Author: Ian Hull

20 Mar

Contractual Obligations and Estates

Ian Hull Estate & Trust, Estate Planning, General Interest, Litigation, Trustees, Uncategorized Tags: , , , , , , , 0 Comments

An estate trustee may be bound to a contract previously entered into by the deceased. This duty is distinct from the duty of an estate trustee to discharge all debts of the deceased.

There are four main elements of a contract:

  • Offer
  • Acceptance
  • Intention (consensus ad idem/meeting of the minds)
  • Consideration

Prior to the formation of a contract, it is possible for an offer to be revoked by death, if the contract has not been accepted by the surviving party. If performance of a contract has already been initiated by the surviving party, the contract may not be able to be revoked. This is due to the fact that part-performance of a contract may validate a contract. The doctrine of part-performance has been upheld in cases such as Lensen v. Lensen, 1984 CanLII 2424 (Sask CA), and Thompson v Guaranty Trust Co., [1974] S.C.R. 1023.

In general, contracts often will have a clause stating that the terms are binding on the estate of a contracting party. Therefore, if a contract is found to be valid,  the estate of a deceased may be bound by a contract entered into by the deceased. It is important to note that a contract need not be formally executed and signed in order to be considered enforceable by the court.

In Bayer Estate v. Blue Button Club, 2007 BCSC 517, the British Columbia Superior Court upheld a contract on the death of a party. In this case, the deceased, Bernard Bayer, and his employer, Blue Button Club, entered into an employment agreement for 10 years, with an annual base salary of $60,000.00 plus benefits. The contract provided that, upon the death of Bayer, the Club would pay into deceased’s estate an amount equal to the salary and benefits that the deceased would have earned. The amount paid into the estate was to be based on how much time was left in the employment contract. The contract also had a provision naming the Club as a beneficiary of the deceased’s insurance policy, so long as the Club was to maintain insurance on the life of Bernard. Upon the death of Bayer, the Club tried to submit that the employment contract was not enforceable. The Court rejected the Club’s submissions and upheld the contract, requiring the Club to pay the deceased’s salary into his estate.

Aside from part-performance of a contract or having a formally executed contract, it is possible to enter into a verbal contract prior to the formal contract being executed. Where a tentative agreement is reached from oral negotiations, the intentions of the parties are the key factor in determining if a contract is in existence. In attempting to enforce a contract in which one of the parties is deceased, the Court will look to the intention of the deceased in order to determine whether or not they intended for a contract to be formed.

Thanks for reading,

Ian M. Hull

Other Articles You Might Be Interested In

Getting Out of a Cellphone Contract

The Legal and Bioethical Questions Regarding Surrogacy Contracts

Enforceability of Domestic Contracts

13 Mar

Removal of an Estate Trustee

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Trustees, Wills Tags: , , , , , 0 Comments

If an estate trustee is not fulfilling their duties and is not acting in the best interests of the estate, it is possible to commence an application for removal.

When seeking to remove an estate trustee in Ontario, anyone with a financial interest in an estate can apply to have an executor passed over or removed, pursuant to s. 37(3) of the Trustee Act. Rule 14.05(3)(c) of the Rules of Civil Procedure, allow an application to be commenced for the purpose of “the removal or replacement of one or more executors, administrators or trustees, or the fixing of their compensation.” The applicable principles for the removal of an executor have been established in Letterstedt v Boers (1884), 9 App Cas 271 (South Africa PC) and have been summarized in Johnston v Lanka Estate, 2010 ONSC 4124:

  • The court will not lightly interfere with the testator’s choice of estate trustee;
  • Clear evidence of necessity for removal is required;
  • The court’s main consideration is the welfare of the beneficiaries; and
  • The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate/trust.

A recent British Columbia Court of Appeal decision, Al-Sabah v Al-Sabah, 2016 BCCA 365,  upheld the removal of an estate trustee of an estate on the basis that she did not comply with the notice provisions of the Wills, Estates and Succession Act, and was not acting in the best interests of the estate.

In this case, the deceased died in 2003, intestate, and left 15 beneficiaries, including his two sons, two wives, and seven daughters. One of his daughters was the appellant and the estate trustee of the estate. The respondents on the appeal comprised 79% of the beneficiaries to the estate.

Upon the death of Mr. Al-Sabah, estate litigation was commenced across several countries, as he had held property in many different locations. The appointment of the estate trustee by British Columbia was successful, however, the appellant had also applied to be the estate trustee of the estate in London, and had her position revoked, and she commenced at least 4 actions in Kuwait against other beneficiaries, all of which were unsuccessful.

