Tag: Trust

10 Jun

Holding a Cottage in Trust

Hull & Hull LLP Estate & Trust, Litigation Tags: , , , , , , 0 Comments

Last week, Globe and Mail columnist Tim Cestnick wrote on cottage ownership through a trust. 

This week, Tim follows up his article with “Seven hints for holding a cottage in trust”.

The hints relate to:

1. Dealing with the tax hit upon the transfer to the trust.

2. The taxation of the taxable benefit of using the cottage.

3. The effect of the 21 year deemed distribution rule.

4. U.S. estate taxes.

5. The payment or avoidance of Land Transfer Taxes.

6. The payment or avoidance of HST.

7. Extra requirements in the event that the cottage needs to be mortgaged.

Both articles are worth a read by anyone considering ownership of a cottage through a trust. They highlight the benefits of such ownership, while also raising the myriad of issues and complications that can arise with such a vehicle. Clearly, good advice is needed by anyone considering the use of a trust for cottage ownership

Also, see our blogs and podcasts for more information relating to cottage ownership and succession. Also, just last week, our Ian Hull spoke on BNN about strategies to keep a cottage property in the family.

Clearly, this topic is as hot as our recent taste of summer weather.

Have a great weekend.

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

27 May

Summary Judgment Awarded Where Testator Obtained Capacity Assessment

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I recently read an Ontario decision involving a will challenge and the court granted summary judgment to the estate trustee on the issue that the Testator had the requisite testamentary capacity to execute her Last Will and Testament. 

In Quinlan v. Caron, the Deceased executed her Last Will and Testament on May 18, 2007 (the “Will”) and she subsequently died on September 7, 2008. Two days before executing the Will, the Deceased underwent a capacity assessment that was recorded on video. The doctor who conducted the capacity assessment concluded that the Deceased had the requisite capacity to create a new Will.

 

The daughter of the Deceased commenced a Will Challenge alleging that the Deceased lacked the mental capacity to execute the Will and undue influence. The Estate Trustee is the son of the Deceased and brought a motion for summary judgment against his sister, arguing that there were no genuine issues requiring a trial as his sister’s claim was not supported by any evidence.

 

The Honourable Justice Tuck put a lot of weight on the capacity assessment and granted summary judgment to the Estate Trustee on the issue of the Deceased’s capacity; however Justice Tuck dismissed the Estate Trustee’s motion for summary judgment on the issue of undue influence. In the decision, Justice Tuck held that “matters of credibility requiring resolution on a case of conflicting evidence ought to go to trial” and he rationalized that there was conflicting evidence in this case, which could suggest that the Deceased was unduly influenced.

 

Thank you for reading and have a great weekend,

 

 

Rick Bickhram – Click here for more information on Rick Bickhram. 

25 May

Passing Over an Executor

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In a recent decision out of the Supreme Court of B.C., Re Thomasson Estate, the Honourable Justice Gerow considered the circumstances where the court may pass over an executor, on an application by a co-executor/beneficiary.

The two Deceased (collectively referred to as the “Deceased”) had been married and had four children together, all of whom survived the Deceased. In their Wills, they named two of their children, as their executors, and directed the executors to distribute the estate to three of their four children. 

 

One son commenced this application to obtain an order that would pass over the other son as his co-executor for the Estates. The Applicant argued that it is necessary for the Estates to make a proper enquiry into the nature of inter-vivos transactions between the co-executor Respondent and the Deceased and such an inquiry must be made independent of the co-executor Respondent as he would be in a conflict of interest.

 

The co-executor Respondent opposed the Applicant’s application, and argued, amongst other things, that the court should not interfere with the testator’s right to nominate his or her executor and removing him would be prejudging the case.

In her decision Justice Gerow states:

In the circumstances of this case, it is my opinion that there is a perceived conflict of interest between the co-executor Respondent in his role as an executor and his interest in his personal capacity. If an action is instituted by the executors as a result of the transfer of the Property, it would be against the co-executor Respondent. In my opinion, the co-executor Respondent, in his capacity as executor, cannot attack the transfer of the Property to himself while at the same time maintaining, in his personal capacity, that the transfer of the Property was proper. By making such a finding I am not prejudging the case. I am simply of the view that, in the circumstances of this case, if an action is commenced as a result of the enquiries into the transfer, the co-executor Respondent cannot conscientiously act as a plaintiff in his capacity as an executor in a case where he will be the defendant.

B.C. legislation is unique compared to the legislation that governs estate trustees in Ontario; however, if a similar situation arose, an application seeking similar relief could be brought under Rule 14.05(3) of the Rules of Civil Procedure.

