependence began, or the date the AIP acquired
the property (whichever is later).</span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">The <i>Act</i> does exempt
certain property’s market value, such as property acquired by gift from a third
party (like parents), property acquired by an AIP by inheritance, and property
acquired by an AIP before the relationship of interdependence began. </span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">All this considered, gifts
from third parties (parents) to a person (child) are exempt property, meaning
that the value of the property from latest of the date of receipt, or the date
the relationship became an AIP is exempt. However, increases in value from such
date are not exempt. </span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">Why does this matter? One
of the main differences between marriage and an AIP relationship is that
marriages have a notable (and hopefully memorable) start date. AIP
relationships are based on cohabitation<a href="#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span style="mso-special-character: footnote;"><span style="font-family: "Calibri",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">[2]</span></span></a></span><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"></span><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">, which can
occur early in a relationship and then the 3<sup>rd</sup> anniversary of
cohabitating can pass without much fanfare. The date that determines what value
is exempt and what value is subject to family property division is the date
that the cohabitation <u>starts</u> (not the 3<sup>rd</sup> anniversary,
meaning property entitlement back dates to the move-in date). </span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">Thus, before you move in
with your partner, you should consider whether you’re willing to have property
divided in the event of a break down of a relationship. Not only that, but keep
in mind that the <i>Act</i> introduces and subjects AIP relationships to a full
regime of property division and disclosure.</span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">Third parties (such as
parents) should also take stock of their children’s relationships being that if
it becomes an AIP relationship, it may have implications on succession or
estate plans, just like they would if their children were about to get married.</span></p>
<p class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: "Calibri",sans-serif; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-CA; mso-hansi-theme-font: minor-latin;">If you wish to discuss the
above or any of your Wills & Estates needs, please contact <a href="https://mross.com/law/People/LawyerProfile/Crista_Osualdini.cid358" target="_blank"><span style="color: blue;">Crista Osualdini</span></a>, <a href="https://mross.com/law/People/LawyerProfile/Moe_Denny.cid2177" target="_blank"><span style="color: blue;">Moe Denny</span></a>, or <a href="https://mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank"><span style="color: blue;">Michelle Fong</span></a>. As necessary
and in light of the circumstances, our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank"><span style="color: blue;">Wills & Estates team</span></a> is available to assist
you on evenings and weekends and will work to accommodate your schedule and
circumstances to ensure that you are properly prepared.</span></p>
<div style="mso-element: footnote-list;"><br clear="all" />
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</div><br />McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-18509892530660507242020-06-24T07:15:00.000-07:002020-06-25T07:36:41.687-07:00Update: Remote Witnessing and Signing of Estate Planning Documents <!--[if gte mso 9]><xml>
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<span style="font-family: inherit;"><span lang="EN-US"><b>By</b> <a href="https://www.mross.com/law/People/LawyerProfile/Sarah_Levine.cid493" target="_blank">Sarah Levine</a></span></span></div>
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<br /></div>
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<span style="font-family: inherit;"><span lang="EN-US">On June 18, 2020, the Government of
Alberta introduced Bill 24, the <i>COVID-19 Pandemic Response Statutes
Amendment Act, 2020</i> (“<b>Bill 24</b>”). In <a href="https://www.mross.com/law/Firm/Publications/Email_Alerts/A_Wrench_in_the_Ability_to_Witness_Wills_Remotely.cid2590" target="_blank">our news release of May 27, 2020</a><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622&useLegacyBlogger=true#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span lang="EN-US" style="font-size: 12pt;"></span></span></span></span></a>,
we highlighted a concern that had arisen in the provisions of Ministerial Order
39/2020 (“<b>M.O.</b>”). The M.O. authorized the remote witnessing of Wills, Enduring
Powers of Attorney, and Personal Directives in light of the COVID-19 pandemic
where public health recommendations for social distancing placed significant
restrictions of the ability of lawyers to meet with their clients to execute
their estate planning documents in person. Once put into practice, it came to
light that the M.O. would not authorize the execution of Wills in counterpart. </span></span></div>
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<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">This issue has been addressed by the introduction
of Bill 24, which amends several pieces of provincial legislation, chief among
them the <i>Personal Directives Act</i> RSA 2000 cP-6, the <i>Powers of
Attorney Act</i> RSA 2000 cP-20, and the <i>Wills and Succession Act, </i>SA
2010 cW-12.2. These amendments define “deemed presence”, stating that persons
are deemed to be in each other’s presence while connected by an electronic
method of communication in which they are able to see, hear and communicate
with each other in real time. Once Bill
24 is passed, it will be possible to execute estate planning documents remotely
in Alberta utilizing video conferencing. </span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;">
<span lang="EN-US" style="font-size: 12pt;">The <a href="https://www.mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills and Estates team </a>at McLennan Ross LLP are well-equipped to advise clients on their estate
planning needs, as well as to meet remotely to execute estate planning
documents safely during the COVID-19 pandemic. </span></span>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-22011485743722263332020-06-23T14:06:00.001-07:002020-06-23T14:06:59.490-07:00Personal Representatives – Notice Obligations<b>By <a href="https://mross.com/law/People/LawyerProfile/Lydia_Roseman.cid2571" target="_blank">Lydia Roseman, Student-at-Law</a></b><br />
<b><br /></b>
<br />
<div class="MsoBodyText">
<span lang="EN-US">This post seeks to answer the following questions:
who must a personal representative<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Executor%20notice%20blog%20post%204130-4579-0757%20v.2.docx#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[i]</span></span><!--[endif]--></span></span></a>
give notice to? When must notice be given? What must be included in that
notice?<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">There are a number of groups of people
that may be entitled to notice before a personal representative distributes the
assets of an estate. These notice requirements arise in a number of different
pieces of Alberta legislation meaning it can be challenging to figure out
exactly who you, as personal representative, must give notice to.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Exactly who is entitled to notice, and
what the notice looks like, can also vary depending on whether you are acting
with or without a grant. When the personal representative applies for a grant
of probate or administration, there are strict rules governing the form of
notice provided to the interested parties. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">A personal representative may be acting
without a grant of probate or administration in a couple situations. For example,
if the deceased held all their assets jointly with another person, such as
their spouse, it may be that all their assets automatically transferred to that
other person. In that case, there may be no assets to administer and therefore
no need for a court order formally granting the representative the authority to
deal with assets. If all of the assets are held in cash or in bank accounts in
fairly small denominations, again the personal representative may be able to access
and distribute those assets without a grant (the bank may, however, require a
bond of indemnity before they release the funds).<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Where, however, you are dealing with an
organization that requires a formal authorization to access the assets, for
example the land titles office for real property, you will need a grant of
probate or administration. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Below, this article addresses each group
of people that may be entitled to notice and what that notice will look like,
with or without a grant. As a starting point, notice must generally be given to
anyone who is a beneficiary or who may have rights under the <i>Wills and
Succession Act </i>(<i>WSA</i>) or the <i>Family Property Act </i>(<i>FPA</i>)
(formerly known as the <i>Matrimonial Property Act</i>).<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Following that is a discussion of a
couple of special cases that may further complicate the notice requirements.
The post ends with a discussion of the potential consequences on a personal
representative of non-compliance. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Beneficiaries <o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>No
Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Anyone who is entitled to a specific gift
or a share of the residue of the estate is a beneficiary and must be given
notice. This notice must be given even if there are no assets<i> </i>in the
estate. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The current notice requirements state
that the notice must: <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">Identify the deceased.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">Provide the name and contact
information of the personal representative.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">Describe the gift left to the
beneficiary in the will or the applicable provisions of the <i>WSA</i> or <i>Intestate
Succession Act</i>.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">Provide the date of the
testator’s<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Executor%20notice%20blog%20post%204130-4579-0757%20v.2.docx#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[ii]</span></span><!--[endif]--></span></span></a>
will.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">If the beneficiary is a residual
beneficiary, provide a copy of the will. <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">State that any gift is subject
to the prior payment of the testator’s debt.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The notice may be given using the Court’s
Form NGA 1. While the form of notice is flexible when acting without a grant,
we recommend using the Court’s recommended forms as a starting point. Using
these standard forms will save time and help ensure you provide the required
information to the individual. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>Grant
<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">All the beneficiaries under the will must
be identified on form NC 6 which is included in the application for the grant
of probate or administration with will annexed. The correct form of notice to
be given to those beneficiaries will depend on what the beneficiary is
receiving under the will. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If an individual is entitled to a
specific gift, such as a piece of property, notice is given in Form NC 20. This
notice includes a description of the specific gift to the beneficiary. If the
specific gift is no longer within the estate, for example if the piece of property
was sold prior to the testator’s death, then the beneficiary does not need to
be notified. You will, however, need to make a note in the grant application
that the gift no longer exists. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If the beneficiary is entitled to a share
in the residue of the estate, use Form NC 19 instead. The main difference is
that this form requires that you attach a copy of the application for the
grant, including a copy of the entire will and a list of the estate’s assets
and debts. The reason that a residual beneficiary is entitled to a copy of the will
and the list of assets and debts is because they need to have enough
information to know what their “residual gift” actually includes. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If there is no will, that is the deceased
died intestate, you must still give notice to the “heirs” of the estate. This
notice is completed via Form NC 21. The personal representative must identify
the share of the estate that will be distributed to the heir under the <i>WSA</i>.
In this situation, we suggest that you obtain legal advice to help you
determine who the heirs are and what they are entitled to.<o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Spouses and Adult Interdependent
Partners<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>No
Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Notice to a spouse or adult
interdependent partner (AIP) will usually be provided under the beneficiary
section above. However, there may be additional information that must be
provided. If the spouse or AIP is <i>not </i>the sole beneficiary under the
will, notice must be given to the individual of his or her rights under the <i>WSA
</i>and <i>FPA</i>. This essentially provides notice to the spouse or AIP that
there is a possibility they may have a claim to more of the testator’s estate. Forms
NGA 2 and NGA 3 can be used for this notice.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If the spouse or AIP is a dependent or
represented adult, instead send the notice to the individual’s trustee or
attorney using Form NGA 4. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">As above when acting without a grant, if
the spouse or AIP is not the sole beneficiary under the will, there are
additional notice requirements. The applicant for the grant must serve on the
individual a copy of the application for the grant, Form NC 23 outlining their
rights under the <i>WSA</i>, and Form NC 22 outlining their rights under the <i>FPA</i>.
<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Where the spouse or AIP is a dependent or
represented adult, the notice must be served upon the attorney or trustee,
still using Forms NC 22 and NC 23.<o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Children <o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>No
Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">A child of the testator is not
automatically entitled to notice. Only a child who meets the definition of a
“family member” must be notified. Children born inside and outside the marriage
are treated the same. A child will qualify as a “family member” if he or she
is: <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">under 18 years of age
(including in the womb);<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">over 18 and unable to earn a
livelihood by reason of mental or physical disability; or<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">between 18 and 22 and a student
under his parents’ charge. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Where a child of the testator falls into
one of these categories, notice must be provided to the child referring them to
their rights under the <i>WSA</i>. This notice may be in Form NGA 2. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">This notice will instead be served on the
child’s guardian if he or she is a minor, or on the child’s attorney or trustee
if he or she is unable to earn a livelihood due to mental disability. In these
cases, additional notice must also be provided which can be in Form NGA 4.
Where the child is a minor, notice must also be served on the Public Trustee
and can be in Form NGA 4. Note that the notices in both Form NGA 4 and NGA 2
must include a copy of the will. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The same definition of “child” applies
where the personal representative applies for a grant; therefore, the same
categories of children are entitled to notice. Those children (or their
guardians, trustees, or attorneys) must be given notice of their rights under
the <i>WSA </i>and a copy of their grant application. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Where the child is under 18 (including in
the womb), the notice is given to both the Public Trustee (Form NC 24.1) and
the child’s guardian (Form NC 24). If the child is over 18 and unable to earn a
livelihood by reason of physical disability, or falls into the student
category, Form NC 24 is served directly on the child. Finally, if the child is
over 18 but unable to earn a livelihood due to mental disability, Form NC 24
must be served on the child’s attorney and/or trustee. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Grandchildren and Great-Grandchildren <o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>No
Grant<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If the deceased stood in the place of a
parent to a grandchild or great-grandchild who was a minor on the date of
death, notice must be sent to the guardian of the grandchild or
great-grandchild (Form NGA 2) and the Public Trustee (Form NGA 4). <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="mso-tab-count: 1;"> </span><i>Grant
<o:p></o:p></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i><br /></i></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If the testator had a grandchild or
great-grandchild in the position described above, notice must be served on the
guardian of the grandchild or great-grandchild (Form NC 24) and on the Public
Trustee (Form NC 24.1). <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Special Cases<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><span style="mso-tab-count: 1;"> </span>Separated
AIP or separated or divorced spouse<o:p></o:p></span></i></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><br /></span></i></div>
<div class="MsoBodyText">
<span lang="EN-US">If a spouse was separated from the
deceased but not yet divorced, that spouse is still entitled to the notice as
described above. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If an AIP recently separated from the
deceased, or a spouse recently divorced the deceased, that individual may still
be entitled to notice. A surviving ex-spouse or former AIP is entitled to
notice of their rights under the <i>FPA </i>so long as the individual could
have brought a family property division application immediately before the
deceased passed. These timelines can be quite complicated but generally this means
that if the deceased divorced a spouse in the last two years, or lived with an
AIP in the last 3 years, that individual may be entitled to notice. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Also note that it is possible for a
testator to have both a spouse and an AIP, or two spouses, falling within the
notice provisions. This could occur, for example, where a spouse and the
deceased were separated and the deceased lived with an AIP, or where the deceased
was divorced and remarried within two years of his or her death. When this type
of situation occurs, notice must be served on both individuals. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If you are handling an estate with former
spouses or AIPs, we recommend seeking legal advice to ensure you properly
fulfill your obligations to these individuals.<o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><span style="mso-tab-count: 1;"> </span>What
if an individual entitled to notice is deceased?<o:p></o:p></span></i></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><br /></span></i></div>
<div class="MsoBodyText">
<span lang="EN-US">For example, if a beneficiary in the will
is deceased, but the gift has not lapsed, that beneficiary may still be
entitled to notice. The notice must generally be provided to the personal
representative of the estate, either appointed or listed in the will. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If there is a will but no personal
representative, consider contacting the Public Trustee to see if it would be
willing to apply for a grant of administration or act as administrator for the
deceased beneficiary. If the deceased beneficiary did not have a will but you
know who the heirs are under intestacy rules, it is a good idea to give notice
to the beneficiary’s heirs. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">In this situation, you can also apply to
the Court for direction on how you should proceed. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><span style="mso-tab-count: 1;"> </span>What
if an individual owed notice is missing?<o:p></o:p></span></i></div>
<div class="MsoBodyText">
<i><span lang="EN-US"><br /></span></i></div>
<div class="MsoBodyText">
<span lang="EN-US">You cannot serve notice on an individual
if you cannot find them. What happens then? The personal representative must
make all efforts to find the individual. If the individual cannot be found, the
personal representative must apply to declare the person missing under the <i>Public
Trustee Act</i>. Once the individual is declared missing, any required notice
must be sent to the Public Trustee.<b><o:p></o:p></b></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">When should you give notice?<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">There is no specific legislated timeline
for sending notice to beneficiaries, spouses, and other family members
mentioned above. That being said, the personal representative cannot obtain a
grant of probate or administration, or distribute the assets of the estate,
until notice has been given.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">We recommend providing notice as soon as
possible. To do so, the personal representative must have located the will (if
it exists), assessed the testator’s assets and debts, and identified all the
beneficiaries and family members. If the personal representative will be
applying for a grant, the application will need to be completed so that a copy
can be included in the notices. Once these steps are complete, the notices
should be sent. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">How should you give notice?<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">A personal representative applying for a
grant must be able to prove that notice was served on the required parties (or
their lawyers). This is easiest to do by using registered mail. This will
provide confirmation of delivery that can readily be provided to the Court. You
can also personally serve someone, that is hand deliver to them yourself, and
then swear that you did so in an affidavit. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Finally, the party required to be served
can acknowledge their receipt of the documents. When applying for a grant, this
acknowledgement can be contained in Form NC 2 or on the bottom of the notice.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">When acting without a grant, it is a good
idea to still follow one of these steps so that you are able to prove service
if you ever need to in the future. <o:p></o:p></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Effect of Non-Compliance<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">If a personal representative fails to
provide the required notice, the Court has the discretion to:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.9pt; margin-right: 0in; margin-top: 6.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">order the personal
representative to provide the notice;<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.9pt; margin-right: 0in; margin-top: 6.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">impose conditions on the
personal representative;<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.9pt; margin-right: 0in; margin-top: 6.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">remove the personal
representative;<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.9pt; margin-right: 0in; margin-top: 6.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">revoke a grant; and<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.9pt; margin-right: 0in; margin-top: 6.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">make any other order it
considers appropriate.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Importantly, personal representatives are
also considered to be trustees within Alberta’s <i>Trustee Act </i>and are in a
fiduciary relationship with the beneficiaries. Breaches of fiduciary
obligations can lead to serious, personal consequences. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">If you are ever in doubt about the
required notices, consider retaining a lawyer. The estate will usually pay the
legal fees associated with this advice. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates">Wills &
Estates</a> team would be happy to help you with any issues that may arise
during your time as a personal representative. <o:p></o:p></span></div>
<div style="mso-element: endnote-list;">
<!--[if !supportEndnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="edn1" style="mso-element: endnote;">
<div class="MsoEndnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Executor%20notice%20blog%20post%204130-4579-0757%20v.2.docx#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[i]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> For ease of reading, I use the term personal representative and do
not differentiate between an executor and an administrator. In general terms,
the personal representative named in a will is an executor. When there is no
valid will or where the will fails to name a personal representative, the
acting personal representative is called an administrator. <o:p></o:p></span></div>
<div class="MsoEndnoteText">
<span lang="EN-US"><br /></span></div>
</div>
<div id="edn2" style="mso-element: endnote;">
<div class="MsoEndnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Executor%20notice%20blog%20post%204130-4579-0757%20v.2.docx#_ednref2" name="_edn2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[ii]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> A testator is a person who has written and executed a will.<o:p></o:p></span></div>
</div>
</div>
<b></b>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-13847823622407843092020-05-29T10:02:00.001-07:002020-06-04T15:19:06.146-07:0085 is the New 71 – The Advanced Life Deferred Annuity<b>By <a href="https://mross.com/law/People/LawyerProfile/Lydia_Roseman.cid2571" target="_blank">Lydia Roseman, Student-at-Law</a> and <a href="https://mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a></b><br />
<div>
<b><br /></b></div>
<div>
<div class="MsoBodyText">
<span lang="EN-US">While the proposed legislation states that the ALDA will be deemed to have come into effect on January 1, 2020, some industry professionals suspect that it will not come into force until next year. We will update this article once such legislation is enacted.</span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Budget 2019 proposed a new type of
annuity, the advanced life deferred annuity (<b>ALDA</b>), to provide greater
flexibility to Canadians managing their retirement savings.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">When individuals contribute to registered
plans, such as a registered retirement savings plan (<b>RRSP</b>), the amounts
contributed are tax-deferred until the funds are withdrawn out from the plan.