In chambers, the estate trustee was removed, and appealed that ruling. On appeal, it was upheld that the estate trustee did not exercise reasonable diligence in providing notice to the other beneficiaries of her intention to apply for the position, and that she failed to disclose relevant information to the beneficiaries.

The British Columbia Wills, Estates and Succession Act section 121, and the British Columbia Supreme Court Rules establish the requirements for notice of the beneficiaries. It was established that the estate trustee did not provide notice to the proper addresses required by the rules, as the addresses to which she forwarded notices were almost all incorrect. The judge also noted that the application was made amidst “hotly contested” and “acrimonious” estate litigation, and that when she applied for her grant of administration, she did not disclose that there was significant litigation surrounding the estate in other countries.

If this case were to have taken place in Ontario, it is likely that the Ontario courts may have come to the same decision as the British Columbia court, in applying the principles as established in Letterstedt v Boers. The court would not have been interfering with the testator’s choice of estate trustee as he died intestate, and it is clear that the removal was required due to her dishonesty and her lack of consideration of the welfare of the beneficiaries, thereby endangering the administration of the estate.

Thank you for reading,

Ian M. Hull

Other Articles You Might be Interested In

The High Bar for Estate Trustee Removal

What Should an Estate Trustee do when a Beneficiary Cannot be Located?

Removing an Estate Trustee for Conflict of Interest

 

 

06 Mar

Does Solicitor/Client Privilege Extend to Trustees and Beneficiaries?

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, Trustees, Wills Tags: , , , , , 0 Comments

Last week we considered the application of solicitor/client privilege to a deceased testator and their testamentary intentions. A further consideration in examining the passing of solicitor/client privilege upon death is whether the individual claiming privilege is a trustee, executor, or a beneficiary.

Trustees, executors, and beneficiaries are generally regarded as having a community of interest, which may entitle them to solicitor/client privilege. Under the common law, there is not a need to protect communications between solicitors and clients from disclosure to persons who are claiming under the estate where the executor (or trustee) and beneficiary have a joint interest in the advice. The common interest/joint interest provision applies so that no privilege will attach to communications between a solicitor and client against a person who has a joint interest with the client in the subject matter of the communication. There can be no privilege asserted against beneficiaries of a trust over communications between a trustee and a trustee’s solicitors regarding the business and affairs of the trust.

Re Ballard Estate, (1994), 20 OR (3d) 189 (Ont. Gen. Div.), held that documents will be said to belong to a beneficiary because the solicitor was engaged and giving advice in regard to the administration of the estate and for the benefit of all beneficiaries who take or may take under the will or trust.

Pursuant to paragraph 16 of Chang v Lai Estate, 2014 BCSC 128, “it is well established that a beneficiary has a proprietary interest in and a right to production of any document relating to advice sought and obtained by an executrix or trustee in connection with the administration of an estate. The executrix cannot claim solicitor/client privilege over such documents because they have a commonality of interest with the beneficiaries in the administration of the estate.” As such, the advice taken by a trustee or an executor is for the benefit of all beneficiaries of the will, establishing a joint interest between the executrix and beneficiaries.

The aforementioned case further highlighted that a beneficiary is not entitled to the production of all communications between legal counsel and an executor. If there is an adversarial relationship between a trustee and a beneficiary, there is no joint interest that would compel disclosure of communications that would normally be protected by solicitor/client privilege. Where a beneficiary is in an adversarial relationship with the executor, solicitor/client privilege would appear to remain in place to preserve confidentiality

Moreover, if litigation is commenced against a third party on behalf of the trust, the trustee cannot generally claim privilege as against the beneficiary, as the beneficiary has an interest in the outcome of the litigation. However, pursuant to the case of Talbot v Marshfield [1865], if a trustee is in litigation against a beneficiary, and especially if the trustee is paying their own legal costs, the trustee can generally uphold privilege as against the beneficiary.

Thanks for reading,

Ian M. Hull

Other Articles You May Be Interested In

What Happens When an Estate Trustee Dies?

Anticipating Trustee Problems

How does Solicitor/Client Privilege Apply on the Death of a Testator?

27 Feb

How does Solicitor/Client Privilege Apply on the Death of a Testator?

Ian Hull Beneficiary Designations, Estate & Trust, Estate Planning, Executors and Trustees, General Interest, Litigation, Trustees, Wills Tags: , , , , , , 0 Comments

What happens to communications between a solicitor and a testator once the testator passes away? Can privilege be waived in order to determine the intentions of a testator?

