Category: Estate Planning

12 Oct

I Don’t Want That Gift!

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When is a gift not a gift? When it is not accepted.

The issue of gifting and acceptance was considered recently in Leclair v. Canada, 2011 TCC 323.

There, a father gifted real property to his daughter. He did so, however, at a time when he was indebted to CRA. CRA assessed the daughter as being liable for the father’s unpaid taxes pursuant to s. 160 of the Income Tax Act. S. 160 renders a recipient of a transfer of property liable for the donor’s unpaid taxes if the recipient was a spouse, under 18 or a person with whom the donor was not dealing at arm’s length.

The court found that the daughter did not have knowledge of the transfer. Upon learning of it, and the father’s liability, she retransferred the property back to her father. 

The court considered a number of cases dealing with acceptance of or disclaimer of a gift, and case law to the effect that a failed testamentary gift is not caught by s. 160. It went on to hold that the same rules applied to inter-vivos transfers. A transfer of an inter-vivos gift must be a completed transfer, and not a failed or void transfer, and further, that intent and delivery by one party alone is insufficient to complete a gift. The gift in question was not accepted, and once the daughter had knowledge of it, it was repudiated within an acceptable time. The transfer back by the daughter amounted to a valid disclaimer of the gift, and she was found to not be jointly liable for her father’s tax debt.


Until tomorrow,

Paul E. Trudelle – Click here for more information on Paul Trudelle

11 Oct

The Gay Estate

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Non-traditional families face particular challenges when dealing with estate planning. Some legislation does not fully apply to non-traditional marriage. For example, a spouse’s right to elect to take an equalization of Net Family Property upon the death of a spouse under Ontario’s Family Law Act, only applies to married spouses.

The Gay Estate: Non-Traditional Families and the Law”, a blog maintained by Chris Tymchuck, a lawyer in Edina, Minnesota, provides helpful information for unmarried, gay, separated, divorced adoptive or “other unique families”: families who fall outside of the so-called “traditional” family structure (or as Chris says, “most of us”).

The informative site focuses mainly on the laws governing estate planning. However, it sometimes verges into other related areas. The well-laid out blog is organized by categories, making for easy access to information. The blog is well written, and the absence of legalese makes it easy for non-lawyers to understand.

Recent topics include the use of life insurance to provide for loved ones, and a two-part series on documents that should be in place in the event of death.

A very worth-while read.

Paul E. Trudelle – Click here for more information on Paul Trudelle

04 Oct

Interpretation Applications

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A paper on Interpretation Applications recently presented at Practice Gems: The Administration of Estates 2011: Avoiding the Pitfalls contains a discussion of the nature of such applications and their procedural implications. As part of the discussion, case law applicable to the types of questions that can be asked of a court in interpretation applications is reviewed.  A short summary of the points made in the paper are:

– applications for the opinion, advice and direction of the court are effective procedures to clarify ambiguous provisions of a testator’s will;
– both the substance and form of the questions brought before the court are crucial to a successful application;
– the questions should only deal with practical problems, rather than academic or future concerns;
– the questions should be structured to receive a "yes" or "no" answer; and
– judges are not prepared to assume the role of the estate trustee – they are concerned with fundamentally legal matters and will not usurp the executor’s responsibilities.
The test for rectification is also briefly reviewed – the equitable power of the court to correct errors or ommissions which compromise the testator’s true intentions.

All in all this is a succinct and helpful paper for practitioners to review when commencing interpretation applications.

Have a good day,

Natalia R. Angelini – Click here for more information on Natalia Angelini

22 Sep

Survey: Many Canadian Boomer Wills Need Updating

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BMO Financial Group announced the results of a survey yesterday revealing that while the overwhelming majority of Canadian boomers had some basic estate plan in place, almost half of them have not updated them in the last ten years.

The survey conducted by Leger Marketing polled 1002 Canadian boomers – defined as being 45 years of age or older, who hold investible assets (including real estate) worth $500,000 or more.

The survey provides some interesting statistics:

  • 85% of Canadian boomers have a will;
  • almost 50% of those who had wills had not revisited or updated their wills in 10 years;
  • the top reasons Canadian boomers prepared wills were: ensuring their assets are distributed as they wished (36%); avoiding family problems once they have passed away (34%); and protecting and looking after their family (28%);
  • those who had updated their wills were motivated to do so for the following reasons: a significant change in wealth (25%); change in a beneficiary’s marital status (21%); a death in the immediate family (11%); and a birth in the immediate family (11%);  
  • of the 15% of Canadian boomers who did not have a will in place, the main reason cited was lack of time (35%);
  • 62% indicated that they had spoken to their children or beneficiaries about the contents in their will;
  • 69% of those who had a will also had a power of attorney – of these respondents, 90% indicated that they had a power of attorney for property and 87% indicated that they had a power of attorney for personal care.