Generally, these are considered “retirement savings” because it is expected
that you do not withdraw them until after you have retired. The benefit of
waiting is that people are usually in a lower tax bracket after retirement.
However, not everyone wants to start withdrawing funds (and being taxed on such
funds) immediately after retirement. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The most common example is an RRSP. An
RRSP “expires” in the year that the owner turns 71. The owner’s options are to:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 39.05pt; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">withdraw all the funds from the
RRSP; <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 39.05pt; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">convert it to a registered
retirement income fund (<b>RRIF</b>); or <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 39.05pt; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US">use the funds to buy some other
annuity.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">A full withdrawal means all the funds are
included in the owner’s taxable income. Alternatively, at the moment, an RRIF
and most other annuities purchased using registered funds will generally require
minimum annual withdrawals (taxable) by you by the end of the year you turn 71.
The proposed ALDA (a new annuity) will instead allow you to defer the start of withdrawals
until the end of the year you turn 85. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">This change can mean a valuable tax deferral
for individuals who do not need or want to draw down their registered funds
between the ages of 71 and 85. Those individuals can continue to hold some of
these funds <i>tax free</i> for an additional 14 years.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The ALDA is also a great tool for
longevity planning. By purchasing an ALDA, you ensure that there are funds
available to support you in your (much) later years.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Things to Know<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">The ALDA is currently designed to have come into effect on January 1,
2020.* It will be available for purchase under an RRSP, RRIF, deferred profit sharing
plan, pooled registered pension plan (<b>PRPP</b>), or a defined contribution
registered pension plan (<b>RPP</b>). An ALDA will also be a “qualified investment”
for a trust governed by an RRSP or RRIF.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">There are, however, a couple limits on
the amount of an ALDA that an individual can purchase. There is a lifetime
dollar limit of $150,000 (indexed to inflation) and a lifetime limit of 25% of
any particular qualifying plan. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">These limits apply at the time of purchase
meaning that any subsequent devaluation of assets held by a plan and
corresponding reduction in the lifetime ALDA limit will <i>not </i>lead to a
surrender of the excess amount. That means it is best to purchase an ALDA when
the assets in your qualifying plan are at their peak value to ensure maximum
contribution to the ALDA and therefore maximum tax deferral. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The value of the ALDA will be <i>excluded</i>
in calculating the minimum amount that must be withdrawn in a year from a RRIF,
PRPP or defined contribution RPP. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">The tax benefits are two-fold. First, you
may defer the taxes of up to 25% or $150,000 of your funds held in a registered
plan until you are 85. Second, by excluding the value of the ALDA from the
RRIF, PRPP, or defined contribution RPP minimum calculation, the regular payments
out of these funds/plans will therefore be lower meaning <i>even more</i> tax
savings between the ages of 71 and 85.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Non-Compliance<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">Any purchases of ALDA contracts beyond an
individual’s limit will attract a tax of 1% per month on the excess amount.
However, all or a portion of this penalty may be waived if the purchaser
establishes that the overcontribution was a reasonable error and the excess
amount is repaid to the registered fund it was taken from by the end of the
following year. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">A <i>non-compliant</i> ALDA contract will
be considered a non-qualifying annuity purchase or a non-qualified investment
for tax purposes. This may mean an immediate tax liability.<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">It is very important that you receive
advice and purchase an ALDA through an appropriate institution. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Conclusion<o:p></o:p></span></b></div>
<div class="MsoBodyText">
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoBodyText">
<span lang="EN-US">The ALDA is a great new tool for tax
deferral and longevity planning. If done right, it can mean substantial tax reduction
between your 71<sup>st</sup> and 85<sup>th</sup> years. But, if done wrong, it may
lead to immediate negative tax consequences. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US">Our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates">Wills &
Estates team</a> would be happy to help you incorporate the use of an ALDA into
your succession plan and estate plan. Please contact our office. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US"><i>*The legislation implementing the ALDA
has not yet been enacted. As drafted, the changes will be deemed to have come
into force on January 1, 2020.</i><o:p></o:p></span></div>
<b></b></div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com1tag:blogger.com,1999:blog-5832875178780555622.post-27759707693208868102020-05-26T15:41:00.001-07:002020-05-26T15:41:53.576-07:00Timeline of an Estate: Tax and Other Considerations<b>by <a href="https://mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a></b><br />
<br />
<br />
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Being
entrusted to be an Executor is an honour – it means that the deceased believes
that you are the best suited person to manage and care for their estate.
However, the position also comes with legal responsibilities and liabilities.
The “job” of an Executor can last from a year or more, with or without
contentious beneficiaries. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">The Executor
has many duties. This article focuses the notable deadlines and timelines. The
“Administering the Estate” timeline focuses on the Grant of Probate process (if
there is no Will, it is called a Grant of Administration). The “Tax” timeline
focuses on what needs to be done at what point to alleviate the tax burden of
the estate. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">ESTATE
ADMINISTRATION TIMELINE</span></u></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><o:p></o:p></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Broadly
speaking, in administering an estate, the Executor’s role is to gather the
assets of the estate, protect them, ensure debts are paid, then distribute the
assets. It seems simple enough. However, there are certain events and their
timing that should be considered.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">A Notice to
Claimants may be published in the local newspaper. </span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">The Executor is responsible for ensuring debts of the estate are
paid <u>before</u> they distribute the assets to the beneficiaries. This notice
“starts the clock” for any claimants who are owed money from the estate – they
must contact the Executor within 30 days and formalize their claim.<span style="mso-spacerun: yes;"> </span>After the 30 days, the Executor can move
forward with the estate without worrying about claimants coming out of the
woodwork. The Executor can be held personally liable if they distribute the
estate to beneficiaries before ensuring all debts are paid. <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Apply for a
Grant of Probate (or Administration)</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">. There is no “deadline” for applying for a Grant of Probate (or
Administration) but certain institutions may refuse to acknowledge an
Executor’s authority until a Grant of Probate is obtained. This may make it
difficult to deal with the estate assets and debts without a Grant of Probate.</span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[1]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> It takes time to compile the information for
an application for the Grant and, once it is submitted to the Court, it can
take 4-5 months to be processed. This is also assuming that no one contests the
application. <o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Family
Maintenance and Supports claims<i>.</i> </span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">After the Grant of Probate is obtained, a family member</span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[2]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">, as legislatively defined, will have 6
months from the date of the Grant to make a family maintenance and support
claim from the Estate. The basis of the claim is that the deceased failed to
make adequate provision for the proper maintenance and support of the family
member. If the Executor distributes the estate assets prior to this 6-month
deadline (or prior to the matter being settled, if a claim is lodged), then the
Executor will be personally liable to the family member for the estate assets
they are found to be entitled to.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Final
Clearance Certificate</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">. The
Executor is responsible for ensuring debts of the estate are paid <u>before</u>
they distribute the assets to the beneficiaries. One major debt of the estate is
tax. After filing the terminal tax return and receiving the Notice of
Assessment, the Executor should pay taxes owed and then apply for a final
Clearance Certificate (if the Estate is designated as a graduated rate estate
(see below), then the final Clearance Certificate is applied for when the
Estate is almost ready to distribute). This Certificate is the CRA’s
confirmation that all taxes have been paid. The Certificate may take 1 to 1.5
years to be issued. If the Executor distributes the estate prematurely, they
will be personally liable for any taxes that are found still owing. It is
recommended to wait until after the receipt of the final Clearance Certificate
before distributing assets to beneficiaries. For more info, see </span><span lang="EN-US"><a href="http://willsandestateslawblog.blogspot.com/2020/01/tax-obligations-of-estate-and-executor.html"><span style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">here</span></a></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">.<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Accounting</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">. <span style="mso-spacerun: yes;"> </span>Accounting is a very important task.<span style="mso-spacerun: yes;"> </span>The Executor must provide an accounting to
the beneficiaries every two years of their management of the Estate assets.<span style="mso-spacerun: yes;"> </span>The law requires this accounting to take a
particular form, so it is best to seek advice from experienced counsel. The
Executor can have the accounting approved by the beneficiaries or by the Court.
<span style="mso-spacerun: yes;"> </span>By seeking this approval, the Executor’s
liability for their management of the Estate assets during the accounting
period is relieved.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Executor
compensation</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">. Executor
compensation is a priority claim against the Estate and may be paid in priority
to certain other debts. <span style="mso-spacerun: yes;"> </span>Unless the Will
expressly provides for the amount of executor compensation, compensation may
not be taken absent beneficiary or Court approval.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">7.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Distribution to Beneficiaries</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> – Once all of the debts of the Estate have
been paid and the accounting approved, either by the beneficiaries or the Court,
a distribution to the beneficiaries can occur.<span style="mso-spacerun: yes;">
</span><o:p></o:p></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">TAX
TIMELINES<o:p></o:p></span></u></b></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">First and
foremost, the Executor should hire a good accountant. Depending on the
complexity of the estate, a tax lawyer may also need to be brought on. As
mentioned above, taxes are usually owed by the Estate. This is because, for
one, there is a deemed disposition of all capital property upon death (capital
gains taxes incurred) and, second, any income of the deceased in the year of
death will also attract tax (e.g. interest income, employment income, etc.).<o:p></o:p></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Filing
return<o:p></o:p></span></u></b></div>
<div class="MsoBodyText">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></div>
<div class="MsoBodyText">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Terminal tax
return (Final income tax return)<o:p></o:p></span></u></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">If the
deceased died on or before October 31<sup>st</sup>, then the terminal tax
return is due April 30<sup>th</sup> of the following year. (Or, June 30<sup>th</sup>
if the deceased was self-employed).<o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">If the
deceased died after October 31<sup>st</sup>, then the terminal tax return is
due 6 months after the death. <o:p></o:p></span></div>
<div class="MsoBodyText">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></div>
<div class="MsoBodyText">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Other tax
returns<o:p></o:p></span></u></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Any returns
that the deceased was responsible for, such as corporate tax returns or trust
returns, may become the responsibility of the Executor if there are no other
directors of the corporation, or other trustees of the trust. Be aware that:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.3pt; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l4 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US"><span style="font-family: Symbol;">·</span><span style="font-size: xx-small;"> </span></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">A
corporation’s T2 return filing deadline is 6 months after its tax year-end (but
corporate taxes may be due 2 or 3 months after tax year-end).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 38.3pt; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l4 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">· </span></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">A trust’s T3
return filing deadline is 3 months after its tax year-end. Taxes are due at the
same time. <o:p></o:p></span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Elective returns<o:p></o:p></span></u></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">In addition to the regular terminal tax return filed for the
deceased, other optional returns can be filed. The benefits of filing multiple
returns is, generally, certain tax credits can be claimed on each return
(duplicating tax credits) and the income in each return will be subject to
graduated rates (duplicating the lower tax rates).<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Rights or
things return.</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> Rights or
things relate to income that the deceased was entitled to but had not yet been
paid. For example, declared but unpaid dividends, or work in progress amounts.
