In case you haven’t read or heard enough about the legalization of cannabis in Canada this week, here’s more.
The legalization of cannabis in Canada may have a significant impact on estate planning. Specific issues include:
- Impact on Testamentary Capacity
Today’s marijuana is not the same as marijuana from “back in the day”. The average potency of marijuana has risen from 3.9% THC in 1983 to 15.1% in 2009. On the OCS website, the only legal retailer of recreational marijuana in Ontario, cannabis is available with a labelled THC content of 17 to 28%.
The long term effect of cannabis on cognitive functions has been documented. The immediate and long term effects of cannabis use may have an impact on testament
ary capacity, much like other intoxicants or mind-altering substances.
- Impact on Bequests Conditional on Non-Use of Illegal Drugs
The use of incentive trusts is not common, but they do exist. See our blog, here, and our podcast on the topic, here. These trusts can be used to limit or restrict distributions to a beneficiary based on prohibited behavior.
An issue arises if the trust is designed to disincentive use of “illegal drugs”. The effect of the legality of marijuana may undermine the testator’s intentions.
- Insurance Issues
Numerous issues arise in the context of health and life insurance. Issues include:
- Disclosure of cannabis use and the effect on insurability and rates
- The implications of being a medical user, as opposed to a recreational user
- Whether the purchase of medical marijuana is covered by health insurance. (See our blog on this topic, here.)
- Whether a loss arising from the use of marijuana would be covered.
- Administration Issues Related to Cannabis
Issues related to administration include:
- What does the estate trustee do with cannabis possessed by the deceased?
- How is the cannabis to be valued for Estate Administration Tax purposes? (However, in light of the possession limits, this might be de minimus.)
These matters may be of greater concern in the US, where some states have legalized marijuana, while it remains illegal under federal legislation.
For a more detailed discussion of these issues from an American point of view, see “Joint wills and pot trusts: Marijuana and the Estate Planner” by Gerry Beyer and Brooke Dacus.
Have a great weekend.