Thanks for reading,

Saman M. Jaffery

16 Aug

Retirement Planning Tips

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An article by Denise Appleby posted yesterday on the Globe and Mail website sets out the top three retirement savings tips for 55 to 64 year olds.

That group, the article advises, is more acutely aware of the need to save for retirement, and are at a critical time in their lives to assess how financially prepared they are for retirement.

The tips are:

1. Assess whether you are financially ready to retire.

This requires that you assess your assets and needs. The article has links to tools to help with these assessments.

2. Re-Assess your portfolio.

As retirement nears, many move their investments into more conservative vehicles.

3. Pay off high interest debts.

This would likely be good advice for any age group.

The article concludes by suggesting that individuals continue on their path towards having their retirement savings on track, and increase savings where possible. The author notes that saving more than required will help cover unexpected expenses.

From an estate and capacity planning point of view, we see on a daily basis the high cost of health care for the elderly, and the devastating effect that this can have on a retirement plan.

Thanks for reading.

Paul E. Trudelle – Click here for more information on Paul Trudelle

15 Aug

Wills and Separation Agreements

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The effect that separation agreements may have on the entitlements of spouses upon the death of one of the parties has fuelled a great deal of litigation. 

One of the issues that can arise is the effect that the separation agreement has on the last will and testament of the deceased spouse. While the Succession Law Reform Act provides that a bequest in a will to a former spouse is revoked upon the termination of a marriage by judgment absolute of divorce, that is not the case where there is only a separation.

In Makarchuk v. Makarchuk, 2011 ONSC 4633 (CanLII), the parties separated, and entered into a separation agreement. The separation agreement provided that, subject to any additional gifts made in any will validly made after the date of the agreement, the parties released all rights that they may acquire under the laws of any jurisdiction in the estate of the other.

The husband died, without making a new will, and without revoking a prior will which provided that his entire estate was to pass to his now separated spouse.

The court was asked to interpret and apply the separation agreement so as to exclude any benefit to the surviving spouse. The court refused to do so. The court held, applying Eccleston Estate v. Eccleston, 3 R.F.L. (5th) 54, that the language of the separation agreement was not broad enough to apply to rights acquired under the will.  The release in the separation agreement applied only to statutory rights. The release did not “trump” the will.

It is important for separating spouses to consider bequests made in prior wills, and consider revising their estate plan.

Thank you for reading.

Paul E. Trudelle – Click here for more information on Paul Trudelle

11 Aug

Discussing the Un-Discussed – A Problem Solving Method

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I blogged earlier this week on how your marital status can have a significant impact on your estate plan. I focused on the apparent recent trend to not legally marry, but to remain in a common-law relationship, and the particular challenges that an estate faces in such a circumstance. What I began to think about shortly after writing my previous blog was how legal marriages can have equally significant impacts on your estate plan.  

With close to 35% of Canadian marriages falling into the second (+) marriage category, the challenges faced by such couples are being addressed routinely and bring unique estate planning concerns.  Financial planning during your lifetime has a direct impact on your estate, and can often be the difference between a family estate fight and a straightforward estate administration.

We no longer live in a world where the ‘nuclear family’ is the norm. Families now come in a variety of definitions, which, from an estate planning perspective, causes a variety of other issues. A recent article in the Globe and Mail addresses some of the issues that arise in second and third marriages and financial planning, including concerns from adult children about ‘gold-digging’, spending habits, and obligations to previous spouses amongst others. 

A particular challenge for individuals marrying for a second time can include melding of families, children, assets and coming to a general understanding, for all involved as to how your savings will be passed on. Perhaps a life interest for your spouse ought to be considered, or perhaps a complete separation of assets during marriage, with particular funds used for joint expenses, making the question of inheritance somewhat easier. Whatever the ‘perfect’ solution to the various problems that arise due to a second marriage, the key to dealing with financial issues is to know what those issues are to begin with.

If blended families can take steps to deal with the financial issues up front, explaining intentions to their children for both their choices during lifetime and the choices for after their death, the courthouses might become a tad quieter, and you may be able to rest in peace. 

Stay Tuned,

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz


10 Aug

When Does the Planning Begin?

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We spend the majority of our lives working, saving for retirement and dreaming of success, often defined as the ‘Freedom 55’ plan. Whether you are still paying off student debt and just starting to consider long term investment, or are but a few years away and wondering if you’ve done enough to live the retirement you’ve always wanted, a recent article in the Financial Post may prove useful as it takes a close look at the dilemmas and financial considerations an ‘early’ retirement may bring.

