Likely to be of a surprise to most readers, Canada has a law on the books governing, among other things, policy and financing with respect to the disposal of nuclear waste. The purpose of the federal Nuclear Fuel Waste Act (the “NFWA”) is to “provide a framework to enable the Governor in Council to make […] a decision on the management of nuclear fuel waste that is based on a comprehensive, integrated, and economically sound approach for Canada.”
The intersection of trust law with the NFWA occurs with respect to how the purpose and the goals of the act are to be financed. Section 9 of the NFWA provides that every “nuclear energy corporation” must maintain a trust fund with a duly incorporated financial institution, the purposes of which are described in greater detail below. The following entities are defined as a “nuclear energy corporation” under the NFWA:
- Ontario Power Generation;
- New-Brunswick Power Corporation; and
- Atomic Energy of Canada Limited.
When the NFWA came into effect, each nuclear energy corporation was required to make a substantial initial deposit into its respective trust fund, and each must make a minimum annual deposit of a prescribed amount to the capital of the trust. To provide some context, the largest trust fund is that maintained by Ontario Power Generation. At its inception, OPG was required to make an initial contribution of $500,000,000.00 to its fund, and its minimum annual levy is $100,000,000.00.
The NFWA provides that the corporations may only make withdrawals from their respective funds for the purposes of implementing a plan selected by the Governor in Council to “[avoid or minimize] significant socio-economic effects on a community’s way of life or on its social, cultural or economic aspirations.” In layman’s terms, the nuclear energy corporations must use the capital of their respective trusts exclusively for the purposes of ensuring the nuclear waste is managed and disposed of in an efficient and comprehensive manner while minimizing the social impact.
Control and management of all aspects of nuclear power generation is top of mind in the wake of the Fukushima nuclear disaster in 2011. We may all hope the capital of the trusts established under the NFWA continue to be used for their intended purpose rather than to fund clean-up efforts in the event of a similar tragedy. However, consider that the most recent financial statements for all of the aforementioned trust funds list a total combined balance of approximately $4 billion. Now consider that some have estimated the total cost of cleaning up and containing the waste and fallout from the Fukushima disaster as exceeding $626 billion. A drop in the proverbial bucket, to be sure. Indeed, the magnitude of the Fukushima incident likely far surpassed any reasonable expectations, though it gives us pause to consider whether we are giving nuclear power the deference it deserves.
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Today on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss the top 5 blogs of 2016.
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In the case of H. v. R., R is the biological father of a child conceived with a lesbian friend, and H is R’s former same-sex partner. R and H’s relationship ended in 2006, when the child was three years old, and there were unfortunately no written arrangements in place with respect to H’s role in the child’s life.
Alberta’s Court of Appeal decided not to disturb a lower court’s finding that H is a legal parent and guardian of the child, which would result in her having three legal parents. An article in the Lawyers Weekly reviews the decision, noting that it does not create certainty on the issue, such that whether there could be three parents under the Family Law Act remains an open question.
There seem to have been huge strides in reproductive technology over the last few decades, which has been needed given the challenges that come along with more and more heterosexual couples trying to have children later in life and same-sex couples wishing to have children. Unfortunately, the law has not caught up as of yet. Philip Epstein comments speak to this point. He reportedly states that the H. v. R. case involves “a difficult area of the law that is very much in flux…we need overarching legislations that’s consistent in each province, spelling out exactly what rights there are, and we need to have a reasoned discussion about a whether people can reasonably contract in this area as opposed to simply voiding all contracts on the grounds of public policy”.
Hopefully, more and more of these cases coming before the courts will propel legislative changes towards a place of certainty in Ontario and Canada as a whole.
Have a great weekend!
Many estate practitioners are familiar with the Rasouli case, which we have blogged and podcasted on in the past. In that case, the Ontario Court of Appeal upheld a decision of the Superior Court of Justice that doctors must get approval from the Consent and Capacity Board in circumstances where their decision to withdraw life-support treatment is contrary to the wishes of a patient’s family. The doctors have appealed the decision to the Supreme Court of Canada. The appeal was heard in December 2012, and no decision has been released as of yet.
In the interim, these types of tragic and difficult struggles continue. In a recent report, the family of Joaquim Silva Rodrigues is in a deadlock with Sunnybrook Hospital over the same issue. Mr. Rodrigues has a rare disease called progressive supranuclear palsy, which has no known treatment. His doctors conclude that he has no reasonable hope of recovery or improvement. In the face of this diagnosis, Mr. Rodrigues’ express wishes to his family are reported as having been to keep him alive – he would rather suffer and remain in the company of his family than die.
The Supreme Court of Canada’s ruling on the issue is anxiously awaited, and should provide clarity on who ultimately has the right to make end of life decisions in such circumstances.
Thanks for reading and have a nice day,
With the growing population of older Canadians we also face increasing numbers of people with dementia, and with that families who are likely anxious of the risks of their loved ones going missing. I can appreciate how scary this must be, and given the statistics – three out of five people suffering from dementia go missing – it is no wonder that the Alzheimer Society of Ontario is taking action.
The Alzheimer Society of Ontario reportedly unveiled a new government-funded education program this week aimed at preventing wandering. The new project called “Finding Your Way” features a website – www.FindingYourWayOntario.ca – with downloadable “safety kits” that include instructions on how to prevent wandering and how to respond when someone goes missing.
Importantly, the Alzheimer Society of Ontario is also extending help to ethnic minorities who may otherwise not access relevant information due to language barriers, by launching public service announcements and online information in several languages.