 

 

Rick Bickhram – Click here for more information on Rick Bickhram. 

26 Apr

Proposed Amendments to the Estate Administration Tax Act

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The Ontario Government’s recent Bill 173 (the Budget Bill) deals with, amongst many other things, proposed amendments to Estate Administration Tax Act, 1998 (Schedule 14).

Estate Administration Tax is applied to the value of an estate when the estate’s representative applies to the court for a certificate of appointment of estate trustee (often referred to as probate). Currently, court staff of the Ministry of the Attorney General administer the tax. Bill 173 proposes amendments to the Estate Administration Tax Act to enhance, it has been said, compliance by integrating the administration of this tax with audit and verification functions at the Ministry of Revenue, starting January 1, 2013.

READ MORE

01 Apr

Life was Easier Before the Digital Era…

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In the days prior to the evolution of the Internet, planning and administering an estate was relatively simple as the physical belongings of the deceased could be carefully sorted through, packaged, and divided according to the Deceased’s testamentary document or the applicable legislation.

In the days since the  Internet has become a common household tool, planning and administering an estate has not been so easy. In a study commissioned by Remember A Charity, The Dying in a Digital Age, it was discovered that four in five people own digital assets, but only nine per cent have considered how these will be distributed upon their death.

According to the study, the nation’s digital music collection is worth an estimated £900 million alone.

Three quarters of those surveyed for the study indicated that their digital music and photo collections had strong sentimental value, while eight out of ten said their digital assets were financially valuable.

Rob Cope, director of Remember A Charity said: ”Bank accounts, music and photograph collections are increasingly stored online…meaning families will wave goodbye to a small fortune if details are not passed on.”

There is now an entire cyber existence that both the Deceased and Trustees need to turn their mind to when planning or administering an Estate. For instance, what will become of Facebook, Twitter, Flickr and PayPal accounts? One easy solution is to subscribe to a website called Legacy Locker. Legacy Locker was created in 2009 and it maintains a master list of user names and programs for online bank accounts, social networking sites and document repositories. 

In the digital era, it is important that we consider and make arrangements for how our digital assets will be distributed, and for estate planners, it may be just as important that you consider including in your questionnaire or checklist, a question that forces a client to turn their mind to consider their digital assets. 

Thank you for reading, and have a great weekend.

Rick Bickhram – Click here for more information on Rick Bickhram.

31 Mar

Lapse and Anti-Lapse

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I regularly tutor students who are preparing to write the Estate and Trust section of the Solicitor’s exam for the Law Society. One of the more common questions that my students ask is for help in explaining two concepts: lapse and the “anti-lapse provision”.

The common definition of a lapsed gift, is a gift that has failed because it is incapable of taking effect.   Two common reasons for a gift to be incapable of taking effect is where the beneficiary predeceases the testator or the gift is disclaimed by the beneficiary.  

 

Pursuant to Section 23 of the Succession Law Reform Act, unless a contrary intention appears in the Deceased’s Will, if a gift is incapable of taking effect, the failed gift will fall into the residue of the testator’s estate and distributed accordingly.

 

Section 31 of the Succession Law Reform Act is commonly referred to as the anti-lapse provision. The anti-lapse provision saves a failed gift if the beneficiary falls into the class of beneficiaries set-out under this provision and that beneficiary leaves a spouse or issue who survived the testator. If these conditions are met, the gift will not fall into the residue, however it will take effect as if it had been made directly to the spouse or issue of predeceased beneficiary.

 

Thank you for reading, and have a great day.

Rick Bickhram – Click here for more information on Rick Bickhram.

30 Mar

Appointing an Estate Trustee During Litigation

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In a recent court decision, the Honourable Justice Stinson considered a motion from competing family members for the appointment of an estate trustee during litigation.

In Buswa v. Canzoneri, the Deceased died without a Will on September 29, 2010. The Deceased did not have a spouse and was survived by seven siblings, and two children.

The concern in this case was that the Deceased did not leave anyone with legal authority or responsibility to arrange his funeral and dispose of his remains.

Two of the Deceased’s siblings, the Applicants, applied for a Certificate of Appointment of Estate Trustee Without a Will. The daughter of the Deceased, the Respondent, also applied for a Certificate of Appointment of Estate Trustee Without a Will.