This return is due 1 year after death or 90 days after the Notice of Assessment
for the terminal return, whichever is later. <b><u><o:p></o:p></u></b></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span></b><!--[endif]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Income
return from proprietor (business) or partner.<i> </i></span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-spacerun: yes;"> </span>If the
deceased died after the end of the business's fiscal period but before the calendar
year-end (in which the fiscal period ended), you can file an optional return
for the deceased. This return is due at the same time as the terminal tax
return.<b><o:p></o:p></b></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Graduated
Rate Estate (GRE) return. </span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Discussed
below. To be treated as a GRE, the Executor must designate the estate to be a
GRE in a T3 trust return. The first GRE return is due at the same time as the
terminal tax return. Subsequent returns are due in accordance with the T3
deadlines (3 months after tax year-end).<span style="mso-spacerun: yes;">
</span><b><o:p></o:p></b></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">For more
information on optional returns, see the CRA site </span><span lang="EN-US"><a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/what-when-someone-died/optional-returns.html"><span style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">here</span></a></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">.<o:p></o:p></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Graduated
Rate Estate<o:p></o:p></span></u></b></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">An estate is
considered a trust for tax purposes. Subject to certain exceptions, trusts are
taxed at the highest marginal rate. However, a GRE allows the estate to be
taxed at graduated rates instead and they have more flexible donation rules. <u>Also,
in order to avail the estate to certain tax elections and options, the shares
of private corporation must be held by a GRE (discussed below)</u>. <o:p></o:p></span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">An estate must be designated as a GRE. In order to qualify as a
GRE, the following criteria must be satisfied during the entire duration of the
GRE:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo5; mso-text-indent-alt: -.25in; page-break-after: avoid; text-align: justify; text-indent: -.75in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>i.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">the estate
arose on and as a consequence of the individual’s death no more than 36 months
after the death;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>ii.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">the estate
is at that time a testamentary trust;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>iii.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">the
deceased’s Social Insurance Number is provided in the estate’s Trust Return for
each taxation year of the estate during the 36-month period after the death of
the deceased;<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l1 level1 lfo5; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.75in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>iv.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">the estate
designates itself as GRE of the individual in its Trust Return (GRE Return) for
tax year of death; and<o:p></o:p></span></div>
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<!--[if !supportLists]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";">
</span>v.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">no other
estate designates itself as the GRE of the deceased.</span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[3]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">A GRE, and
its preferential tax treatment, will only last up to 36 months from death. It
can be terminated earlier if it distributes all assets, or if the estate no
longer satisfies all the above requirements. <o:p></o:p></span></div>
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<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
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<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Corporations:
Options to avoid double taxation<o:p></o:p></span></u></b></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">If the
deceased owned shares in a private corporation at death, then there may be
double taxation (tax at the deemed disposition at death, and tax upon extracting
the funds from the corporation to pay the beneficiaries). There are certain
strategies to avoid this double taxation.<span style="mso-spacerun: yes;">
</span>The two most common are:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Loss
Carryback 164 Election. </span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">The deemed
disposition at death will increase the adjusted cost base of the shares to fair
market value. The Estate (GRE) then redeems the shares in the corporation,
creating a deemed dividend and a capital loss. This capital loss is then
carried back to net against the capital gain at death. The 164 election to
carryback the capital loss must be included on the terminal return, meaning <u>this
option must be completed within 1 year after death</u>.<b><o:p></o:p></b></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-bidi-font-family: Cambria; mso-bidi-theme-font: major-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Pipeline
(post-mortem).</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> A pipeline
requires a new corporation to be created (NewCo) in addition to the private
corporation already owned by the deceased (PrivCo). The NewCo will acquire the
shares of the PrivCo from the Estate (GRE) in exchange for a promissory note or
preferred shares. Later on, NewCo will then use the assets originally in PrivCo
to pay off the promissory note. <span style="mso-spacerun: yes;"> </span>The is
no “deadline” for this transaction but there is a timeline. The NewCo and
PrivCo must exist for at least 1 year (we recommend longer, such as 3 years). The
assets should not be distributed to the beneficiaries until after the 1-3-year
period. Therefore, it is better to start this process sooner than later. <b><o:p></o:p></b></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Both options
are complex and carry risks and benefits. The above explanations are very
generalized overviews. The risk of double taxation, and the complexity
associated with avoiding it, <u>means a tax practitioner should always be
consulted as soon as possible if an estate includes shares of a private
corporation.<o:p></o:p></u></span></div>
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<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Rollovers:
Spouse and Farm or Fishing Property<o:p></o:p></span></u></b></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Upon death,
the deceased is deemed to have disposed all his or her capital property at fair
market value. This will often trigger tax for capital gains and recapture (if depreciable
property). <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">However,
there are two main exceptions where the property is deemed to be transferred at
cost instead:<o:p></o:p></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l5 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-style: italic; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Rollover to a spouse, common-law partner, or
qualified spousal trust.</span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> To qualify
for this rollover, the property must vest indefeasibly in the spouse,
common-law partner or trust within 36 months after death. The “default” rule is
that the transfer will occur at cost if it qualifies (no election required) but
the Executor may <i>elect out</i> of this default rule and the transfer will
then occur <i>at fair market value.<o:p></o:p></i></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l5 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Rollover of
farm or fishing property from parent to child. </span></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">To qualify for this rollover, the property must be qualified farm
and fishing property</span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[4]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">, the recipient child must be a Canadian
resident immediately before the deceased died, the property must have
transferred to the child as a consequence of the deceased’s death, and the
property must vest indefeasibly in the child within 36-months after death. The
“default” rule is that the transfer will occur at cost (no election required) but
the Executor may <i>elect</i> to have the transfer occur <i>at any value between
cost and fair market value.</i> <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">In both
exceptions, it is possible for the Executor to elect for the transfer to occur <u>not
at cost</u>. This is usually done to trigger capital gains tax which can then
be offset with the deceased’s lifetime capital gains exemption. For the capital
gains exemption to apply, the property must be eligible property and the
deceased must still have a capital gains exemption balance at death.</span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[5]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">, </span><a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 10.0pt; mso-hansi-theme-font: major-latin;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Cambria",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-hansi-theme-font: major-latin;">[6]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><o:p></o:p></span></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></u></b></div>
<div class="MsoBodyText">
<b><u><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">CONCLUSION</span></u></b><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Acting as
Executor can be time-consuming, onerous and complicated. This article aims to highlight
the deadlines that must be met and to demonstrate that administering an Estate
can take a long time, even for the most organized. Therefore, it is generally
better to start earlier than later. <o:p></o:p></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"><br /></span></div>
<div class="MsoBodyText">
<span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">The McLennan
Ross </span><span lang="EN-US"><a href="https://mross.com/law/Practice_Areas/Wills_and_Estates"><span style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Wills & Estates Group</span></a></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> and </span><span lang="EN-US"><a href="https://mross.com/law/Practice_Areas/Tax"><span style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;">Tax Group</span></a></span><span lang="EN-US" style="font-family: "Cambria",serif; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> would be happy to assist you in dealing with
your Executor’s duties as well as the various tax issues that may apply to the
estate. Please contact our office.<o:p></o:p></span></div>
<div style="mso-element: footnote-list;">
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<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> A Grant of Probate will usually be required for dealing with bank
accounts exceeding a certain amount and for any land transfers. <o:p></o:p></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[2]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> Family members include spouses, adult interdependent partners,
minor children and dependent adult children.<o:p></o:p></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[3]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> This means that any testamentary trusts or insurance trusts also
resulting from the death of the deceased cannot be designated as a GRE. There
can only be one GRE per deceased person. <o:p></o:p></span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[4]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> There are certain requirements to qualify as farm and fishing
property, such as the property must be used principally (50%+) for farming or
fishing, and that the taxpayer (or certain family members) have been engaged
actively and continuously in the farming or fishing. The requirements are quite
technical and may be complex in their application, so we recommend a tax
practitioner confirm the property qualifies before attempting to take advantage
of this rollover.<o:p></o:p></span></div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[5]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> Note, paragraph 110.6(14)(g) of the Income Tax Act gives some
relief. So long as the relevant corporation met the test for “small business
corporation” at any time in the preceding 12-months prior to death, then the
shares are deemed to be “qualified small business corporation shares”.<span style="mso-spacerun: yes;"> </span>The definition of “small business
corporation” is under subsection 248(1) and requires the corporation to be a
Canadian-controlled private corporation with certain criteria met. Again, the
requirements are quite technical and may be complex in their application, so we
recommend a tax practitioner confirm the property qualifies before attempting to
take advantage of the exemption.<o:p></o:p></span></div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/bdavis/Documents/ndEcho/EU-DXNSM8S8/Timeline%20of%20an%20estate%20-%20tax%20and%20other%20considerations%204151-4655-1076%20v.2.docx#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 8.0pt; mso-ansi-language: EN-US; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[6]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> Note, claiming certain losses will decrease the balance of the
lifetime capital gains exemption of a person. <o:p></o:p></span></div>
</div>
</div>
<br />McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-33360443760666646582020-05-25T12:45:00.000-07:002020-05-26T15:36:05.383-07:00New Trust Reporting Requirements: It’s Almost Time<span style="font-family: inherit;"><span lang="EN-US">By <a href="https://www.mross.com/law/People/LawyerProfile/Lydia_Roseman.cid2571" target="_blank">Lydia Roseman, Student-at-Law</a> and <a href="https://www.mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a></span></span><br />
<div class="MsoBodyText">
</div>
<div class="MsoBodyText">
<br />
<span style="font-family: inherit;"><span lang="EN-US">Budget 2018 announced, and Budget 2019
confirmed, that trust reporting requirements are changing in 2021. While it may
have felt far away at the time, 2021 is now almost upon us. If they have not
already, it is time for trustees to start thinking about the implications of
these changes. They need to ask themselves, are the benefits of a trust worth
the effort and risks?</span></span></div>
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"></span><b><span style="font-family: inherit;"><span lang="EN-US">The new reporting requirements</span></span></b><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><u><span lang="EN-US"><br /></span></u></span></div>
<span style="font-family: inherit;"><span lang="EN-US">The proposed changes primarily affect
express trusts, that is trusts created by specific intent, usually in writing. As
it stands right now, these trusts are generally only required to file if
certain circumstances arise during the taxation year, for example if the trust
earns income, disposes of capital property, or makes distributions to
beneficiaries. In other words, if nothing changes for the trust then nothing is
reported. </span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">Starting in 2021, except for a few
specifically exempted types of trusts (such as mutual fund trusts or trusts
that qualify as registered charities), express trusts resident in Canada must:</span></span><br />
<span style="font-family: inherit;">
</span><br />
<ol>
<li><span style="font-family: inherit;"><span lang="EN-US"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"></span></span></span><span lang="EN-US">file income tax returns
annually in the form of a T3 Trust Income Tax and Information Return (T3);</span></span></li>
<li><span style="font-family: inherit;"><span lang="EN-US"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"></span></span></span><span lang="EN-US">report all the settlors,
trustees and beneficiaries of the trust; and</span></span></li>
<li><span style="font-family: inherit;"><span lang="EN-US"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"></span></span></span><span lang="EN-US">identify any persons who exert
control over the trustee’s decisions concerning income and capital
(“protectors”).</span></span><span style="font-family: inherit;"><span lang="EN-US"> </span></span></li>
</ol>
<span style="font-family: inherit;">
</span><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><span lang="EN-US">This new information will be filed as a
new schedule (yet to be released) with the T3. The information reported on the
settlors, trustees and beneficiaries includes each individual’s taxation
identification number (usually their social insurance number), birth date, address
and jurisdictions of residence.</span></span></div>
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"></span><b><span style="font-family: inherit;"><span lang="EN-US">Increased risks associated with the new
reporting requirements</span></span></b><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><u><span lang="EN-US"><br /></span></u></span></div>
<span style="font-family: inherit;"><span lang="EN-US">Failing to comply with these new
requirements can mean harsh penalties. Filings that are late or fail to provide
the required additional information are penalized $25 a day for each day the
filing is late, from a minimum of $100 to a maximum of $2,500. Additionally, if
the failure was made knowingly, or due to gross negligence, an additional
penalty of 5% of the maximum value of the trust property (minimum $2,500
penalty) will apply. </span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">Collecting this information may be an
extremely onerous process, especially where there is a broad group of
beneficiaries, so consider starting the process sooner rather than later. </span></span><br />
<span style="font-family: inherit;">
</span><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><span lang="EN-US">Further, this change could have much
further reaching implications.</span></span></div>
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">Once the CRA has this information, a
whole new set of other potential taxation issues arise. For example, the
increased availability of beneficial ownership information of corporations
means the CRA can crack down on related shareholders and associated
corporations. Theoretically, beneficiaries of trusts that they<i> did not even
know existed</i> could now be facing major tax implications from association
rules. </span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">As a result, this could impact a
trustee’s obligation to disclose the existence of a trust to beneficiaries. </span></span><br />
<span style="font-family: inherit;">
</span><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><span lang="EN-US">In <i>Valard Construction Ltd. v. Bird
Construction Co</i>, 2018 SCC 8, the Supreme Court held that a trustee’s
fiduciary duty includes an obligation to disclose the existence of a trust to a
beneficiary wherever a beneficiary would be unreasonably disadvantaged not to
be informed of its existence. While this case arose in the commercial context,
the case has already been cited for its general principles of trust law in
other contexts.</span></span></div>
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">If a court were to hold that unforeseen
tax consequences to a beneficiary taxpayer were an unreasonable disadvantage
due to not being informed of the existence of a trust, the trustee could be <i>personally
liable </i>for a breach of its fiduciary duty. </span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">Trustees should, therefore, consider
disclosing the existence of trusts now to any beneficiaries, including
discretionary beneficiaries, that are currently unaware they are beneficiaries.</span></span><br />
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"></span><b><span style="font-family: inherit;"><span lang="EN-US">Conclusion</span></span></b><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><u><span lang="EN-US"><br /></span></u></span></div>
<span style="font-family: inherit;"><span lang="EN-US">Given the above, trustees should consider
whether it would be preferable to wind up their trusts. There are many reasons,
including tax reasons, why parties will continue to use trusts. However, many
of the tax advantages of using trusts have been eliminated over the last
several years and family circumstances will have changed. Added with the hassle
and risks associated with the new reporting requirements, some trusts settled
several years ago may no longer make sense. </span></span><br />
<span style="font-family: inherit;">
</span><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><span lang="EN-US">These conversations must happen soon so
restructuring can be completed before the next taxation year begins.</span></span></div>
<div class="MsoBodyText">
<br /></div>
<span style="font-family: inherit;"><span lang="EN-US">The lawyers from the <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills and Estates Group</a> would be happy to assist you in determining whether it makes sense
to continue any trusts and/or assist with any reorganization or wind-up which
may be advisable.</span></span>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-64222411755531607692020-05-21T10:10:00.000-07:002020-05-21T13:32:52.819-07:00Electronic Signing for Wills, Personal Directives and Power of Attorneys<!--[if gte mso 9]><xml>
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<br />
<div class="MsoBodyText">
<b>by <a href="https://mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a></b><br />
<br />
<span style="font-family: inherit;">On
May 15, 2020, Ministerial Order 39/2020 was issued that allows for electronic
signing of estate planning documents under certain circumstances.
</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span style="font-family: inherit;"><b>Wills</b></span></div>
<br />
<span style="font-family: inherit;">Formal
Wills<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;">[1]</span></span></span></span></span></a> can be signed by all
parties separately if all the following criteria are met:</span><br />
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.5in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span>i.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span></span>An
active Alberta lawyer must have been involved (legal advice and services) in
regards to the Will, including the making, signing and witnessing of it; and</span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.5in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span>ii.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span></span>Witnesses
and the testator (or the person signing on behalf of the testator) all sign
while connected by an electronic method of communication where they can <u>see,
hear and communicate in real time</u>. Effectively, this means video
conferencing.</span></div>
<span style="font-family: inherit;">
</span><br />
<div class="MsoBodyText">
<span style="font-family: inherit;"><b>Personal
Directives and Powers of Attorney</b></span></div>
<span style="font-family: inherit;">Personal
Directives and Powers of Attorney can be signed by all parties separately if
all the following criteria are met:</span><br />
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.5in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span>iii.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span></span>An
active Alberta lawyer must have been involved (legal advice and services) in
regards to the personal directive or power of attorney, including the making, signing
and witnessing of it; and</span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.5in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span>iv.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span></span>Witnesses
and the maker/donor (or the person signing on behalf of the maker/donor) all sign
while connected by an electronic method of communication where they can <u>see,
hear and communicate in real time</u>. Effectively, this means video
conferencing.</span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -.5in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;"><span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span>v.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;">
</span></span>If
you choose to use the Personal Directive form set out in the Regulations
(Schedule 1), you must add the following wording at the end:</span><br />
<br /></div>
<div class="MsoBodyText" style="margin-left: 1.0in;">
<span style="font-family: inherit;">“<b>Note regarding signatures: </b>In
certain circumstances, persons are deemed to be in each other’s presence while
connected to each other by an electronic method of communication in which they
are able to see, hear and communicate with each other in real time. See section
5(1.1) and 5(1.2).”</span><br />
<br /></div>
<div class="MsoBodyText" style="margin-left: .5in;">
<span style="font-family: inherit;">However, even if you do not use the form
set out in Schedule 1, it would be prudent to include this disclosure on the
Personal Directive regardless. There is no form set out in the Power of
Attorney Act but it is also recommended to include this disclosure in the Power
of Attorney. </span></div>
<br />
<span style="font-family: inherit;"><span lang="EN-US" style="font-size: 12pt;">These electronic
signing measures are temporary and will end 60 days after the Public State of
Emergency Order lapses</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;">[2]</span></span></span></span></span></a><span lang="EN-US" style="font-size: 12pt;"> or when it is terminated by the Minister or Lt.