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As a recent article in The Lawyers Weekly (March 15, 2013 issue) reminds us, the 21-year rule operates by deeming a trust to have sold its property on the day that is 21 years after the trust’s creation, and every 21 years thereafter, at a price equal to fair market value. The trust is then deemed to have acquired that property at the price equal to the deemed selling price, which then becomes the cost of that property for subsequent deemed or actual dispositions.
There are certain exceptions to the 21-year rule. Planning techniques have also developed to offset the potentially significant tax burden resulting from application of the rule.
However, the article addresses the difficulty when certain terms governing a trust, as set out in the trust document itself, create obstacles in the way of such planning techniques. In that regard, the Kanji v. Canada (Attorney General) decision is cited, where the settlor of the trust was also a co-trustee and beneficiary, thereby giving rise to an “attribution rule”. The application of this rule resulted in the inability of the trust to distribute its property to certain of the beneficiaries on a tax-deferred basis.
Unpleasant 21st anniversary tax surprises may be deferred or avoided if dealt with in a timely manner, and a tickler system to remind ourselves of pending deadlines a couple of years in advance may be useful.
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Where a person wishes to make a gift by will but keep the recipient and the nature of the gift away from public scrutiny, the testator could leave such a gift to a third party to hold on a secret trust for a beneficiary.
The essentials of a secret trust created by equitable principles are:
· the intention of a testator to benefit secret beneficiaries;
· communication of the trust to the beneficiaries/trustee; and
· express or tacit acceptance of the trust by the beneficiaries/trustee.
Whether or not a trust exists depends on the three certainties, being:
· the words must be so used that on the whole they ought to be construed as imperative;
· the subject matter of the trust must be certain; and
· the objects or intended beneficiaries must be certain.
A trust of this nature, not reduced to writing to constitute a Will, brings with it many difficulties. Some of these are:
· proving that a trust exists, the onus of which is on the person alleging the existence of a secret trust;
· determining whether the trust forms part of the testator’s will; and
· the danger of a named trustee using the trust property for him/herself.
Secret trusts are rare, and not an instrument I would recommend clients contemplate unless properly papered.
Thanks for reading and have a good day,
I am obsessed with mastering Parchesi (great board game that I highly recommend to those of you who still play!). I play weekly, and I can’t even fathom risking something more than my next move on a roll of the dice, which is why the real-life story of a man who thought up having his nieces and nephews play Monopoly, with the winner getting his fine antique furniture, threw me for a loop. Another gentleman reportedly directed in his will that the winner between his nephews in a dice throw would get his palatial home in the tropics. One lucky nephew won, and the will was upheld in court.
These testators’ wishes represent comical (at least for the winners) and extreme scenarios. Below I highlight some of the more common methods of gifting (usually of personal property) the author in the article mentions:
1 – Say nothing, and your executor will distribute in accordance with his/her discretion;
2 – Write your list of items and who they go to in your will or in an appendix thereto;
3 – Implement a rotating pick system (eg. Each beneficiary gets a number and picks when it is his/her turn until all items have been selected); and
4 – Direct the beneficiaries to get together and agree on who gets what, with the executor having the final say.
Thanks for reading and have a great weekend!
As part of Canada Revenue Agency’s increased focus on tax compliance for trusts and estates, in the last couple of years it has made the following additions to its compliance program:
· Ontario Region Trust and Estates Coordinator – the person in this position is tasked with, among other things, coordinating and prioritizing the estates and trusts related tax issues that concern the province;
· Regional Trust Team – this team is engaging in substantial audit activity in the Golden Horseshoe region, concentrating on Mississauga, Hamilton, Kitchener, London and Windsor; and
· Related Party Initiative – this initiative focuses on high net-worth persons with net assets of $50 million or more, and who have 30 or more related economic entities (including trusts, corporations, partnerships, joint ventures and private foundations).
We can expect an increased number of CRA trust audits. It would seem given the decision in Antle v. Canada (where a trust was deemed invalid) that auditors will be concerned with the particulars of how a trust was set up. They will also look to whether it is being properly maintained (e.g. that tax filings are being done in compliance with the legislation).
This is something to keep in mind for estates and trusts lawyers, especially since CRA may perform reassessments that could result in additional tax, interest and penalties.
Thanks for reading and have a good day,
There has been much written on the accounting duties of attorneys, and several cases address the issue. One such case may be helpful to those attorneys who find themselves being called to account by third parties notwithstanding that the grantor of the power of attorney is mentally capable and has not requested any accounting.
In Koperniak v. Wojtowicz the applicant was the grantor’s daughter, who made accusations regarding the attorneys’ management of her mother’s financial affairs. The attorneys were the grantor’s sons, and there was evidence that the grantor was content to have them handling her financial affairs.
The Court considered the evidence and the applicable legislation (s. 42(4) of the Substitute Decisions Act) that lists the persons who may apply to have attorneys pass their accounts. Despite the basket clause that states “any other person, with leave of the court” can apply to have attorneys’ accounts passed, the Judge did not agree that leave ought to be granted in this case, particularly as the grantor was capable and able to confirm her wishes, and as no evidence was found to have been advanced displaying the necessity to pass accounts. While the brothers had used their powers to sign a small number of cheques, the Judge held that this fact did not automatically give rise to an entitlement to a passing. Accordingly, the application was dismissed.
You will be able to find more on this case and other topics covered at our firm’s recent breakfast series.
Thanks for reading and have a good day,