Tag: declaration

23 Jul

Customs Requirements When Sending Money to the US from Canada

Doreen So Continuing Legal Education, Estate & Trust, Executors and Trustees, General Interest, In the News Tags: , , , , , , , 0 Comments

It is not uncommon for Canadian estate trustees to make distributions to beneficiaries living in the U.S.  In doing so, the U.S. Customs and Border Patrol (the “US CBP“) could be involved in a myriad of ways.

A recent story from CBC News is an example of what can go wrong if estate trustees are not aware of their US reporting obligations.  An estate trustee in Ottawa mailed a bank draft worth $500,000.00 to a beneficiary in the U.S.  U.S. border officials seized the bank draft because it was mailed without filing the appropriate customs declaration form.  Almost a year later, the bank draft is still held at the border while the unfortunate beneficiary is sick and in need of money for his medical bills.

According to the U.S. Customs and Border Protection website, any time money exceeding $10,000.00 is sent to the U.S. from a foreign country, the sender is required to file a “Report of International Transportation of Currency or Monetary Instructions” (FinCEN Form 105) with the CBP before the money is sent.  This applies regardless of whether the sender is acting personally or on behalf of another legal entity.  This applies to money in the form of coins, currency notes, travellers checks, money orders, etc.   This also applies to money sent by mail, courier, personal delivery, etc.

However, this particular US reporting requirement does not apply where the method of transfer does not involve physically transporting money over the border, such as wire transfers through banking institutions.  If a wire transfer is used, the bank is responsible for satisfying the necessary reporting requirements.

This a US duty to report and the CBP does not collect duty on currency.  Click here for a copy of the CBP reporting Form 105.

In course of sending money worth $10,000.00 or more from Canada, there are corresponding Canadian customs requirements as well.  If money is sent by mail, be sure to visit a Canada Post location and inquire about the necessary requirements.  The applicable reporting form must be filled out and enclosed within the envelope or package and a copy of the same form must be submitted to the Canada Border Services Agency.  If money is sent by courier, the courier is responsible for filing another reporting form while the individual sender is still responsible for providing the courier with the general reporting form.

Like the US CBP, Canada Border Services Agency has the authority to seize the funds and charge penalties if the Canadian reporting obligations are not satisfied.

Thanks for reading!

Doreen So

21 Sep

Validity of Beneficiary Declarations for Insurance Policies

Umair Beneficiary Designations, Estate Planning, Litigation, RRSPs/Insurance Policies Tags: , , , 0 Comments

Beneficiary designations for a life insurance policy can be an important estate planning tool. However, as with any testamentary document or disposition, questions can arise about the insured’s actual intentions after death.

In the recent decision of Sun Life v Nelson Estate et al., 2017 ONSC 4987, the Court was asked to resolve such an ambiguity by considering the validity of an insurance declaration under the deceased’s Will and the validity of a change of beneficiary designation on file with the insurer.

Juanita (the “Deceased”) died in December 2009. The Deceased was entitled to group life insurance coverage with Sun Life in the amount of $148,500.00. Following the Deceased’s death, Sun Life deposited the proceeds of the policy into Court. The Deceased’s two children (the “Respondents”) brought a Motion for a declaration that they were solely entitled to the proceeds.

The Deceased had been married to the respondent, Justin Nelson (“Justin”), since 2006. Following the Deceased’s death, Justin signed an acknowledgment that the Respondents were entitled to the proceeds of the policy. He had made no claim to the proceeds since the Deceased’s death, and his whereabouts were unknown as of the hearing of the Motion.

Beneficiary Declarations Under the Insurance Act

Pursuant to section 190 of the Ontario Insurance Act, an insurance may designate the insured, the insured’s personal representative or a specific beneficiary pursuant to the insurance contract or a declaration, including a declaration under the insured’s Will.

Section 171(1) of the Act sets out the criteria for a valid declaration. The declaration must be made by way of an instrument signed by the insured. The declaration must also be an instrument with respect to which an endorsement is made on the policy, that identifies the contract, or that describes the insurance or insurance fund (or a part thereof).

The Issue in Sun Life v Nelson Estate

In 2007, the Deceased’s employer’s group policy with Sun Life was terminated and transferred to Desjardins Financial Security (“Desjardins”). The Deceased completed an application for enrolment and an irrevocable beneficiary designation in favour of the Respondents. She also advised her financial advisor that she had changed the beneficiary for the policy from Justin to the Respondents.

However, after the Deceased’s death, it was discovered that her coverage had remained with Sun Life instead of being transferred to Desjardins because she was disabled at the time of the transfer. As a result, there were two beneficiary designations in the Deceased’s file.

The Deceased’s Last Will and Testament also included a beneficiary declaration that directed the “proceeds of the insurance policy” to be held in trust for the benefit of the Respondents. The term “insurance policy” was not defined in the Will, and the Deceased was insured under two policies at the time of her death.

Thus, the Court was asked to consider the validity of the declaration under the Will and the validity of the change of beneficiary designation in 2007.

Justice Brown’s Decision

After reviewing the facts, the Honourable Justice Carole Brown concluded that the declaration under the Will was ambiguous and did not refer to a specific insurance policy. Accordingly, the declaration under the Will failed.

However, with respect to the change of beneficiary designation form, the Court was satisfied that the Deceased clearly intended for the Respondents to be the beneficiaries of the policy. The evidence before the Court included the Deceased’s statements to the Respondents, the change of beneficiary designation form and the fact that Justin had signed an acknowledgment that the Respondents were the beneficiaries of the policy.

In the result, the Court held that the change of beneficiary designation form was valid within the meaning of section 171(1), and ordered that the proceeds be paid out to the Respondents equally.

Thank you for reading,

Umair Abdul Qadir

 

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