As stated in R v McClure, 2001 SCC 14, “solicitor/client privilege must be as close to absolute as possible to ensure public confidence and retain relevance. As such, it will only yield in certain clearly defined circumstances, and does not involve a balancing of interests on a case-by-case basis.”

It has been established that the beneficiary of privilege (i.e. the client) is able to pass on their privilege to established successors. Pursuant Bullivant v AG for Victoria [1901] (HL), a testator’s death does not destroy the privilege that can be asserted by an executor, and the heirs of the testator.

In Hicks Estate v. Hicks, (1987) 25 E.T.R. 271, the Ontario District Court (as it then was) was faced with the question of whether an Estate Trustee could step into the shoes of the deceased individual and waive privilege in the same fashion as the deceased. In this case, the court clarified that solicitor/client privilege exists for the benefit of the client, not the solicitor.

In Goodman v Geffen, [1991] 2 SCR 353, the Supreme Court of Canada established that there are situations where privilege does not arise where the interests of the party seeking information are the same as those of the individual who retained the solicitor. For example, the court may receive evidence from a solicitor of instructions given to the solicitor by a deceased testator in order to determine the testator’s true intentions. This principle has been further explained in the case of Stewart v Walker (1903) 6 OLR 495 (CA): “the reason on which the rule is founded is the safeguarding of the interest of the client, or those claiming under him when they are in conflict with the claims of third persons not claiming, or assuming to claim under him.” As such, upon the death of a testator, it is possible for the privilege between the testator and their solicitor to extend beyond death.

Aside from trying to determine the true intentions of the testator, the principle of solicitor/client privilege upon the death of a testator can be applied to the disclosure of legal opinions to a trustee, as a trustee is bound to act in the best interests of the beneficiaries and to further their interests. This will be discussed further next week.

Thanks for reading,

Ian M. Hull

Other Articles You May Be Interested In

Can an Estate Trustee Waive Privilege?

Waiver of the Solicitor and Client Privilege

Leaving an Inheritance: An Obligation or Privilege?

 

13 Feb

Expenses Deducted from Estate Trustee Compensation

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, Passing of Accounts, Uncategorized, Wills Tags: , , , , , , , 0 Comments

Pursuant to the testamentary document of a deceased, or the Trustee Act, an estate trustee may take compensation. We have previously blogged on the calculation of estate trustee compensation.

However, in calculating compensation, there are certain expenses that will be deducted from the compensation to which an estate trustee would otherwise be entitled. As a general rule, expenses paid to a third party for tasks that are properly a part of the main duties and expected expertise of the estate trustee (i.e. “executor’s work”) will be deducted from compensation.

Tasks that are Generally Deducted from  Compensation

Generally, the determination of whether the amount will be deducted will depend on the complexity of the task and the circumstances of the particular estate.

If an estate trustee delegates any of his or her general duties to professionals, it is usually a personal expense for which he or she will not be compensated. Examples of this may include preparing the estate tax return, investing the estate assets, and preparing accounts.

Maintaining proper accounts is the primary duty of a trustee and the preparation of  accounts has generally been deducted from estate trustee compensation. If an estate trustee acted improperly, the fees to have accounts prepared will be deducted. While accounts are specialized and the argument has been made that an estate trustee may not have the requisite knowledge to prepare proper accounts, the preparation is still excluded from estate trustee compensation.

An estate trustee is not entitled to be compensated for legal fees paid for their own personal benefit; however, the case of Geffen v Goodman, 1991 2 SCR 353, established that an individual may be compensated for any legal fees incurred to defend the interests of the estate.

If an estate trustee’s actions resulted in a loss to the estate through mismanagement of the estate assets, the amount will likely be deducted from compensation. An example of mismanagement is if the estate trustee fails to prudently invest the estate assets.

Tasks that are Generally Not Deducted from Compensated

In Young Estate, 2012 ONSC 343, the court found that investment management was beyond the skill of an estate trustee, and it was proper to retain and pay private investment counsel out of the assets of the estate. An investment or financial manager may be necessary to hire and pay through estate assets if the expertise is reasonably outside the expertise of the average estate trustee.

An estate trustee can also hire consultants, investment managers, property managers or operating managers if an estate has a corporation as an asset, and can pay their fees out of the estate if it would not be reasonable to expect an estate trustee to have reasonable knowledge of the topic.

In summary, it bears repeating that whether an expense is deducted from compensation will depend on the particular circumstances of the estate and the particular expertise of an estate trustee.