Many of us will face the same dilemmas that Pilot ‘Jack’ faces in the article. After working hard, even on the brink of freedom, we may have to make tough decisions that impact daily lifestyle during retirement and your Estate. The nuances associated with choice in pension benefits and the impact on those we will eventually leave behind us is well explored in the above-noted article, and certainly sheds light on Estate Planning issues you may otherwise have not considered. The number crunching and options analysis faced by ‘Jack’ will become more and more prevalent across our country as the boomer generation proceeds to yet another milestone en masse.

The options available from the Canadian Government to opt for early retirement and the slight percentage benefit to claiming same in 2011 may throw a curveball into your plans. Whatever your current considerations, it is never too early to take a close look at your retirement goals, in particular what benefits will exist on your death and thereafter. An Estate Plan can be in flux, but knowing the bottom lines should help make all your decisions easier.

Thanks for reading,

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz

27 Jul

Finding Last Wills

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When applying for a Certificate of Appointment of Estate Trustee with a Will, the applicant must be certain that the Will annexed is the Last Will and Testament of the Deceased. Ideally, the testator will have discussed the location of their Last Will with a trusted family member, friend or professional and it will be easily located at the appropriate time. 

If this is not the case, there are a number of places to begin your search for a Last Will, as discussed by Sean Lawler in his article “Wills Kept by the Law Society of Upper Canada” in the most recent issue of Deadbeat, a publication of the Trusts and Estates Law Section of the Ontario Bar Association.

Some of the places Wills are often kept include the following:

  1. The drafting lawyer’s Wills vault.
  2. Among the Deceased’s possessions.
  3. In a safety deposit box.
  4. With the Executor.
  5. With an attorney for property or for personal care.
  6. On file with the Superior Court of Justice pursuant to Section 2 of the Estates Act, which establishes a Wills depository administered by local Court offices.

If you are unsuccessful locating a Will as above, you can place an ad with the Ontario Reports or other publication to determine if another lawyer who acted for the Deceased, or any other person, is in possession of a Last Will.

One other place to look is the Law Society of Upper Canada (“LSUC”). The files of many lawyers who die, retire, or are disbarred are transferred to LSUC’s Trustee Services Department. Most files are now stored electronically.

LSUC keeps over 45,000 Wills, a number that increases by approximately 3,000 per year. The Wills register can be searched by the name of the lawyer or by the name of the Testator.

The key takeaway here is that estate planning should not be a secret. Discuss your Will with your family (contents and location) and make it easy on loved ones when the time comes to probate your Will.

Sharon Davis – Click here for more information on Sharon Davis

04 Jul

What happens if you do not have a Will?

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In our modern society more and more people choose to remain in common law relationships rather than to marry. Certainly many think that few differences distinguish a common law relationship from a married one as society has responded to practical reality by making common law spouses eligible for pension benefits, family insurance benefits and spousal support. No wonder some people think it is all the same whether they are married or not. However, what many fail to realize is that it makes a very big difference with respect to property rights – both in life and after death.

A common law spouse of a deceased who has died intestate (without a Will) has no entitlement as a beneficiary of the deceased partner’s estate.   It is not uncommon that a dedicated common law spouse of 20 or 30 years is faced with the prospect of the estate of their loved one, which they helped to build over the years, going to the blood relatives, who are the legal heirs according to legislation; and often being people who never had any social relationship with the deceased whatsoever.  

If a person dies intestate, Part II of the Succession Law Reform Act  governs who is entitled to their estate. In the Act, a spouse is defined as a married spouse only. Here is the order in which family of a deceased is entitled to take:

1.      If there is spouse and no children the spouse takes all.

2.      If there is a spouse and children, the spouse gets the first $200,000.00. 

3.      If there is one child, the residue goes to the spouse and the child equally.

4.      If more than one child, the spouse gets one-third of the residue and the children share the other two-thirds equally.

5.      If there is no spouse, the estate goes to the children equally.

6.      If no children, the estate goes to the deceased’s parents equally.

7.      If no parents, the estate goes to the deceased’s siblings; if a sibling pre-deceased, that sibling’s share goes to the deceased sibling’s children.

8.      If no siblings, the estate goes to the nephews and nieces.

9.      If no nephews and nieces it goes to the next of kin of equal degree of consanguinity – that’s where it gets complicated and complete strangers end up inheriting. 

10.   If no next of kin, the estate escheats to the crown.

Lesson? Make sure you have a Will!  

Sharon Davis – Click here for more information on Sharon Davis


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