Governor.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
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Name="index 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="index 9"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
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<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 2"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 3"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 4"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 5"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 6"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 7"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 8"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" Name="toc 9"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="footnote text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="annotation text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="header"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="footer"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="index heading"/>
<w:LsdException Locked="false" Priority="35" SemiHidden="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="table of figures"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="envelope address"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="footnote reference"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="endnote reference"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Bullet 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="10" QFormat="true" Name="Title"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="1" SemiHidden="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="11" QFormat="true" Name="Subtitle"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="22" QFormat="true" Name="Strong"/>
<w:LsdException Locked="false" Priority="20" QFormat="true" Name="Emphasis"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Top of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Acronym"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Address"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Cite"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Code"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Definition"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Keyboard"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Preformatted"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal Table"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="39" Name="Table Grid"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" Name="Placeholder Text"/>
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<w:LsdException Locked="false" Priority="60" Name="Light Shading"/>
<w:LsdException Locked="false" Priority="61" Name="Light List"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 1"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 1"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 1"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 1"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 1"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Revision"/>
<w:LsdException Locked="false" Priority="34" QFormat="true"
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<w:LsdException Locked="false" Priority="29" QFormat="true" Name="Quote"/>
<w:LsdException Locked="false" Priority="30" QFormat="true"
Name="Intense Quote"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 1"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 1"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 1"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 1"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 1"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 1"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 1"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 2"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 2"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 2"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 2"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 2"/>
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<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 2"/>
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<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 2"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 2"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 2"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 2"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 2"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 3"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 3"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 3"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 3"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 3"/>
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<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 3"/>
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<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 3"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 3"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 4"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 4"/>
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<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 4"/>
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<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 4"/>
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<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 4"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 4"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 5"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 5"/>
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<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 5"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 5"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 5"/>
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<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 5"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 5"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 5"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 5"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 5"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 5"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 5"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 6"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 6"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 6"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 6"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 6"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 6"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 6"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 6"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 6"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 6"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 6"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 6"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 6"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 6"/>
<w:LsdException Locked="false" Priority="19" QFormat="true"
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<w:LsdException Locked="false" Priority="21" QFormat="true"
Name="Intense Emphasis"/>
<w:LsdException Locked="false" Priority="31" QFormat="true"
Name="Subtle Reference"/>
<w:LsdException Locked="false" Priority="32" QFormat="true"
Name="Intense Reference"/>
<w:LsdException Locked="false" Priority="33" QFormat="true" Name="Book Title"/>
<w:LsdException Locked="false" Priority="37" SemiHidden="true"
UnhideWhenUsed="true" Name="Bibliography"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" QFormat="true" Name="TOC Heading"/>
<w:LsdException Locked="false" Priority="41" Name="Plain Table 1"/>
<w:LsdException Locked="false" Priority="42" Name="Plain Table 2"/>
<w:LsdException Locked="false" Priority="43" Name="Plain Table 3"/>
<w:LsdException Locked="false" Priority="44" Name="Plain Table 4"/>
<w:LsdException Locked="false" Priority="45" Name="Plain Table 5"/>
<w:LsdException Locked="false" Priority="40" Name="Grid Table Light"/>
<w:LsdException Locked="false" Priority="46" Name="Grid Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="Grid Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="Grid Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 2"/>
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<![endif]--><span style="font-size: 11pt;">Our McLennan Ross
<a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills & Estates Group</a> would be happy to assist you with your Will, Power of
Attorney and Personal Directive.</span></span></span></span></span>
</span><br />
<div style="mso-element: footnote-list;">
<span style="font-family: inherit;"><br clear="all" />
</span><br />
<hr align="left" size="1" width="33%" />
<span style="font-family: inherit;">
</span><br />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<span style="font-family: inherit;"><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;">[1]</span></span></span></span></span></a><span lang="EN-US"> Holographic Wills remain effective (fully handwritten).</span><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;"> </span></span></span></span></span></span><br />
<span style="font-family: inherit;"><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8pt;">[2]</span></span></span></span></span></a><span lang="EN-US"> Order in Council 080/2020</span></span></div>
</div>
</div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-52212704656851603302020-04-23T13:32:00.000-07:002020-04-23T13:32:21.573-07:00What’s in a Name? Amendments to Alberta’s Family Property Act <b>by the McLennan Ross Wills & Estates Team</b><br />
<b><br /></b>
<br />
<div class="MsoNormal">
While the world seems to have been turned on its head these
last few months as we all adjust to the “new normal” necessitated by the
worldwide COVID-19 pandemic, there have been some non-Coronavirus related
changes made to the way property division for non-married couples is legislated
in Alberta that are worth noting.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<h4>
<b style="mso-bidi-font-weight: normal;"><u>Legislative
Changes</u></b></h4>
<div>
<b style="mso-bidi-font-weight: normal;"><u><br /></u></b></div>
<div class="MsoNormal">
The legislative framework for the way in which property
division occurs upon the breakdown of a relationship for non-married couples in
Alberta has changed drastically. In December 2018, royal assent was granted in
the provincial legislature to Bill 28, the <i style="mso-bidi-font-style: normal;">Family
Statutes Amendment Act</i>¸ 2018, SA 2018, c 18 (“<b style="mso-bidi-font-weight: normal;">FSAA</b>”). This Act set out significant amendments to Alberta’s <i style="mso-bidi-font-style: normal;">Matrimonial Property Act</i>, the act that governed
property division of married couples upon breakdown of the marriage. As of
January 1, 2020, the FSAA renamed the <i style="mso-bidi-font-style: normal;">Matrimonial
Property Act</i> to the <i style="mso-bidi-font-style: normal;">Family Property
Act </i>(“<b style="mso-bidi-font-weight: normal;">FPA</b>”). The name change is
significant as it signals a broader application of the legislation to not only
the property division of married couples, but to non-married, adult
interdependent partners as well. The FPA now provides for adult interdependent
partners to make a claim for property division within 2 years from the date the
party applying knew or ought to have known the relationship had ended. The
implications for this legislative change are potentially quite far-reaching, as
more and more couples either remain in adult interdependent relationships
without getting married or live together for a significant period of time
before getting legally married.<o:p></o:p></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Furthermore, the FPA may prove to create more confusion than
clarity, as it applies not only to property division for adult interdependent
relationships, but also for married spouses, including any time they lived
together in a relationship of interdependence <u>before</u> they were married.
Determining the exact date of cohabitation for adult interdependent
relationships, or married couples for the relevant cohabitation period before
marriage, for the purposes of division of property will likely prove to be a
difficult and nebulous exercise in many cases. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<h4>
<b style="mso-bidi-font-weight: normal;"><u>Defining Adult
Interdependent Relationships</u></b></h4>
<div>
<b style="mso-bidi-font-weight: normal;"><u><br /></u></b></div>
<div class="MsoNormal">
Part of the impetus behind the amendments to the FPA was to
help those in committed relationships outside of traditional marriage to divide
their property. The amendments now provide adult interdependent partners (“<b style="mso-bidi-font-weight: normal;">AIPs</b>”) with the same property division
rights and rules as married couples.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
An AIP is defined in Alberta’s <i style="mso-bidi-font-style: normal;">Adult Interdependent Relationships Act</i>, SA 2002, c A-4.5 (“<b style="mso-bidi-font-weight: normal;">AIRA</b>”) as two individuals who live
together in a relationship of interdependence:<o:p></o:p></div>
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<ul>
<li>for a continuous period of at least 3 years;</li>
<li>of some permanence (and less than 3 years) if
the couple has a child together, or</li>
<li>who have entered into an adult interdependent
partner agreement.</li>
</ul>
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While many use the colloquial term “common law” interchangeably
with AIPs, the two terms do not bear the same legal meaning and implications.
The AIRA specifically uses the terms “adult interdependent partner” or “adult
interdependent relationship” to describe a non-married couple who are in a
relationship with the above attributes. Common law is a not a term legally
employed in Alberta, and furthermore, can actually have an entirely different
legal meaning than AIPs. For instance, in the federal <i style="mso-bidi-font-style: normal;">Income Tax Act</i>, if two people live together for a period of <u>1
year</u> (as opposed to 3 years under the AIRA), they are considered common law
partners for income tax purposes<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The AIRA sets out the following factors to consider when
determining whether two people function as an “economic and domestic unit” such
that they can be considered AIPs. These factors include:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="line-height: 150%; mso-list: l1 level1 lfo2; text-indent: -.25in;">
</div>
<ul>
<li>the exclusivity of the relationship;</li>
<li>how they behave when it comes to household
activities and living arrangements;</li>
<li>how they represent themselves to others as an
economic and domestic unit;</li>
<li>the contributions they make to each other or
their mutual well-being;</li>
<li>the degree of financial dependence or
interdependence between them;</li>
<li>the care and support of children, if any; and</li>
<li>the ownership and use of property.</li>
</ul>
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<o:p></o:p></div>
<div class="MsoNormal">
AIPs can still dictate the terms of their own property
division to be different from the default property division rules set out in
the FPA by entering into a Cohabitation Agreement, which sets out the
cohabiting parties’ obligations to each other, such as their roles in the
relationship, any child support or child custody issues, property division,
mortgage or rent payments, and life insurance policy designations.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Unlike a marriage, there are no formal proceedings akin to a
divorce that terminate an adult interdependent relationship. Instead, the
relationship ends upon the occurrence of any one of the following:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
</div>
<ul>
<li>The partners live separate and apart for one
year;</li>
<li>The partners marry each other, or one of the
partners marries or enters into an adult interdependent relationship with a
third party;</li>
<li>The partners sign a written agreement stating
that they intend to live separate and apart without the possibility of
reconciliation.</li>
</ul>
<!--[if !supportLists]--><o:p></o:p><br />
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<div class="MsoNormal">
For all intents and purposes, the changes to the FPA have
made AIPs and married couples effectively the same with respect to property
rights and protections upon dissolution of the relationship. The only property
right that remains solely available to married couples are dower rights, which protect
the spouse of a registered owner of real property. These amendments to the FPA
therefore necessitate serious consideration about your rights upon breakdown of
an adult interdependent relationship, as it will now effectively be treated the
same as a divorce in terms of division of property.<span style="color: red;"><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<h4>
<b style="mso-bidi-font-weight: normal;"><u>Estate Planning
Considerations </u></b></h4>
<div>
<b style="mso-bidi-font-weight: normal;"><u><br /></u></b></div>
<div class="MsoNormal">
The significance of a couple being recognized as AIPs is the
rights, benefits and responsibilities that arise from a legal perspective.
Those rights, benefits and responsibilities are now nearly indistinguishable
from those of married couples. It is therefore important to appreciate your
rights, and conversely your partner’s rights, upon breakdown of an adult
interdependent relationship. This is critical not only during one’s lifetime,
but also an important consideration in estate planning.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Increasingly, individuals enter into successive adult
interdependent relationships and/or marriages. It is important to appreciate
with the amendments to the FPA the heightened rights and protections an AIP
has, and what they may be entitled to when you die, or alternatively, what you
may be entitled to as the AIP of a person who has deceased.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A surviving AIP is a “family member” of the deceased for the
purposes of family maintenance and support claims under the <i style="mso-bidi-font-style: normal;">Wills and Succession Act</i>, SA 2010, c
W-12.2, <span style="mso-spacerun: yes;"> </span>meaning that a surviving partner
can apply for maintenance and support from the estate if the deceased does not
make adequate provisions for them in the Will or on intestacy. If you leave a
surviving AIP inadequately provided for, this can have serious consequences for
other individuals, such as children or other partners, whom you intend to
provide for in your Will.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Surviving AIPs are afforded a whole host of other rights and
protections akin to married spouses upon death of the other partner in the
adult interdependent relationship. For instance, the AIRA has amended the <i style="mso-bidi-font-style: normal;">Insurance Act</i> to allow for a person to
insure the life of an AIP. There are also rules which allow for an AIP to
receive certain insurance benefits under the law. The law for Assured Incomes for
Severely Handicapped (“<b>AISH”</b>) now provides benefits to the
co-habituating partner of an AISH-eligible person, which includes AIPs. There
are also benefits to AIPs under the <i style="mso-bidi-font-style: normal;">Workers
Compensation Act</i> where payments available to the victim, in the event of death,
can be payable to the victim’s AIP. These other benefits afforded by the
above-noted legislation are independent of the FPA and many were in place
before the FPA came into being.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If you have questions about how these legislative changes
might affect you and your estate planning, please contact one of the members of
our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Estates, Trusts, and Tax practice group</a>.<o:p></o:p></div>
<b></b>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-91021356197909721522020-04-16T09:07:00.000-07:002020-04-16T09:08:17.231-07:00National Advance Care Planning Day: Terminology Explained<!--[if gte mso 9]><xml>
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<![endif]--><b>By McLennan Ross Wills and Estates Team</b><br />
<br />
Today is National Advance Planning Day in Canada. This day is intended to prompt the difficult conversation that most people tend to avoid for the other 364 days a year. There is a lot of confusing language out there regarding advance planning. This article seeks to clarify the terminology and provide some practical considerations. <br />
<br />
<b>Personal Directives </b><br />
<br />
Personal Directives are sometimes referred to as “living wills”, “advance directives”, or “directives to physicians”. In Alberta, the official term is “Personal Directive”. It is a document that allows a person to designate an alternate decision-maker (called “Agent”) in relation to personal and health decisions. It may also set out specific wishes and guidelines that the person would like their Agent to follow when making decisions for him or her. For a detailed summary of Personal Directives, see <a href="https://mross.com/law/Firm/Publications/Email_Alerts/Planning_for_the_Unknown.cid2483">here</a>. <br />
<br />
<b>Goals of Care Designation </b><br />
<br />
“Goals of Care Designation” is a medical designation/order made by a physician in regards to a patient. The Goals of Care will indicate the patient’s specific and general medical care intentions, preferred locations of care, and gives transfer opportunities for current and future care of a patient being treated in Alberta. It is a piece of short-hand communication to all members of a patient’s health care team about the patient’s intentions and wishes. <br />
<br />
Goals of Care are discussed and created during the course of care and treatment, ideally the earlier the better. The Goals of Care will communicate to the health care team of the intended care level is for the patient. In determining this, the health care team consults with the patient, if he or she has capacity. If he or she do not have capacity, this is when the Personal Directive becomes important. The Agent designated in the Personal Directive will then consult with the physician regarding the intended care level. In those consultations and any decisions made accordingly, the Agent will be bound by what is set out in the Personal Directive. <br />
<br />
There are three main categories in a Goals of Care (with subcategories in each)<span lang="EN-US" style="font-family: "arial" , "sans-serif"; font-size: 10.5pt;"><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-ansi-font-size: 10.5pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "arial" , "sans-serif"; font-size: 10.5pt;">[1]</span></span></span></span></span></a>:</span><br />
<ol>
<li>Resuscitative (R): The focus is to extend or preserve life using any medical or surgical means. This includes, if needed, resuscitation and admission to the intensive care unit. </li>
<li>Medical Care (M) – Medical tests and interventions are used to cure or manage an illness as well as possible but don’t use resuscitative or life support measures. </li>
<li>Comfort Care (C) – The focus of care is to provide comfort to ease a person’s symptoms without trying to control the underlying illness. </li>
</ol>
<b>Green Sleeve: Personal Directive, Goals of Care, and other documents </b><br />
<br />
A “Green Sleeve” is a plastic pocket belonging to a patient that contains: <br />
<ul>
<li>Goals of Care Designation order, when one exists; </li>
<li>Advance Care Planning Goals of Care Tracking Record;</li>
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<![endif]-->Personal Directive copies, if they exist;</li>
<li>Guardianship Order, if one exists; and </li>
<li>“Expected death in the home”, if one exists. </li>
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<br />
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</xml><![endif]--><b>Practical Considerations </b><br />
<br />
These are difficult, but important, topics to discuss with family members. Often people say that their family knows what they would want and forego a detailed conversation about illness and incapacity. However, when these circumstances do arise, family members are often stricken with grief and stress. Careful and considered decisions rarely come out of that kind of emotional state. That is why is best to set out what your intentions and wishes are in the Personal Directive. It alleviates the pressure for your family to “make the right decision” and ensures that your wishes are met, when possible. <br />
<br />
In addition to the specific medical considerations you may want, you should also consider these practical matters:<br />
<ol>
<li> Whoever you name as your Agent may need to make decisions suddenly and urgently. It should be someone you trust but also should be someone accessible. Can they be reached in the middle of the night or mid-work day? Will they be available in Alberta to consult with your health care team? </li>
<li>Consider the dynamics between your Agents (if multiple) or your Agent with other family members. Will the designation create additional stress? Will there be conflict over the decision-making? </li>
<li>Remember that if you are naming your children to be your Agents that they are used to having you be their caretaker, meaning that they probably turn to you for the answers to questions they cannot figure out. It is very important to set out your specific wishes and intentions in your Personal Directive because children will feel the pressure of “making the right decision” more than most. </li>
<li>Keep your Personal Directive somewhere that is accessible to your Agent (or give them signed Personal Directive). For example, if you are sent to the hospital in the middle of the night, your Agent will not be able to grab the Personal Directive if it is locked somewhere in your house or in a safety deposit box. </li>
</ol>
The <a href="https://www.mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">McLennan Ross Wills & Estate Group </a>would be happy answer your questions regarding your estate plans and estate matters. Please contact any of our group’s lawyers or our office. <br />
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<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[1]</span></span></span></span></span></a><span lang="EN-US"> </span>https://myhealth.alberta.ca/Alberta/Pages/advance-care-planning-goals-of-care-designations.aspx</div>
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McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-34233839014309531172020-03-09T01:30:00.000-07:002020-03-09T12:46:44.484-07:00More than One Will: The Issue of Revocation<!--[if gte mso 9]><xml>
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<span lang="EN-US"><b>By <a href="https://mross.com/law/People/LawyerProfile/Katherine_Hagan.cid2353" target="_blank">Katherine Hagan, Student-at-Law</a></b> </span></div>
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<br /></div>
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<span lang="EN-US">A recent Alberta decision has addressed
the issue of a Testator leaving two wills without either document containing an
express revocation clause . In the decision <i style="mso-bidi-font-style: normal;">Sokalski
Estate (Re),</i> 2019 ABQB 28, the Court was required to determine which
document formed the Deceased’s last will, with wills being created both in 2011
and 2017. Ultimately, Justice Michalyshyn found that the 2017 will was the
Deceased’s last will on the evidence before the Court establishing the
Deceased’s intentions as a testator.</span></div>
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<br /></div>
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<span lang="EN-US">The parties, the Deceased’s children,
disagreed on which of the Deceased’s testamentary documents constituted the
last will. The Deceased had created three documents, dated March 6, 2011,
November 1, 2016 and May 14, 2017, without ever revoking the prior documents.