Thanks for reading,

Ian M. Hull

Other Articles You May Be Interested In

Executor and Trustee Compensation

Taxation of Trustee Compensation

When Does an Attorney for Property Lose the Right to Claim Compensation?

30 Jan

A Novel Argument by an Adopted Child in British Columbia

Ian Hull Beneficiary Designations, Estate & Trust, Estate Planning, General Interest, In the News, Litigation, News & Events, Wills Tags: , , , , , , , 0 Comments

As societal norms are continuously changing and evolving, there has been a change in attitudes toward the relationship between adopted children and their biological parents. Today, society encourages adopted children and their birth parents to re-establish a relationship. For example, we have previously blogged on a change of the law in Saskatchewan, which provides for an adult adopted child to reconnect with their birth parents.

In Ontario, the legal status of adopted children is governed by the Child and Family Services Act (the “CFSA”). Section 158(2) of the CFSA provides that, upon an adoption order being granted, the adopted child becomes the (legal) child of the adoptive parent and ceases to be the child of the person who was his or her parent before the adoption order was granted. Pursuant to this statute, once a child is adopted, they are not entitled to their birth parent’s estate unless specifically provided for in the birth parent’s will.

Furthermore, in Ontario, there are no direct provisions governing a testator’s wishes in distributing their property. There is no requirement that all children must be treated equally, or that an individual must leave a part of their estate to their children through a testamentary document. Statutory protection does exist, for dependants, however, under Part V of the Succession Law Reform Act.

In contrast, the law in British Columbia provides that the Court has discretion to vary a will to remedy disinheritance of a child. Pursuant to s. 60 of the Wills, Estates and Succession Act (“WESA”), a parent must make adequate provision for their children, and if the court does not find a testamentary division among the children to be equitable, the court can intervene.

A recent case out of British Columbia considered a novel argument: does the receipt of a benefit under a birth parent’s will entitle an adopted child to argue for a greater share of the estate under section 60 of the WESA?

In the Boer v Mikaloff, 2017 BCSC 21, Mr. Boer was legally adopted as a baby to an adoptive family. He became reunited with his birth mother around the age of thirty, and in his birth mother’s last will and testament, he received a portion of her estate. Mr. Boer challenged his birth mother’s last will and testament in court, arguing that pursuant to s. 60 of the WESA, he was not given an equitable share of his mother’s estate compared to his mother’s other children.

The court held that Mr. Boer was not entitled to an equitable share, as he was not legally considered to be his birth mother’s child. The court held that section 3(2)(a) of the WESA does not allow an adopted child to manipulate a bequest by the child’s pre-adopted parent into a s. 60 claim and applied the case of Canada Trustco Mortgage Co. v Canada, 2005 SCC 54, to uphold that the text, context and purpose of the statute in this regard was clear.

Thanks for reading,

Ian M. Hull

More Articles You Might be Interested In

Can you be adopted as an adult?

Do adopted children still receive entitlement to their birth parent’s estate?

Can you be adopted into a trust?

 

 

 

23 Jan

The Common Law Slayer Rule

Ian Hull Capacity, Estate & Trust, Estate Planning, Ethical Issues, General Interest, Health / Medical, In the News, News & Events, Public Policy Tags: , , , , , , , , 0 Comments

The common law slayer rule makes the law in Canada clear that committing murder will prevent a person from inheriting the estate of the victim. For clarity, the accused must be found guilty and exhaust all of their rights to appeal before the courts will void a testamentary gift or beneficiary designation.

In the cases of Helmuth Buxbaum and Peter Demeter, who were found guilty of murdering their wives, the court refused to allow the men to benefit from their crimes by collecting the proceeds of their wives’ insurance policies. Pursuant to the case of Demeter v British Pacific Life Insurance Co., [1984] OJ No 3363, a criminal conviction will be accepted as proof of criminal activity in civil cases. Therefore, a person who has been convicted of murder cannot argue in civil court proceedings that he or she is innocent and capable of accepting a testamentary gift.

Recently, in Minneapolis, an individual named Michael Gallagher killed his mother, and around a year later, is attempting to obtain her life insurance proceeds. According to an article in the Toronto Star, bedbugs were infesting the apartment of Mr. Gallagher’s mother, and he believed that she would be evicted from her home, and decided to “send her to heaven.” The law in Minnesota is similar to the law in Canada, and their legislation states that an individual who “feloniously and intentionally kills the decedent is not entitled to any benefits under the will.”