The parties did not dispute that all of the documents were authentic, valid and
documentary in nature, and the parties ultimately agreed the latter two
documents could be read together. </span></div>
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<br /></div>
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<span lang="EN-US">The representatives of the Estate, the
Deceased’s sons, argued that the 2011 and 2017 wills should be read
functionally as one testamentary document. Alternatively, they argued the 2017
document should be read as a codicil to the 2011 will. The sons argued that
only these readings gave effect to the intentions of the Deceased. Conversely,
the Respondents , the Deceased’s daughters, argued that the Deceased was not
the “type” to have multiple testamentary documents. Further, the Daughters
argued that much had changed in the Deceased’s estate and relationships between
2011 and 2017, and so the documents should not be read together.</span></div>
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<br /></div>
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<span lang="EN-US">Ultimately, the issue facing Justice
Michalyshyn was whether the 2017 will revoked the earlier 2011 will. The Court
relied on its previous decision in <i style="mso-bidi-font-style: normal;">Bates
v. Oryshchuk</i>, 2009 ABQB 688 to hold that a Court must examine the intention
of the testator to determine whether the testator impliedly revoked an earlier
will. In the absence of an express revocation clause, an earlier will is
revoked only to the extent that it is inconsistent with a second will. However,
where a subsequent will disposes of or intends to dispose of all the testator's
property, the Court may infer that the testator has implicitly revoked the
first will in its entirety.</span></div>
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<br /></div>
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<span lang="EN-US">The Court held that all parties relied
heavily on speculation and opinion without being supported by evidence. Still,
on the evidence before him, Justice Michalyshyn concluded that the Deceased
intended for the 2017 will to be his last will and replace the 2011 will for
three reasons. First, the 2017 will disposed of all of the Deceased’s assets.
Second, there was no mention of the 2011 document within the contents of 2017
will and no evidence was before the Court that the documents should be read
together. Third, the 2017 will was similar in form to the 2011 will – it dealt with
executors, debts owing to the estate, specified gifts and residue in a similar
manner to the 2011 will. </span></div>
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<br /></div>
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<span lang="EN-US">While the 2017 will did not contain an
express revocation clause, Justice Michalyshyn held the revocation was implied
by the Deceased’s intentions to the 2011 will. Additionally, Justice
Michalyshyn found the two testamentary documents to be inconsistent with each
other, as the 2017 will addressed changes to the Deceased’s assets and familial
relationships. Therefore, the documents were not intended to be reads together.</span></div>
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<br /></div>
<span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 12.0pt;">This decision serves
as a useful reminder for a Testator to expressly revoke previous wills to
prevent a dispute on which testamentary document or documents is valid. Additionally,
if the Court has to determine the intentions of Testator, the Court relies upon
documents and supported evidence of statements of intention, particularly from
uninterested third parties. If you have further questions about the express or
implied revocation of a will or other estate issues, please contact any member
of our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills and Estates practice group</a>.</span>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-38079334759126970172020-02-20T12:36:00.000-08:002020-02-24T10:32:19.064-08:00Passing Down the Farm<!--[if gte mso 9]><xml>
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<br />
<div class="MsoBodyText">
<b><span style="mso-bidi-font-weight: normal;"><span lang="EN-US">By <a href="https://www.mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a> and <a href="https://www.mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a></span></span></b></div>
<div class="MsoBodyText">
<b style="mso-bidi-font-weight: normal;"><u><span lang="EN-US"><br /></span></u></b></div>
<div class="MsoBodyText">
<span lang="EN-US">Farming is a fundamental part of our
Canadian society and history. Entire generations of families have lived,
thrived, and survived on the same land. However, farms today are increasingly
large and complex operations. As such, various tools have been developed over
the years to deal with one big question: How do I pass the farm down to the
next generation when I retire? </span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">This article will briefly discuss the
options available for transferring farm property from parent to child while the
parent is alive. </span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">Two major questions that a farming-parent
should consider when transferring farm property to a child are: 1) When do I
want the disposition to be effective? and 2) What are the tax implications on
the disposition?</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span lang="EN-US">Transferring Farm Property to a Child</span></b></div>
<div class="MsoBodyText">
<span lang="EN-US"></span><u><span lang="EN-US"><br /></span></u></div>
<div class="MsoBodyText">
<span lang="EN-US">Generally, farmland values have skyrocketed
over the last few decades. Land acquired decades prior by the parent has often doubled,
tripled or more in value. This means, without proper planning, capital gains
tax triggered upon the disposition can be significant.</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">The other issue is <b>when</b> should the
disposition happen? There will be a deemed disposition on death, so the
question really is whether you want to transfer the land upon death or sometime
before death.<span class="msoIns"><ins cite="mailto:Michelle%20Fong" datetime="2020-02-19T08:44"></ins></span></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">There are three options for transfer: </span></div>
<ol>
<li><span lang="EN-US">Fair market value disposition; </span></li>
<li><span lang="EN-US">Section 73 rollover; or </span></li>
<li><span lang="EN-US">a transfer to the child in bare trust.</span></li>
</ol>
<b><span style="mso-bidi-font-style: normal;"> <span lang="EN-US">Fair
market value disposition</span></span></b><br />
<div class="MsoBodyText">
<i style="mso-bidi-font-style: normal;"><u><span lang="EN-US"><br /></span></u></i></div>
<div class="MsoBodyText">
<span lang="EN-US">A fair market value disposition occurs
at, unsurprisingly, fair market value.<span style="mso-spacerun: yes;">
</span>This triggers the full capital gains on the transfer. This means that
the child who buys the land will then have an adjusted cost base (“ACB”) equal
to the fair market value. </span></div>
<div class="MsoBodyText">
<span lang="EN-US">However, the parent may be able to use his
or her lifetime capital gains exemption (“LCGE”) to offset the capital gains
tax. </span></div>
<div class="MsoBodyText">
<span lang="EN-US">Farmers receive a $1,000,000 LCGE
(compared to $883,384 (2020) for non-farmers) for dispositions on farm property
(usually shares in farm corporation or farm<span class="msoDel"><del cite="mailto:MaryAnne%20Loney" datetime="2020-02-19T12:34"> </del></span>land</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[1]</span></span></span></span></span></a><span lang="EN-US">). <span class="msoIns"><ins cite="mailto:MaryAnne%20Loney" datetime="2020-02-18T16:39"></ins></span></span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">For farm corporation shares, generally, throughout
any 24-month period before disposition, more than 50% of the fair market value
of the corporation’s property must be attributable to property that was used
principally</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[2]</span></span></span></span></span></a><span lang="EN-US"> in the course of carrying on a farming business in Canada in which
the individual, his or her spouse or common-law partner, child, or parent (or
beneficiary of a trust if the individual is a trust) was actively engaged on a
regular and continuous basis.</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[3]</span></span></span></span></span></a></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">For farmland, if the land was acquired
after June 18, 1987, the land must have been owned for any 24-month period
before disposition by, generally, the individual, his or her spouse or common-law
partner, child, parent (either owned directly or owned through a personal trust</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn4" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[4]</span></span></span></span></span></a><span lang="EN-US">). If the land was owned by a farm partnership, the partnership interests
must be held by the individual or his or her spouse or common-law partner. We
will refer to this person as the “Operator”. In addition to the 24-month ownership
test, during any two-year period of ownership, the land must be used
principally in a farming business, a farm corporation or a farm partnership
carried on in Canada in which the Operator (or beneficiary, if Operator is a trust)
was actively engaged on a regular and continuous basis. </span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">If the land was acquired before June 18,
1987, then there are two ways to qualify for the LCGE. The first option is if,
in the year of the disposition, the land was<b> </b><b>used</b> principally in the
course of carrying on a farm business in Canada by the individual, his or her
spouse or common-law partner, child or parent; or by a farm corporation, a farm
partnership; or by a beneficiary of a personal trust</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn5" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[5]</span></span></span></span></span></a><span lang="EN-US"> or by a personal trust in which the individual acquired the
property. The second option is if the land was <u>both </u><b>owned and used</b>
principally by these same categories of persons or individuals in the course of
carrying on a farming business in Canada in any 5-year period. </span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">It is important to confirm with a tax
practitioner that your farm property qualifies for the LCGE before claiming it
as the test is quite technical and may be complicated to apply in practice.</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US"><span style="background: yellow; mso-highlight: yellow;"></span></span></div>
<div class="MsoBodyText">
<b><span style="mso-bidi-font-style: normal;"><span lang="EN-US">Section
73 rollover</span></span></b></div>
<div class="MsoBodyText">
<i style="mso-bidi-font-style: normal;"><u><span lang="EN-US"><br /></span></u></i></div>
<div class="MsoBodyText">
<span lang="EN-US">A section 73 rollover is one in which the
disposition of farm property is deemed pursuant to subsections 73(3) to (4.1)
of the <i style="mso-bidi-font-style: normal;">Income Tax Act </i>to occur on a
tax-deferred “rollover” basis. This means the land and farm property may be
transferred at the ACB so the child inherits the same ACB that the parent had. There
are no capital gains triggered on this disposition.</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn6" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[6]</span></span></span></span></span></a><br />
<span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;"> </span></span></span></span></span><span lang="EN-US"> </span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">In order
to qualify for the tax-rollover under subsection 73(4) and 73(4.1) (farm
corporation and partnership shares):</span></div>
<br />
<ul>
<li><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">the child was a </span><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;">resident in Canada immediately before the transfer; and</span></li>
<li><span lang="EN-US"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;">the property was,
immediately before the transfer, a share of the capital stock of a family farm
or fishing</span><span lang="EN-US"> corporation of the taxpayer or an interest
in a family farm or fishing partnership of the taxpayer (as defined in
subsection 70(10)).</span></li>
</ul>
<div class="MsoBodyText">
<span lang="EN-US"> In order to qualify for the tax-rollover
under section 73(3) and (3.1) (farmland):</span></div>
<ul>
<li><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;">the property was, before
the transfer, land in Canada or depreciable property in Canada of a prescribed
class, of the taxpayer;<a href="https://www.blogger.com/null" name="co_tempAnchor"></a></span></li>
<li><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;">the child of the taxpayer
was a resident in Canada immediately before the transfer; and</span></li>
<li><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="mso-ansi-language: EN-CA; mso-bidi-font-size: 12.0pt; mso-fareast-language: EN-CA;">the property has been used
principally in a farming or fishing business in which the taxpayer, the
taxpayer's spouse or common-law partner, a child of the taxpayer or a parent of
the taxpayer was actively engaged on a regular and continuous basis</span></li>
</ul>
<div class="MsoBodyText">
<br />
<span lang="EN-US">Again, these seemingly straightforward
requirements can be complicated in practice, so we recommend you confirm with a
tax practitioner that the transfer will qualify if you intend to rely on the
provision.</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<b><span style="mso-bidi-font-style: normal;"><span lang="EN-US">Transfer
to the child in bare trust</span></span></b></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">The last option is for the parent to place
the farm property in joint names with him or herself and the child. However,
the child is a bare trustee, meaning that he or she has no beneficial ownership
in the land until the parent(s) die. The parent(s), while alive, have all the
control, pay the expenses, and reap all the benefits of the land. The
disposition does not actually happen until the parent(s) die.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoBodyText">
<span lang="EN-US">At that point, <b>provided the property
qualifies</b>, it is still possible to take advantage of the LCGE or do a tax-deferred
rollover to the child.<span style="mso-spacerun: yes;"> </span><span class="msoDel"><del cite="mailto:MaryAnne%20Loney" datetime="2020-02-18T16:51"></del></span></span></div>
<div class="MsoBodyText">
<i style="mso-bidi-font-style: normal;"><u><span style="mso-ansi-language: EN-CA; mso-fareast-language: EN-CA;"><br /></span></u></i></div>
<div class="MsoBodyText">
<b><span style="mso-bidi-font-style: normal;"><span style="mso-ansi-language: EN-CA; mso-fareast-language: EN-CA;">Other Considerations</span></span></b></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">When it comes to farms, there are many
tools available to meet the unique challenges that farmers face. However, it is
important to not let tax considerations lead your estate planning.<span style="mso-spacerun: yes;"> </span>Farms are some of the most common types of
property fought over in estate litigation, a process that not only wastes
significant amounts of money, but also tears families apart.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoBodyText">
<span lang="EN-US">It is more important that your estate
plan related to the family farm suits your family, not simply that it saves the
most tax.</span></div>
<div class="MsoBodyText">
<br /></div>
<span lang="EN-US">If you would like to discuss what options are available for your specific situation, we would be
happy to meet with you. Please contact any member of our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills and Estates</a> or <a href="https://mross.com/law/Practice_Areas/Tax" target="_blank">Tax</a> practice groups.</span>
<br />
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[1]</span></span></span></span></span></a><span lang="EN-US"> May also dispose of farm partnership interests, which is not
discussed in this article.</span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref2" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[2]</span></span></span></span></span></a><span lang="EN-US"> “Principally” means more than 50%.</span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref3" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[3]</span></span></span></span></span></a><span lang="EN-US"> LCGE can also be used for farm partnerships and qualified small
business corporations. However, for simplicity, we only briefly touch on some
LCGE areas, such as farm corporations and farmland. </span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref4" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[4]</span></span></span></span></span></a><span lang="EN-US"> If the land is in a personal trust or was from a personal trust,
the ownership test applies to, generally, the same categories of persons
(except if the land was from a personal trust, the ownership test cannot apply
to the recipient individual’s spouse).</span></div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref5" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[5]</span></span></span></span></span></a><span lang="EN-US"> As described subparagraph (a)(ii) of the definition of “qualified
farm or fishing property” in subsection 110.6(1). The beneficiary or his or her
spouse, common-law partner, child or parent.</span></div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref6" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[6]</span></span></span></span></span></a><span lang="EN-US"> Note, you can elect to transfer at an amount above ACB as well.</span></div>
</div>
</div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com1tag:blogger.com,1999:blog-5832875178780555622.post-1856379956964245332020-01-16T10:43:00.000-08:002020-01-16T09:32:26.156-08:00Tax Obligations of an Estate and Executor <b>by <a href="https://mross.com/law/People/LawyerProfile/Michelle_Fong.cid2403" target="_blank">Michelle Fong</a></b><br />
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">In a recent Alberta case <i style="mso-bidi-font-style: normal;">(Muth Estate, 2019 ABQB 922</i>), the Court found
that an Executor could not legally require beneficiaries to indemnify the
Executor for the payment of taxes owed by the Estate.</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">The deceased died in 2008. His ex-wife
(Ms. Muth) and a set of nieces and nephews first went to Court to determine how
the Estate should be administered and distributed. They ultimately reached a
mediated settlement in 2011 where it was agreed that Ms. Muth would apply for
probate as the Executor and the Estate would be divided 55% to Ms. Muth and 45%
to the nieces and nephews. Ms. Muth’s first accountant advised her to holdback
$25,000 for taxes. She did so and distributed the balance of the Estate in accordance
with the settlement. This first accountant did not file the required tax
return. A second accountant was retained and advised that the holdback was
insufficient. Ms. Muth paid the difference as well as other related expenses.
She then sought indemnity from the nieces and nephews for 45% of these amounts.
The Court ultimately found that she, as the Executor, was not entitled to be
indemnified by the beneficiaries because her failure to obtain a final
Clearance Certificate prior to distributing the property meant that she was
personally liable for the taxes and related expenses.</span></div>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">This case serves as a good reminder that
Executors can be found personally liable for unpaid taxes, interest and
penalties of an Estate if he or she distributes the property of the Estate
before obtaining a final Clearance Certificate.</span><b style="mso-bidi-font-weight: normal;"><span lang="EN-US"></span><span lang="EN-US"> </span></b></div>
<div class="MsoBodyText">
<br /></div>
<h3 class="MsoBodyText">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Applying
for a Clearance Certificate</span></b></h3>
<div class="MsoBodyText">
<br /></div>
<div class="MsoBodyText">
<span lang="EN-US">An Executor may apply to the Canada
Revenue Agency (CRA) for a final Clearance Certificate. The final Clearance
Certificate confirms that all of the taxes, interest and penalties owed by the
Estate have been paid. Section 159(2) of the Income Tax Act requires an
Executor (legal representative of the Estate) to obtain a final Clearance
Certificate and section 159(3) holds the Executor personally liable for taxes,
interest and penalties owed by the Estate if he or she distributes property
prior to obtaining such certificate.</span></div>
<div class="MsoBodyText">
<span lang="EN-US">Prior to applying for a final Clearance
Certificate, the Executor must</span><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[1]</span></span></span></span></span></a><sup><span lang="EN-US">,</span></sup><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftn2" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt;"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif"; font-size: 8.0pt;">[2]</span></span></span></span></span></a><span lang="EN-US">:</span><span lang="EN-US"> </span></div>
<ol>
<li><span lang="EN-US">File the final tax return;</span></li>
<li><span lang="EN-US">Receive the corresponding Notice
of Assessment or Reassessment; and</span></li>
<li><span lang="EN-US">Pay all taxes, interest and
penalties owed by the Estate based on the final tax return and/or Notice of
Reassessment.</span><span lang="EN-US"> </span></li>
</ol>
<span lang="EN-US">Only after all
of these steps have been completed can the Executor apply for a final Clearance
Certificate.</span><span lang="EN-US"> </span><br />
<div class="MsoBodyText" style="margin-top: 6.0pt;">
<span lang="EN-US">According to the
CRA’s website, a final Clearance Certificate can take up to 120 days to obtain.
However, in practice, the wait time can be up to a year or a year and a half.</span></div>
<div class="MsoBodyText" style="margin-top: 6.0pt;">
<br /></div>
<h3 class="MsoBodyText">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">When
is a Clearance Certificate Not Needed?</span></b></h3>
<br />
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">First, a
final Clearance Certificate is not needed if the Estate (or trust) continues to
exist to pay income to beneficiaries. To be clear, there may be taxes owed, filing
requirements and accounting obligations for the continuing Estate or trust, but
the final Clearance Certificate is not required to pay income to beneficiaries
from an ongoing trust.</span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<br /></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">Second, a
final Clearance Certificate is not needed if there is no tax liability. But,
there is no guarantee that there is no tax liability without a final Clearance
Certificate confirming it. On the other hand, there can be circumstances where it
is very likely there is no tax liability, such as an Estate with no capital
property and no income (e.g. only asset is a non-interest-bearing cash
account). In those circumstances, the Executor must balance the risks of not
obtaining a final Clearance Certificate against the likelihood that no taxes,
interest and penalties are owed. </span></div>
<br />
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">Third, a
final Clearance Certificate is not needed if there is a sufficient holdback for
taxes, interest and penalties. However, as seen in <i style="mso-bidi-font-style: normal;">Muth</i>, there is a risk that the holdback will be insufficient. </span></div>
<div class="MsoBodyText" style="page-break-after: avoid;">
<br /></div>
<h3 class="MsoBodyText" style="page-break-after: avoid;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Conclusion</span></b></h3>
<br />
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">Overall,
an Executor of an Estate should ensure that all obligations owed to the CRA by
the Estate (and all other liabilities) are satisfied prior to distributing the
property of the Estate. A final Clearance Certificate is a confirmation of
satisfaction. Failure to obtain a final Clearance Certificate exposes the
Executor to personal liability if the property of the Estate has already been
distributed.</span></div>
<br />
<div class="MsoBodyText" style="page-break-after: avoid;">
<span lang="EN-US">The
process to apply and obtain a final Clearance Certificate can be quite lengthy
(i.e. prepare and file tax return, prepare application for certificate, wait
for certificate, etc.). Therefore, it is recommended that the Executor
communicate the lengthy process to the beneficiaries so that they understand
why it may take a year or more before they receive their distributions. Navigating
through the process of administering an Estate can be confusing, especially
when taxes are involved. As such, it is also recommended that the Executor consider
if or when a lawyer and/or an accountant conversant in estate matters should be
brought in to provide assistance.</span><br />
<br />
<span lang="EN-US">If you have further questions about the administration of an Estate or other tax issues, please contact any member of our <a href="https://mross.com/law/Practice_Areas/Wills_and_Estates" target="_blank">Wills and Estates</a> or <a href="https://mross.com/law/Practice_Areas/Tax" target="_blank">Tax</a> practice groups.</span></div>
<div style="mso-element: footnote-list;">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif";">[1]</span></span></span></span></a><span lang="EN-US"> <i>Information Circular
IC82-6R11</i> (Canada Revenue Agency, 2016) at para 11</span></span></div>
<span style="font-size: x-small;">
</span></div>
<span style="font-size: x-small;">
</span><br />
<div id="ftn2" style="mso-element: footnote;">
<span style="font-size: x-small;">
</span><br />
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="https://www.blogger.com/blogger.g?blogID=5832875178780555622#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: "times new roman" , "serif";">[2]</span></span></span></span></a><span lang="EN-US"> If the Estate creates a trust and the property is held in trust
prior to distribution to beneficiaries, then there are additional steps that
must be completed prior to applying for a Clearance Certificate. These
additional steps are found at <i>Information
Circular IC82-6R11</i> (Canada Revenue Agency, 2016) paras 11 - 13 </span></span></div>
</div>
</div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com1tag:blogger.com,1999:blog-5832875178780555622.post-22890042963091627712019-09-11T09:58:00.001-07:002019-09-16T11:22:55.599-07:00Proposed Changes to Foreign Affiliate Dumping Rules: Individuals, Trusts and Estates May Now Be Caught<br />
<div class="MsoNormal">
<b>By <a href="https://mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a> and <a href="https://mross.com/law/People/LawyerProfile/Moe_Denny.cid2177" target="_blank">Moe Denny</a></b><span lang="EN-US" style="font-family: "times new roman" , "serif";"> </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">The
government is proposing changes to the <i style="mso-bidi-font-style: normal;">Income
Tax Act </i>which could impact many Canadian corporations with foreign
affiliates.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">Of
particular concern are situations where controlling interests in such
corporations are owned by</span><span lang="EN-US" style="font-family: "times new roman" , "serif";"> </span></div>
<ol>
<li><span lang="EN-US" style="font-family: "times new roman" , "serif";">individuals
emigrating from Canada, or</span><span lang="EN-US" style="font-family: "times new roman" , "serif";"> </span></li>
<li><span lang="EN-US" style="font-family: "times new roman" , "serif";">trusts
or estates where any beneficiaries may be, or may become, non-residents of
Canada.</span></li>
</ol>
<span lang="EN-US" style="font-family: "times new roman" , "serif";"></span><span lang="EN-US" style="font-family: "times new roman" , "serif";">Anyone
who thinks they could be caught should keep an eye out in the coming months to
see what happens with these proposals. Depending on what changes are passed,
some may wish to take steps to mitigate potential added tax costs.</span><br />
<div class="MsoNormal">
<br /></div>
<h3 class="MsoNormal">
<u><b><span style="mso-bidi-font-style: normal;"><span lang="EN-US" style="font-family: "times new roman" , "serif";">Proposed changes to FAD rules</span></span></b></u></h3>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">Since
being introduced in 2012, the <i style="mso-bidi-font-style: normal;">Income Tax
Act</i>’s Foreign Affiliate Dumping Rules (the “FAD” rules) were generally of
little concern to most because of the rules limited applicability to
circumstances with a non-resident parent corporation controls a corporation
resident in Canada (a “CRIC”), which in turn invests in a foreign affiliate. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">However,
earlier this year, first in the federal budget in March and then in revised
legislative proposals in July, the Department of Finance proposed changes to broaden
the application of the FAD rules so they would not just apply to CRIC’s
controlled by non-resident <i style="mso-bidi-font-style: normal;">corporations</i>,
but also to cases where a CRIC is “controlled” by non-resident <i style="mso-bidi-font-style: normal;">individuals</i>, including through a trust or
estates.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">With respect to trusts and estates in particular, under the proposed
FAD rules a trust or estate is assumed to be a corporation with a capital stock
of 100 common shares (the “Contrived Shares”), and each beneficiary under the
trust owns a portion of shares equal to their interest in the trust based on
fair market value (“FMV”). </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">If the beneficiaries interest in the trust or estate is
discretionary, then </span><span lang="EN-US" style="font-family: "times new roman" , "serif";">the
FMV of each beneficiaries’ interest is deemed to be equal to 100% of the
Contrived Shares unless the trust is </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-indent: -.5in;">
<span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(i)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "times new roman";">
</span></span></span><span lang="EN-US" style="font-family: "times new roman" , "serif";">a
resident of Canada and </span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-indent: -.5in;">
<span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(ii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "times new roman";">
</span></span></span><span lang="EN-US" style="font-family: "times new roman" , "serif";">“it
cannot reasonably be considered that one of the main reasons for the
discretionary power is to avoid or limit the application of” the FAD rule. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">And
no, it’s not entirely clear how one would prove that this second requirement
has been met.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif";">The
proposed changes could cause the FAD rules to apply in several common
situations, including, but not limited to, when:</span></div>
<div class="MsoNormal">
<br /></div>
<ul>
<li><span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-fareast-font-family: "Times New Roman";">an individual controlling a CRIC
with a foreign affiliate emigrates for personal or business reasons (such as to
grow the foreign subsidiary), becoming a non-resident;</span></li>
<li><span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-fareast-font-family: "Times New Roman";">a beneficiary of a discretionary
family trust resident in Canada becomes a non-resident of Canada and the family
trust controls a CRIC with a foreign affiliate; and</span></li>
<li><span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-fareast-font-family: "Times New Roman";">the death of an individual results
in control of a CRIC with a foreign affiliate being left to an estate with
non-resident executors or beneficiaries.</span></li>
</ul>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">If passed, the
proposed amendments would be effective retroactively to March 19, 2019, the
date of the 2019 budget.</span></div>
<div class="MsoNormal">
<br /></div>
<h3 class="MsoNormal">
<u><b><span style="mso-bidi-font-style: normal;"><span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">What to do if you think you, your estate or your trust might
be caught</span></span></b></u></h3>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">The question is
what should you do if you think you, your estate or your trust might be caught
by these proposed changes. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">The tax consequences
of having the FAD rules apply are quite severe – resulting in constructive
upstream dividends subject to non-resident withholding tax. As a result, it is
almost certainly in taxpayers best interests to avoid their application if
possible.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">Should taxpayers,
therefore, be reorganizing corporations, amending trust deeds and revising
wills?!</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">Well… maybe not
yet. The changes have not yet been implemented, and it is not certain what form
they will finally take.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">Due to the complex
nature of the FAD rules and the fact that the proposed changes of the rules are
fraught with unintended implications and uncertainty, the Joint Committee on
Taxation of the Canadian Bar Association and Chartered Professional Accountants
of Canada issued a submission to the government on May 24, 2019 outlining
issues with the proposed FAD rules and provided recommendations for amendments.
</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">On July 30, 2019,
the Department of Finance released new proposed legislation to implement the
proposed changes and <u>have invited comments by October 7, 2019</u>. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">The July 30, 2019
proposed legislation appears to have partially addressed at least one of the
main concerns tax professionals had with the initial proposed legislation: the
proposed legislation released with the budget would have automatically had all
beneficiaries of a discretionary trust deemed to own 100% of the Contrived
Shares where the new July 30, 2019 proposed legislation provides an exclusion
for Canadian trusts where </span><span lang="EN-US" style="font-family: "times new roman" , "serif";">it
cannot reasonably be considered that one of the main reasons for the
discretionary power is to avoid or limit the application of the FAD rules. That
being said, without further guidance from the CRA and the Courts, it is unclear
how useful that exclusion will actually be.</span><span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";"> </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">In any event, it is
uncertain exactly what form the proposed changes to FAD rules will actually
take. As a result, it is difficult to determine what changes, if any, would be
advisable with regards to corporate structure, wills and trust deeds at this
time.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";">However, <u>it is
definitely worth considering if you, your estate or trust might be caught and,
if you think it might be, keep your eyes open for future posts on this blog
addressing this topic further once we have more information.</u></span><u><span lang="EN-US" style="font-family: "times new roman" , "serif";"></span></u></div>
<div class="MsoNormal">
<br /></div>
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif"; font-size: 12pt;">This update is a
general overview of proposed changes to the FAD rules and cannot be regarded as
legal advice. Please contact <a href="https://mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a> or <a href="https://mross.com/law/People/LawyerProfile/Moe_Denny.cid2177" target="_blank">Moe Denny</a> to discuss any of the
above items, or any of your other tax needs.</span><br />
<span lang="EN-US" style="background: white; font-family: "times new roman" , "serif";"></span><span lang="EN-US" style="color: black; font-family: "times new roman" , "serif";"></span>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-1402278362155638022019-01-28T09:21:00.000-08:002019-01-28T09:39:18.558-08:00What Do The New Tax On Split Income (“TOSI”) Rules Mean For Trusts?<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>By: <a href="https://mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank">MaryAnne Loney</a></b></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span>
<br />
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">A recent tax change that has gotten a lot
of attention is the tax on split income, or “TOSI”.<span style="mso-spacerun: yes;"> </span>Through design or inadvertently, many trusts will
be affected by these rules.<span style="mso-spacerun: yes;"> </span>Many family
trusts were set up at least partially to split income to family members.<span style="mso-spacerun: yes;"> </span>Even when income splitting is not an express
purpose of the trust, where a trust owns property that earns money from the
work or investment of a person (“source individual”) who is related to a
beneficiary, there is a risk TOSI may apply.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><i style="mso-bidi-font-style: normal;"><u><span lang="EN-US"><br /></span></u></i></span></div>
<div class="MsoBodyText">
<u><b><span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">Things
Trustees and their advisors should know about TOSI</span></span></b></u></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span>
<br />
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<u><span style="font-family: "arial" , "helvetica" , sans-serif;"><i style="mso-bidi-font-style: normal;"><span lang="EN-US"><span style="mso-list: Ignore;">1.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span></i><i style="mso-bidi-font-style: normal;"><span lang="EN-US">TOSI doesn’t just apply to
dividends</span></i></span></u></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">While dividends have gotten the most
press, TOSI may apply to any income from a “related business”.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">A related business is any business,
whether operated personally or through a partnership, corporation or trust,
where a source individual at any time during the year was “actively engaged on
a regular basis in the activities” or in which he or she had a qualifying
interest (for a corporation this is 10% or more).<span style="mso-spacerun: yes;"> </span>TOSI may apply to any dividends, shareholder
benefits, capital gains, or interest derived from a related business.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">This means trustees need to look
carefully at any source of income and ensure it is not caught under the TOSI
rules.<span style="mso-spacerun: yes;"> </span>I recommend starting with the
assumption that TOSI applies to any income, unless you can find a reason why it
should be excluded.</span></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<u><span style="font-family: "arial" , "helvetica" , sans-serif;"><i style="mso-bidi-font-style: normal;"><span lang="EN-US"><span style="mso-list: Ignore;">2.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span></i><i style="mso-bidi-font-style: normal;"><span lang="EN-US">Beneficiaries of trusts
cannot own “excluded shares” through a trust</span></i></span></u></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">One of the main exclusions to the TOSI
rules is if the recipient owns “excluded shares”.<span style="mso-spacerun: yes;"> </span>Shares are excluded shares when an individual
owns at least 10% of the shares of a corporation which meet specific criteria.