This case turns, however, on the fact that Mr. Gallagher was not convicted for murdering his mother. In July, a Judge found that he was not guilty due to reasons of mental illness, stating that he “was unable to understand that his actions were wrong.” This finding allows Mr. Gallagher to potentially have a claim to his mother’s life insurance policy.

In Canada, a  similar finding is known as NCRMD (Not Criminally Responsible on Account of Mental Disorder). If this case took place in Canada, it is likely that Mr. Gallagher would have been found NCRMD. This raises the important question of whether an individual, who is not convicted of murder, but has killed somebody, is still able to claim the proceeds as a beneficiary a testator’s estate or life insurance.

In the case of Nordstrom v. Baumann, [1962] SCR 147, Justice Ritchie stated, “The real issue before the trial judge was whether or not … the appellant was insane to such an extent as to relieve her of the taint of criminality which both counsel agreed would otherwise have precluded her from sharing in her husband’s estate under the rule of public policy.“ The court held that the public policy slayer rule does not apply if the individual was found NCRMD at the time of the killing. Furthermore, in the case of Dreger (Re), [1976] O.J. No. 2125 (H.C.J.), the court held that “[the] rule of public policy [that a person found not guilty for murder] cannot receive property under the will…the only exception to this rule is that a person of unsound mind is not so disqualified from receiving a benefit under the will of a person he has killed while in law insane.“ Lastly, the recent case of Dhingra v. Dhingra Estate, 2012 ONCA 261, upheld a similar finding and allowed the NCRMD individual to apply for the deceased`s life insurance policy.

The law in Ontario seems to uphold the principle that a mentally ill individual who was unable to understand the consequences of their actions should not be automatically disentitled to life insurance proceeds.

Thanks for reading,

Ian M. Hull

Other Articles You Might be Interested In

Red flags when applying for Life Insurance

Life Insurance Fraud and Faking Your Own Death

No-Fault Inheritance

16 Jan

The Case for Financial Support of Non-Conjugal Caregivers

Ian Hull Beneficiary Designations, Elder Law, Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Trustees, Uncategorized, Wills Tags: , , , , , , 0 Comments

With the aging population, there are increasing numbers of individuals who may require a caregiver. And that caregiver is not always privately employed, or a direct family member or a spouse.

Currently, the socio-economic situation of such unpaid caregivers has been documented as “financial hardship” due to the void created upon the terminated relationship  A recent article published by Canadian Family Law Quarterly suggests a two-pronged statutory remedy be put in place in order to: (i) provide legal recognition of such relationships, and (ii) compensate sacrifices of the unpaid/altruistic caregiver.

Who Should Compensate Unpaid Caregivers?
An important consideration in the contemplation of providing support to unpaid caregivers is whether the state or the individual accepting care should have the onus of providing financial support. In the case of Egan v Canada, [1995] 2 SCR 513, Justice Sopinka ruled in favour of individual responsibility and stated “the government was not required to be proactive in recognizing new social relationships [and that]… it is not realistic for the court to assume that there are unlimited funds to address the needs of it all.”

On the other hand, Nicholas Bala in an article published in the Queens Law Journal states: “an adult who shares a home and provides care for another economically dependent adult should be entitled to the same level of state assistance (or tax relief) [as paid caregivers] whether the dependent is a spouse, parent, sibling, uncle or friend.”

Estate Planning
Currently, aside from equitable and statutory remedies (not available to all and not certain), the only private law safeguard put in place to protect unpaid caregivers is through wills and estate planning. To protect an unpaid caregiver through a will or estate plan would require forethought by the recipient of the care.  The plan would need to be instituted at a point when the individual had capacity, and was able to properly execute a will or testamentary document.

In the case of unpaid caregiving, the care provider who is a family member may be a beneficiary of an existing estate plan (outside of any caregiving obligations). Entitlement to an enhanced benefit would be a fair way to compensate for unpaid care to the testator.

Dependant’s Relief
Another recourse for an unpaid caregiver is to apply for dependant’s relief pursuant to section 58(1) of the Succession Law Reform Act (“SLRA”).

Section 58(1) provides that:

Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them

In the case of Cummings v Cummings, 2004 CanLII 9339 (ON CA),  the Court of Appeal acknowledged that “caregiving may give rise to both legal and moral obligations to provide support.” Therefore, if an unpaid caregiver can establish themselves as a dependant of the deceased individual who was receiving their care, it is possible they may get some recourse under the SLRA.