Income earned on excluded shares, or gains earned on disposing of excluded
shares, are not caught by TOSI.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">Unfortunately, even if a trust owns
shares that would otherwise be excluded shares, income allocated through the
trust to a beneficiary on those shares owned by the trust will not qualify as
shares “owned by the specified individual”, (and therefore not “excluded
shares”) since the beneficiary and not the trust would be the specified
individual.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">This is a significant disadvantage of
owning what otherwise might qualify as excluded shares through a family
trust.<span style="mso-spacerun: yes;"> </span>In some cases, it may make sense
to distribute shares owned by a trust to a beneficiary so they do qualify as
excluded shares for that particular beneficiary. </span></span></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<u><span style="font-family: "arial" , "helvetica" , sans-serif;"><i style="mso-bidi-font-style: normal;"><span lang="EN-US"><span style="mso-list: Ignore;">3.<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-optical-sizing: auto; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span></i><i style="mso-bidi-font-style: normal;"><span lang="EN-US">Some exclusions from TOSI
will still apply to allocations from trusts</span></i></span></u></div>
<div class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 12.0pt; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">There are, however, exclusions that will
still apply to payments through a trust.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">While capital gains from a related
business are now generally caught by TOSI, capital gains that qualify for the
capital gains exemption are specifically excluded, including for allocations
from trusts.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">A second exemption is that if the income
derives from a business which is an “excluded business” for the beneficiary, then
it will not be caught by TOSI.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">A business will be an “excluded business”
if the beneficiary was actively engaged on a regular, continuous and
substantial basis in the activities of the business in either the taxation year
or any prior five taxation years.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">While “actively engaged” is not defined,
if the beneficiary works at least an average of 20 hours per week in the
business (while the business operates), the beneficiary will be deemed to be
actively engaged.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">Recent CRA publications and responses to
questions at conferences have also suggested that passive investment income
earned on the investment of income from a related business, is not itself necessarily
income from that related business.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">This suggests that, with the right
structure, investment income earned on income itself caught by TOSI could be an
excluded amount.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><i style="mso-bidi-font-style: normal;"><u><span lang="EN-US"><br /></span></u></i></span></div>
<div class="MsoBodyText">
<b><span style="font-family: "arial" , "helvetica" , sans-serif;"><u><span lang="EN-US">Conclusion</span></u><span lang="EN-US"> </span></span></b></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">The new TOSI rules will make things more
complicated for trustees and their advisors when it comes to allocating income
to beneficiaries.<span style="mso-spacerun: yes;"> </span>Existing trusts should
be re-examined to determine whether they should be restructured or their operations
changed.<span style="mso-spacerun: yes;"> </span>Potential settlors, trustees
and their advisors will need to more carefully consider whether setting up a
new trust is the best option.</span></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoBodyText">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US">However, trusts will continue to be used
for non-tax reasons where it is advisable to separate legal and beneficial
ownership and, depending on individual circumstances, trust will continue to
make sense in certain tax plans.</span></span></div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-3374442360552135532018-07-30T10:13:00.000-07:002018-07-30T10:33:49.300-07:00The Value of Digital Assets and Why It Should Not Be Ignored in Estate Planning<span style="font-family: "arial" , "helvetica" , sans-serif;">
<strong>Author: </strong></span><a href="https://mross.com/law/People/LawyerProfile/Marika_Cherkawsky.cid2174" target="_blank"><span style="font-family: "arial" , "helvetica" , sans-serif;"><strong>Marika Cherkawsky, Student-at-Law</strong></span></a><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Your house, children, jewelry and art, these are all the
typical items a person will think about when planning their Estate.<span style="mso-spacerun: yes;"> </span>However, what is often forgot about is a
person’s digital assets. In a report on digital assets, </span><a href="http://welpartners.com/resources/WEL_Digital_Assets_24_4_13.pdf"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Kimberly
Whaley</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">, defines digital assets as digital photos, word and excel documents,
blogs, iTunes collection, tweets, or even Airmiles points. A report by </span><a href="https://www.theglobeandmail.com/globe-investor/personal-finance/what-to-do-about-online-accounts-and-assets-after-death/article14024031/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Deloitte</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">
estimates that by 2020, the average Canadian will have accumulated over $10,000
in digital assets. Yet, </span><a href="https://www.theglobeandmail.com/globe-investor/personal-finance/what-to-do-about-online-accounts-and-assets-after-death/article14024031/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">BMO
Wealth Institute</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"> finds over 57% of Canadians have failed to plan for their
digital assets in their estate plans. With an<span style="mso-spacerun: yes;">
</span>increasing trend towards the digital way of life, it is key that one keeps
their digital assets in mind when planning their Estate. This post attempts to
demonstrate why digital assets are so important, and what steps can and should
be taken to protect ones digital assets after death. </span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span> </div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "arial" , "helvetica" , sans-serif;">What is a Digital
Asset and Why Should I Care</span></b></span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Whaley distinguishes between digital assets and digital
accounts.<span style="mso-spacerun: yes;"> </span>As defined above, digital
assets include any digital file a person owns.<span style="mso-spacerun: yes;"> </span>Similar to the physical and financial assets typically provided for in a
Will, digital assets hold both sentimental and monetary value.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span></span></span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Think about all of those photos stored on your computer or hard
drive.<span style="mso-spacerun: yes;"> </span>Previously the boxes of physical
photos could easily be found in the basement. But with digital photos, there needs
to be clear instructions on how to find and access them if you wish to pass
them on. What about your Facebook page? After death do you want your page shut
down, or left up as a digital memorial site for your loved ones to visit? </span></span></span></span></span></span></span></span></span></span></span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">On the monetary end of things, one simply has to think of </span><a href="https://bitcoin.org/en/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Bitcoin</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">, the first decentralized digital
currency.<span style="mso-spacerun: yes;"> </span>Currently, the total value of
Bitcoin supply in circulation is </span><a href="https://bitcoincharts.com/bitcoin/)"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">over
$100 billion</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"> Without taking Bitcoin into consideration in estate planning,
one could be simply throwing away real value. The same goes for loyalty
programs such as Airmiles or cash back credit card accounts.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Unlike digital assets, which are the digital files themselves,
digital accounts are how one accesses those files.<span style="mso-spacerun: yes;"> </span>According to Whaley, digital accounts can be
separated into three categories:<o:p></o:p></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<ol start="1" style="margin-top: 0in;" type="1"><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l1 level1 lfo1;"><span style="font-family: "arial" , "helvetica" , sans-serif;">accounts that contain
virtual currency that could be transferred to your heirs and include a </span><a href="https://www.paypal.com/ca/home"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">PayPal account</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">, loyalty program
accounts such as credit card accounts with cash back, and Bitcoin;<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l1 level1 lfo1;"><span style="font-family: "arial" , "helvetica" , sans-serif;">accounts containing
virtual property such as </span><a href="http://www.kobo.com/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Kobo</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"> and
iTunes accounts. For these accounts people only own a licence to use the
digital files and therefore do not actually “own” them; and<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l1 level1 lfo1;"><span style="font-family: "arial" , "helvetica" , sans-serif;">accounts containing
information likely of personal or commercial interest such as personal
email accounts, your </span><a href="http://www.facebook.com/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Facebook</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"> page,
</span><a href="http://www.twitter.com/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">Twitter</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">, or </span><a href="https://ca.linkedin.com/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">LinkedIn</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;">.<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></ol>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">When planning for your digital assets it is important to
always take note of your digital accounts since without access to the digital
accounts your digital assets may be subject to its provider’s terms of
service.<span style="mso-spacerun: yes;"> </span>A further obstacle is most
account providers will err on the side of caution when it comes to granting
access to non-account holders out of fear of breaching Canadian privacy laws.
What does this mean? Well, for example, without explicit instruction in a will,
grieving family members may be facing a legal battle against big businesses,
simply for access to a deceased’s Facebook, email or blog. Recently, in the
United States, there have been a number of cases where grieving families
embroiled in </span><a href="https://www.cnet.com/news/for-apple-q3-earnings-its-all-about-the-next-iphone/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">legal
battles</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"> with Facebook over access to a deceased family member’s Facebook
account.</span><a href="file:///C:/Users/sshort/Documents/ndEcho/EU-CCTF0VM8/Wills%20&amp;%20Estates%20Blog%20Post%204136-0766-1590%20v.1.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><sup><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><sup><span style="font-family: "calibri" , "sans-serif"; font-size: 11pt; line-height: 115%;"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">[1]</span></span></sup><!--[endif]--></span></sup></a><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"> </span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"></span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "arial" , "helvetica" , sans-serif;">What Should You Do</span></b></span></span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></b></span></span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Currently, the law says little to nothing with respect to
digital asset management after death. This means it is up to you to take steps
to protect your digital assets and accounts. The following steps may assist in this process:<o:p></o:p></span></span></span></span></span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<ul style="margin-top: 0in;" type="disc"><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l0 level1 lfo2;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Identify all of your digital
assets and accounts.<span style="mso-spacerun: yes;"> </span>This includes
documenting the location of all mobile devices, computers and flash
drives;<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l0 level1 lfo2;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Instruct exactly what you
want done with each digital asset and account. You may want to leave this
responsibility with your chosen executor, or appoint a separate trustee
who will be responsible for managing your digital assets;<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l0 level1 lfo2;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Provide access to your
chosen appointed person.<span style="mso-spacerun: yes;"> </span>This can be done by leaving a
password-protected list of digital assets and digital accounts.<span style="mso-spacerun: yes;"> </span>An online password manager such as </span><a href="https://www.lastpass.com/business-password-manager"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">LastPass</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"> </span>or </span><a href="https://1password.com/"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">1Password</span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"> </span>may assist in this step; and<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
<li class="MsoNormal" style="margin: 0in 0in 10pt; mso-list: l0 level1 lfo2;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Update your digital assets
and digital accounts as often as possible.<o:p></o:p></span></li>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></ul>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">One final point is that it is important not to list any passwords to
digital assets and accounts within the actual Will. The reason
for this is that if, and when your estate goes through probate, the court
process by which a Will is proven valid or invalid, the contents of the Will
may become public record.<span style="mso-spacerun: yes;"> </span>Thus, putting
your digital assets and accounts at risk.<span style="font-family: "arial" , "helvetica" , sans-serif;"><o:p><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></o:p></span></span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<div style="mso-element: footnote-list;">
<!--[if !supportFootnotes]--><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<hr align="left" size="1" width="33%" />
<span style="font-family: "arial" , "helvetica" , sans-serif;">
<!--[endif]-->
</span><br />
<div id="ftn1" style="mso-element: footnote;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/sshort/Documents/ndEcho/EU-CCTF0VM8/Wills%20&amp;%20Estates%20Blog%20Post%204136-0766-1590%20v.1.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , "sans-serif"; font-size: 10pt; line-height: 115%;"><span style="color: blue; font-family: "arial" , "helvetica" , sans-serif;">[1]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: x-small;"> </span><span lang="EN-US" style="mso-ansi-language: EN-US;"><span style="font-size: x-small;">Stassen v Facebook is a case from
Wisconsin whereby the Stassen;s 21 year-old son committed suicide.<span style="mso-spacerun: yes;"> </span></span><span style="font-size: x-small;">The Stassen’s wanted to access their son’s
Facebook and Gmail accounts.</span><span style="mso-spacerun: yes;"><span style="font-size: x-small;"> </span></span><span style="font-size: x-small;">Facebook
refused to release any information, citing concerns over breaching their
client’s ownership rights.</span><span style="mso-spacerun: yes;"><span style="font-size: x-small;"> </span></span><span style="font-size: x-small;">Facebook
refused to disclose their son’s personal account information even after a court
order declared the parents the heirs to their son’s estate. <o:p></o:p></span></span></span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-28561074334872758002018-07-04T10:19:00.002-07:002018-07-04T10:20:29.361-07:00Changes in the Wind for Cohabitating Couples<strong><span style="font-family: Arial, Helvetica, sans-serif;">Author: </span></strong><a href="https://mross.com/law/People/LawyerProfile/Karen_Platten__Q.C..cid285" target="_blank"><strong><span style="font-family: Arial, Helvetica, sans-serif;">Karen Platten, Q.C.</span></strong></a><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">For many individuals in Alberta, living in a relationship of interdependence (a common law relationship) without the benefit of marriage is a choice. The choice involves the notion that they do not want the legal obligations of marriage, such as division of property, to apply to their relationship. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">However, there are changes to legislation being contemplated which would impact those individuals who are in a common law relationship. The Alberta Law Reform Institute ("ALRI") in its report entitled "Property Division for Cohabitants", is reviewing the law in the area of property rights for cohabitating couples and will be forwarding their findings to the provincial government for its own review of the topic. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">The ALRI report is based on consultations with individuals who are currently cohabitating as well as with lawyers who practice in the area and other interested individuals. It appears, from the ALRI report, that many cohabitating couples already believe that they fall within the same rules regarding division of property on separation that married couples are subject to. Additionally, the majority of responses to various ALRI surveys, indicate that the public is in favour of having the same or somewhat the same rules that apply to married couples also apply to common law couples. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">While common law couples currently have rights to division of property based on rules relating to the doctrine of unjust enrichment, these rules are cumbersome and generally result in unsatisfactory outcomes for both parties. The reform of the law in this area would make it clear for couples from the outset of their relationship as to what their responsibilities and obligations are to their partners. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">Couples who do not want to be bound by the new legislation, do have an option. They can contract out of the legislation with a properly crafted agreement which deals with division of property on separation. Similar in nature to a prenuptial agreement, the agreement would determine how property would be divided on separation. Many couples prefer to retain ownership of assets which they brought into the relationship and protect the growth on those assets from division as well. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">For anyone interested in reading further on the proposed reforms, we refer you to the ALRI Report for Discussion, September 30, 2017. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">In the meantime, if you are in a common law relationship and would like to protect your assets from division with your partner, you should consult with a lawyer who is familiar with cohabitation agreements so that you can remove the possibility of the changes in legislation applying to your relationship.</span> McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com3tag:blogger.com,1999:blog-5832875178780555622.post-49980242804211910672018-05-14T14:26:00.000-07:002018-05-14T14:26:36.084-07:00New Trust Reporting Requirements – Big Implications?<span style="font-family: Arial, Helvetica, sans-serif;"><strong>Authors: </strong><a href="https://mross.com/law/People/LawyerProfile/MaryAnne_Loney.cid443" target="_blank"><strong>MaryAnne Loney</strong></a><strong> and </strong><a href="https://mross.com/law/People/LawyerProfile/Mike_Harris.cid1970" target="_blank"><strong>Mike Harris</strong></a> </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"> </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">
<span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">All trustees need to
be aware that trust reporting requirements are changing.<span style="mso-spacerun: yes;"> </span></span></span></span><br />
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Currently, a trust
only needs to file an income tax return in certain circumstances, including if
it earns income, disposes of capital property, or makes distributions to
beneficiaries during the year.<span style="mso-spacerun: yes;"> </span>There is
no current requirement to identify all of the trust’s beneficiaries.</span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">However, the 2018 Federal
Budget announced that starting in 2021, except for specifically exempted trusts,
trusts resident in Canada and non-resident trusts required to file in Canada
will need to: </span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 12pt 0in 0pt 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-ansi-language: EN-CA;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="mso-ansi-language: EN-CA;">file income tax returns annually;</span></span></div>
<div class="MsoBodyText" style="margin: 12pt 0in 0pt 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-ansi-language: EN-CA;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="mso-ansi-language: EN-CA;">report all the settlors, trustees and
beneficiaries; and </span></span></span></div>
<div class="MsoBodyText" style="margin: 12pt 0in 0pt 0.5in; mso-hyphenate: none; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-ansi-language: EN-CA;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="mso-ansi-language: EN-CA;">identify persons who exert control over trustee
decisions related to income and capital (“protectors”).<o:p></o:p></span></span></span></span></div>
<span style="font-family: Arial, Helvetica, sans-serif;">
</span><br />
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Excluded trusts
include constructive or resulting trusts (which usually no one knows exist
until proclaimed by a judge), lawyer trust funds, trusts that qualify as
non-profits or charities, trusts governed by registered plans (which already
require significant reporting), and graduated rate estates.<span style="mso-spacerun: yes;"> </span>Most importantly, many common forms of trusts
(such as family trusts and spousal trusts) will not be exempted from this
reporting requirement.</span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">There will also be penalties
for late filing of up to $2,500, plus a penalty of <i style="mso-bidi-font-style: normal;">5% of the maximum fair market value of the property</i> if the failure
to file was made knowingly or due to gross negligence. Given the CRA’s willingness to find gross
negligence on the part of taxpayers, this is quite alarming.</span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">The purpose of these
changes is to help identify aggressive tax planning, tax evasion and money
laundering – concerns that have been in the media both nationally and
internationally.<span style="mso-spacerun: yes;"> </span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">However, trustees
that have not been responsible for filing tax returns in the past will now have
to ensure returns are properly filed, which adds an additional administrative burden.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Further, the new
requirement for trusts to report settlors, beneficiaries, trustees and
protectors will provide the CRA with substantially more information they can
use for audit purposes.<o:p></o:p></span></span></span></span></span></span></span></span></div>
<span style="font-family: Arial, Helvetica, sans-serif;">
</span><br />
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<i style="mso-bidi-font-style: normal;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Potentially Big Implications?</span></span></i></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">While there are a
few years before these changes come into effect, it is important trustees know
the changes are coming and consider the implications this additional disclosure
may have.<span style="mso-spacerun: yes;"> </span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Currently, there are
many rules dealing with beneficiaries and trusts that are rarely audited
because the CRA doesn’t know what trusts are out there and who all their
beneficiaries are.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">For example, in a
discretionary trust, pursuant to subparagraph 256(1.2)(f)(ii) of the <i style="mso-bidi-font-style: normal;">Income Tax Act</i>, all beneficiaries are
considered to own all the shares of corporations owned by the trust in
determining whether corporations are associated.<span style="mso-spacerun: yes;"> </span>The effect of this provision was recently
upheld by the Tax Court in <i style="mso-bidi-font-style: normal;">Moules
Industriels et al v The Queen </i>(2018 CCI 85).</span></span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">When corporations
are associated, they are required to share a single $500,000 business limit for
purposes of claiming the small business deduction.<span style="mso-spacerun: yes;"> </span>Association rules are complex, but the effect
is that corporations owned by beneficiaries of a discretionary trust, depending
on the various share ownerships, may be associated with any corporations owned
by the trust.<span style="mso-spacerun: yes;"> </span>Further, since two corporations
that are associated with a third corporation are in turn associated,
corporations owned by two beneficiaries of a trust, with no connection beyond
both being owned by someone who is a beneficiary of the trust, may end up being
associated.<span style="mso-spacerun: yes;"> </span>Cousins with completely
unrelated corporations may suddenly find themselves sharing a single small
business deduction.</span></span></span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">While this issue has
existed for several years, it has not been a significant concern because the
CRA usually did not know who the beneficiaries of a trust were – especially not
the beneficiaries of discretionary trusts who owned profitable corporations of
their own, as they were less likely to receive distributions and therefore come
to the CRA’s attention.</span></span></span></span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">All this will change
once the first trust returns are filed for 2021.<span style="mso-spacerun: yes;"> </span>The CRA will suddenly have records of every
beneficiary of every trust (except for trusts where the trustees fail to file
and are subject to penalties).<span style="mso-spacerun: yes;"> </span>The CRA
will be able to combine this information with their records of all private
corporations shareholders.<span style="mso-spacerun: yes;"> </span>It’s far too
easy to imagine them putting together an algorithm to identify where associated
corporations have not been properly identified in corporate tax returns – not
just for 2021 but for previous years as well.</span></span></span></span></span></span></span></span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-spacerun: yes;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">And this is only one
potential new audit avenue open to the CRA.<span style="mso-spacerun: yes;"> </span>Trusts and their beneficiaries are often considered to be related for
many purposes and as soon as any of the parties are non-resident there are a
whole slew of other potential issues.<o:p></o:p></span></span></span></span></span></span></span></span></span></span></span></div>
<span style="font-family: Arial, Helvetica, sans-serif;">
</span><br />
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Conclusion</span></span></b></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">With this change on
top of other recent changes, such as the taxation of corporations, this is now
a very good time for trustees to review the tax implications of their trust’s
current structure.<span style="mso-spacerun: yes;"> </span>Especially family
trusts owning shares of a private corporation may no longer make sense.</span></span></span></div>
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="mso-ansi-language: EN-CA;"><span style="font-family: Arial, Helvetica, sans-serif;">Even if there
continues to be valid reasons to have the trust in place, it is more important
than ever everyone is properly reporting to the CRA.<span style="mso-spacerun: yes;"> </span>The chances of getting caught for failing to
do so are going up substantially.<o:p></o:p></span></span></span></span></div>
<span style="font-family: Arial, Helvetica, sans-serif;">
</span>McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com2tag:blogger.com,1999:blog-5832875178780555622.post-1661484979284576532018-04-04T10:34:00.001-07:002018-04-04T14:55:55.863-07:00Judicial Discretion, Consent and Closure: Priority and Control Over the Dead<div style="text-align: justify;">
<b>By: <a href="https://mross.com/law/People/LawyerProfile/Richard_Wong.cid1974" target="_blank">Richard Wong, Student-at-Law </a></b></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
The Alberta Court of Appeal in <i>Campbell </i>v<i>. Campbell</i>, 2018 ABCA 46, agreed with the chambers judge, dispensing with the consent of the appellant-father of the deceased to have his son’s remains tested to determine the cause of death under “suspicious circumstances”. Although the father opposed the mother’s application in order to maintain the integrity of their deceased son’s remains, the chambers judge empathized with the mother, who believed testing was necessary to bring dignity to their son’s death and closure to their family.</div>
<div style="text-align: justify;">
<br />
On appeal, the father argued that Section 36 of the <i>General Regulation to the Funeral Services Act</i>, Alta Reg 226/1998, gave him priority and control over the disposition of the deceased’s remains. Section 36 specifically states that, “subject to an order of the Court,” the right to control the disposition of human remains vests in the prescribed order of priority, which includes a parent of the deceased. Where parents of the deceased cannot agree to whom controls the disposition of the remains, the <i>General Regulation</i> stipulates, “the order of priority begins with the eldest person in that rank.” This would mean the father of the deceased in this case. </div>
<div style="text-align: justify;">
<br />
Despite the father conceding that the <i>General Regulation</i> gave the Court discretion to depart from the prescribed priority, he argued that the Court must have persuasive reasons for doing so. Specifically, the father argued that there was no factual basis to support the chamber judge’s decision. He stated that no evidence was presented that supported the position that testing should be done on the deceased’s remains or that testing would accomplish anything. Although the Court of Appeal agreed that no expert evidence was presented to identify a potential connection to the death of the deceased, such as having a history of concussions, this did not provide sufficient reason for the Court to prevent further testing as other possibilities such as mental illness and substance abuse had already been ruled out. </div>
<div style="text-align: justify;">
<br />
Considering the facts before him, the chambers judge concluded that the benefits of conducting testing on the preserved remains of the deceased outweighed the lost opportunity of determining the deceased’s cause of death. The Court of Appeal agreed, finding that the chambers judge acted reasonably in exercising his discretion, ultimately dispensing with the father’s consent, and providing closure for the family. At the end of the day, the facts of this case, Court of Appeal and the drafters of the <i>General Regulation to the Funeral Services Act</i> gave the chambers judge control over the dead.</div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-20269821669512409722018-02-15T08:12:00.002-08:002018-02-15T08:15:36.894-08:00Who Gets the Farm? <span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">Author: </span><a href="https://mross.com/law/People/LawyerProfile/Joel_Franz.cid475" target="_blank"><span style="font-family: "arial" , "helvetica" , sans-serif;">Joel Franz</span></a></span><br />
<span lang="EN-US" style="font-family: "arial" , "helvetica" , sans-serif;"></span><br />
<span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">Justice Nielsen released his decision in <i style="mso-bidi-font-style: normal;">Kachur Estate</i>, 2017 ABQB 786, on
December 19, 2017.<span style="mso-spacerun: yes;"> </span>While disputes
regarding estate succession in the farming context are common throughout
Alberta, reported decisions are less plentiful, given that most matters settle
prior to a hearing.<span style="mso-spacerun: yes;"> </span>This decision
provides some guidance regarding the passing of farm land and equipment in not
uncommon circumstances.<span style="mso-spacerun: yes;"> </span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">In this case, the testator farmed some
property with his brother.<span style="mso-spacerun: yes;"> </span>The testator’s
will provided that a life estate be provided to the brother to allow him to
continue farming, along with “all of my farm equipment”.<span style="mso-spacerun: yes;"> </span>Upon the death of the brother, the land and
equipment was to go to the testator’s two nephews in equal shares.<span style="mso-spacerun: yes;"> </span>Other issues were also dealt with in the
decision, but for the purposes of this blog post, we will be dealing with what
the court decided relating to “farm equipment” and the extent of the brother’s
gift.<span style="mso-spacerun: yes;"> </span>The brother argued at trial, that
he owned the farm equipment jointly with his brother, and that upon the
testator’s passing, all of the property passed to him.<span style="mso-spacerun: yes;"> </span>The brother’s argument was rejected based on conflicting
evidence, and section 11 of the <i style="mso-bidi-font-style: normal;">Alberta
Evidence Act</i>, which requires that parties to estate litigation “shall not
obtain a verdict…on that party’s own evidence in respect of any matter
occurring before the death of the deceased person, unless the evidence is
corroborated by other material evidence”.<span style="mso-spacerun: yes;"> </span>In this case, only the brother’s evidence suggested that the farm
equipment was to be passed to him jointly and pass outside the estate.</span></span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">Justice Nielsen also had to determine
what included “farm equipment” for the purposes of the will.<span style="mso-spacerun: yes;"> J</span>ustice Nielsen’s first port of call was the <i style="mso-bidi-font-style: normal;">Oxford Dictionary</i> which defined farm
equipment as “the necessary items for farming”.<span style="mso-spacerun: yes;"> </span>No list of farm equipment was provided and evidence was provided at
trial that if the equipment was used on the farm, it was likely farm
equipment.<span style="mso-spacerun: yes;"> </span>This would include vehicles
and other items that may not necessarily be considered farm equipment <i style="mso-bidi-font-style: normal;">per se, </i>however if they were used for
the primary purpose of farming they would be included in the definition. <span style="mso-spacerun: yes;"> </span></span></span></span></span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"></span></span></span></span></span></span></span><br />
<span lang="EN-US"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">Finally, the court noted that as part of
the brother’s life interest, he would be required to pay the cost of insurance
for the land, buildings, farm equipment, as well as taxes, utilities, and cost
of reasonable maintenance and repair of the land and farm equipment until the
brother passed away.<span style="mso-spacerun: yes;"> </span>The court
acknowledged that there was case-law authority suggesting no obligation on a
life tenant to insure property.<span style="mso-spacerun: yes;"> </span>However,
after considering all of the evidence, the court held that it would have been
in the reasonable contemplation of testator that the land, property and
equipment be insured, particularly when all of these items were to be passed to
the next generation after the brother had passed away.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span></span></span></span></span><br />
<div class="MsoBodyText" style="margin: 0in 0in 6pt;">
<span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"></span></span></span><br />
<span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">The court did note that the brother was
not obliged to pay for major repairs to the land, home or other buildings
including farm equipment and that the nephew beneficiaries were responsible for
expenses of a capital nature. Only
ongoing routine maintenance was to be paid for by the brother.<span style="mso-spacerun: yes;"> </span></span></span></span></span></span><br />
<span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"></span></span></span></span></span></span><br />
<span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="mso-spacerun: yes;"><span lang="EN-US"><span style="font-family: "arial" , "helvetica" , sans-serif;">This case serves as another useful
reminder that in joint farming operations, it is always best to have agreements
put in writing as to properly clarify each party’s position and to prevent
costly litigation.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></span></span></span></span></span></span></div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-18483894649911059692018-01-26T09:33:00.000-08:002018-01-26T09:33:07.639-08:00The Importance of Signing<div style="text-align: justify;">
<span style="font-size: large;">By <a href="https://mross.com/law/People/LawyerProfile/Andrea_MacLean.cid1967" target="_blank">Andrea MacLean, Student-at-Law</a></span></div>
<div style="text-align: justify;">
<span style="font-size: large;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-size: large;">Alberta’s <i>Wills and Succession Act</i>, SA 2010, c W-12.2 (“WSA”) gives courts the power to order that a will is valid, even where it does not comply with formal requirements required by the Act. But how far can a court go?</span><br />
<br />
<span style="font-size: large;">The Alberta Court of Queen’s Bench found, on December 6, 2017, that power will not allow a court to add a signature to an unsigned will where the testator had not had the opportunity to review the will and had not been given the chance to sign it.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;"><b>Facts</b></span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">In the decision of <i>Edmunds Estate</i>, 2017 ABQB 754, a paralegal prepared a will according to the instructions of the testator, Ms. Edmunds. However, Ms. Edmunds never had the opportunity to review the final version of the unsigned will; she was hospitalized and then passed away unexpectedly before she had a chance to execute it. The beneficiary of the unsigned will asked the Court to validate it despite the absence of Ms. Edmunds’ signature.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;"><b>Law</b></span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">Section 39 of the WSA allows the Court to add or subtract from a will to make it accord with a testator’s evidenced intentions. However, in order to do so, the Court must be satisfied, “on clear and convincing evidence”, that the will does not reflect the testator’s intentions because of an accidental slip or omission or if the person preparing the will failed to give effect to the testator’s instructions.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">When it comes to adding a signature, the Court is <i>only</i> permitted to add the testator’s signature if the Court is satisfied on clear and convincing evidence that the testator:</span></div>
<div style="text-align: justify;">
<blockquote class="tr_bq">
<span style="font-size: large;">(a) intended to sign the document but omitted to do so by pure mistake or inadvertence, and </span><br />
<span style="font-size: large;">(b) intended to give effect to the writing in the document as the testator’s will.</span></blockquote>
</div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;"><b>Analysis</b></span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">In order for a court to rectify the will, there must first be an accidental omission, or a situation where the person who prepared the will misunderstood, or failed to give effect to, the testator’s instructions.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">The death of a testator, as in<i> Edmunds Estate</i>, is not an accidental omission. The Court in that case found, ['Ms. Edmunds'] death cannot be responsibly characterized as an ‘accident’ that resulted in the omission of her signature on the unsigned will.” The Court did find, however, that if she attended a meeting to execute the will but failed to do so, there may have been a basis for a different conclusion.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">The Court also found that an unsigned will does not represent a failure on the part of the person preparing the will to give effect to a testator’s instructions. The instructions, the Court found, were never given by Ms. Edmunds as the execution meeting never occurred and therefore this section did not apply.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">The Court also determined that a signature can only be added if there was clear and convincing evidence it was omitted by “pure mistake or inadvertence.” The Court relied on other cases which showed that a testator dying does not satisfy the element of omission by “pure mistake or inadvertence.” The Court found a pure mistake implies that the testator thinks she is doing one thing but, in fact, does something else (ex: executing a power of attorney and mistaking it for a will). Inadvertence arises from accidental oversight. Neither were present in this case.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">In <i>Edmunds Estate</i>, there was no clear and convincing evidence of intention to sign the document and to give effect to the writing in the document as the testator’s will. Though, if Ms. Edmunds had attended upon execution and attempted to sign the will, the Court indicated it may have arrived at a different conclusion.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;"><b>Conclusion</b></span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">It is difficult to imagine a scenario in which a Court will ever validate an unsigned will where the testator had not had the opportunity to review and execute it. It is, therefore, critically important for an individual to follow through with completion of the will to ensure that his or her intentions will be carried out.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">Where a testator dies before reviewing and signing his or her will, it will be challenging to show clear and convincing evidence that he or she intended to sign the unsigned will. The Court recognized that wills are frequently revised, sometimes dramatically, at the very meeting convened to deal with execution. Arguing that a document never reviewed by the testator perfectly reflected his or her wishes is likely going to be unsuccessful.</span></div>
<div style="text-align: justify;">
<br />
<span style="font-size: large;">Further, the death of a testator does not constitute evidence that the failure to sign arose through pure mistake or inadvertence. Death, even accidental death, does not meet the definition of “pure mistake” or “accidental oversight.”</span></div>
McLennan Ross LLPhttp://www.blogger.com/profile/17030264125089486790noreply@blogger.com0tag:blogger.com,1999:blog-5832875178780555622.post-66679170524878806252018-01-05T10:17:00.001-08:002018-01-05T12:46:15.889-08:00Gifting of Irrevocable Right of Survivorship<div style="text-align: justify;">
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<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;">By <a href="https://mross.com/law/People/LawyerProfile/Justine_Bell.cid1975" target="_blank">Justine Bell, Student-at-Law</a></span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Recently, Alberta’s Court of Queen’s Bench held an <i>inter vivos </i>gift of a joint interest in real property may be irrevocable where a party intended to gift an irrevocable right of survivorship.</span></span><br />
<div style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br />In <i>Pohl v Midtal</i>, 2017 ABQB 711, a mother and father transferred their interest in a quarter-section of farmland to themselves and their daughter as joint tenants. The parents had intended to live on (and farm) the quarter-section until they were unable to do so and, thereafter, for their daughter to assume possession of the quarter-section. Several years post-transfer, the father’s relationship with his daughter had deteriorated. The father, on his own behalf and as the mother’s attorney, registered a transfer thereby severing the parties’ joint tenancy and rendering the daughter a tenant in common. This transfer worked to “reduce” the daughter’s joint interest in the quarter-section to a mere one-third undivided, common interest. The effect of this “reduction” was to deprive the daughter of a right of survivorship (i.e., an entitlement to the whole quarter-section upon the death of her parents). The daughter, accordingly, brought an action against her (deceased) parents as means of recovering her joint interest in the quarter-section.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br />Briefly, the Court of Queen’s bench held a party gifting a joint interest is presumed to retain the ability to sever same. The Court, however, held this presumption may be rebutted with evidence indicating a gifting party intended otherwise:</span></span></div>
<div style="text-align: justify;">
<blockquote class="tr_bq">
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;">There is a presumption that the right of survivorship is given with the joint tenancy in a “normal” way, preserving the ability of the parent to sever. But that presumption can be rebutted by evidence that the intention of the transferor was to give an irrevocable right of survivorship which would prevent the transferor from applying to sever the joint tenancy in the future (at para 52).</span></span><span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></span></blockquote>
</div>
<div style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Here, the Court held this presumption of severability had been rebutted and, as such, the daughter had been gifted an irrevocable right of survivorship. That is, evidence of the parents’ intentions (<i>i.e</i>., that their daughter would take exclusive benefit of the quarter-section upon their death) allowed for an inference they had relinquished their right of severance upon gifting her a joint interest in the quarter-section.</span></span></div>
<div style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br />Accordingly, one ought to take caution when gifting a joint interest. While the law assumes a gifting party retains his/her right to sever a joint tenancy, care should be taken to document an irrevocable right of survivorship has <u>not</u> been gifted. Conversely, a gift of a joint interest in property with a right of survivorship may be confirmed in a will as a means of ensuring the intention of such a gift is understood by all parties involved.</span></span></div>
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