It nonetheless bears repeating that the case for law reform relates to the person who does not meet the definition of dependant: the non-direct family member, non-conjugal caregiver who altruistically provides caregiving at significant personal sacrifice and is not named in the Will on the termination (i.e. death) of the caregiving relationship.

Thanks for reading,

Ian M. Hull

Other Articles You Might Be Interested In

Caregivers & Fiduciary Obligations

Family Caregivers Bill passes final vote

The Sandwich Generation of Caregivers

09 Jan

Saskatchewan’s New Adoption Regulations

Ian Hull Estate & Trust, Estate Planning, General Interest, In the News, News & Events, Wills Tags: , , , , , , 0 Comments

On January 1, 2017, the Government of Saskatchewan implemented changes governing the release of adult adoptees birth registration, and access to birth registration information.

Old Regulation

In Saskatchewan, prior to the adoption of the new regulations, adult adoptees required the consent of a birth parent in order to find out their birth name, the name and location of the hospital where they were born, and the name of their biological parents. The requirement of consent was very burdensome on adult adoptees who had to go through the Saskatchewan Government, specifically the Post-Adoption Services branch, in order to track down their biological parents. Locating biological parents and obtaining consent would result in average wait times of approximately three years.

New Regulation

Those eligible to apply for the newly implemented Post-Adoption Services regulations, if the adoption was finalized in Saskatchewan, are:stocksnap_dca2ae8fa9

  • an adult adoptee (18+ years of age);
  • an adoptive parent of an adoptee who is under 18;
  • a birth parent of an adoptee;
  • the adult child of a deceased adult adoptee;
  • the adult child of a deceased birth parent whose child was placed for adoption; or
  • an extended family member of an adult adoptee or birth parent.

With the new regulation, adult adoptees no longer require consent from both parties to access birth registration information. The information is readily available to individuals who file a request. With the current regulation, the wait time for information is expected to be a few weeks.

From January 1, 2016 to January 1, 2017, both adoptees and birth parents had the option to veto the release of their birth registration information, specifically the biological names. There was no option to veto the name of the birth hospital or location. According to an article by CBC News, some 84 vetoes have so far been registered by birth parents, and “significantly fewer” by adult adoptees. Vetoes can only be placed on adoptions that occurred prior to January 1, 2017. Therefore, adoptions after January 1, 2017 must be subject to the new regulations.

The Government of Saskatchewan Post-Adoption Services website offers online forms requiring documentation such as a birth certificate, drivers licence and Order of Adoption. Further documentation will be required if the individual is an adult child of a deceased adult adoptee, or the adult child of a deceased birth parent whose child was placed for adoption. Furthermore, the application allows the searching party to specify their preferred method of contact.

From an estate planning perspective, it is interesting to consider that these revisions will, in certain circumstances, cause adoptees to be named as beneficiaries in the will of their biological parents.

Thanks for reading,

Ian M. Hull

Other Articles You May be Interested In

Adult Adoptions

The Issue of Parental Recognition

Estate Litigation for the Living

03 Jan

New Life Insurance Tax Regime

Ian Hull Estate Planning Tags: , 0 Comments

On January 1, 2017, new rules for taxation of personal life insurance policies came into effect. In 2014, Bill C-43, received royal assent but its new rules on life insurance took effect this week. This marks the first change to taxation of life insurance since the 1980s.3oexfdxo6k

Key changes include:

  • Lower tax-sheltered savings limit
  • Changes to the “250% Rule” that may allow lump sum deposits in the later years of a policy
  • Less tax free income from annuities
  • Lower tax free withdrawal room for business owners
  • Changes to the rules on multi-life policies, which may affect the tax advantages of such plans

Plans issued prior to December 31, 2016 are grandfathered to the old rules, but any plans issued in the future will be subject to the new rules. A policy might lose its grandfathered status if it is converted from one kind of life insurance to another or if additional coverage is added to the policy. Changes that will not affect the grandfathered status of a plan include changing the beneficiary designation of the plan, transferring ownership, or switching from smoker to non-smoker status.

Life insurance is commonly used in estate planning to supplement the assets of an estate and to avoid certain tax liabilities. It is important that lawyers practising estate law are aware of these changes. For those whose life insurance policy is a central or significant piece of an estate plan, it may be prudent to seek tax advice to understand how these new rules might affect their plans.

Thank you for reading.

Ian M. Hull

Other articles you might enjoy:

How Can Life Insurance Supplement an Estate Plan?

Should Life Insurance Proceeds be Included in the Value of an Estate for Probate Purposes?

Red flags when applying for Life Insurance

 

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