 

In his decision, the Honourable Justice Stinson considered the legal interpretation of section 29 of the Estates Act, which reads as follows:

1)  Subject to subsection (3), where a person dies intestate … administration of the property of the deceased may be committed by the Superior Court of Justice to:

 

a)      the person to whom the deceased was married immediately before the death of the deceased or person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death;

 

b)      the next of kin of the deceased;

As the Deceased did not have a spouse, the court considered the definition of “next of kin.” In the Black’s Law Dictionary, “next of kin” is defined as “the person’s nearest of kindred to the decedent, that is, those who are most nearly related by blood.

 

Applying these concepts, the court held that the Respondent daughter was related to the Deceased by blood in the first degree, whereas the Applicants siblings were related to the Deceased in the second degree. Accordingly, the Respondent daughter was appointed as the Estate Trustee During Litigation.

 

Thank you for reading, and have a great day.


Rick Bickhram – Click here for more information on Rick Bickhram.

28 Mar

PLANNING ON WHAT TO DO WITH AN INHERITANCE IS IMPORTANT

Hull & Hull LLP Estate & Trust Tags: , , , , , , , , , , , , 0 Comments

Within the next twenty years, Canada’s baby boomers are in line to inherit a substantial fortune, which will represent the largest transfer of wealth from one generation to the next.

In an article written by Jennifer Power Scott and published in Canadian Living, Ms. Scott discusses the  bittersweet bonanza that many heirs face and cautions the impulsive spender: "There are a lot of people in this world who might go out and blow the whole thing in a week, and that’s not appropriate. Unless you’re well-heeled to begin with, flushing the funds into trips to Las Vegas, sexy cars and plush home theatres probably isn’t the smart way to go."

In her article, Ms. Scott stresses the importance of carefully planning what to do with your inheritance, so that your inheritance can turn into a gift that lasts. Ms. Scott urges those who have received a windfall inheritance to:

  1. Take a breath. Put your inheritance somewhere safe that earns a good guaranteed rate of interest for a few months while you think things through
  2. Once you are ready to make a decision, speak to a certified financial planner
  3. Consider your option, such as satisfying outstanding debts, investing into an RESP for your children, or an RRSP or RRIF for yourself

Essentially Ms. Scott’s article forces her readers to consider their long-term goals as opposed to their short-term goals. "It pays to step back a little bit. Some people will immediately say, I’ve got this money, I don’t deserve it all, and maybe I should start helping out my kids right away. But they need to make sure that their financial future is properly secured before they do that."

Thank you for reading, and have a great day,

Rick Bickhram – Click here for more information on Rick Bickhram.

07 Feb

Dual Co-habitation and Claims for Support

Hull & Hull LLP Estate & Trust Tags: , , , , , , , , , , , , , 0 Comments

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Can a deceased person, immediately before his or her death, be found to have been in a common law spousal relationship with two persons, each of whom could assert a claim for support as a dependant?  This was the interesting question recently considered on a motion for interim support under Ontario’s Succession Law Reform Act ("SLRA").

In Blair v. Cooke, the Applicant commenced an Application against the Estate seeking dependant support, and subsequently brought a motion seeking interim support from the estate.   In support of her application, the Applicant filed an extensive affidavit describing the history of her relationship with the Deceased and argued that she is a dependant spouse of the Deceased, thus, entitled to support under the provisions of the SLRA.  The court was also provided with numerous affidavits of friends and acquaintances confirming the Applicant’s 11-year relationship with the Deceased.

The Respondent is the estate trustee of the estate for the Deceased, and also argues that she is the Deceased’s common law spouse.  It is important to clarify that the Respondent does not make a claim for dependant support, but rather opposes the Applicant’s application.  In doing so, the Respondent filed her own affidavit and the affidavit of friends and acquaintances, which would corroborate that she was the Deceased’s common law spouse.  The Respondent argued the court should not make any finding of entitlement to support for the Applicant, because doing so would preclude her from claiming support (if she decided to make a claim at a later date) or claiming that she was in fact the “spouse” of the deceased. 

In considering whether or not a person could have two spouses for the purpose of making a dependant support claim, the court considered section 57 of the SLRA, more particularly the following definitions:

1.      “Dependent” can be a  “spouse of the deceased…to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death…”. 

2.      “Spousal” is further defined under the SLRA as “either of two persons who…are not married to each other and have co-habited…continuously for a period of not less than three years”; and

3.       “Co-habit” is defined to mean living together “in a conjugal relationship”.

The “twist” that I found interesting in this case, was that the court found that there was enough evidence to conclude that the deceased may have co-habited with two different women, in different homes.  The court stated that they did not have to determine that one party was a spouse and the other was not for purposes of awarding interim support; in fact both women could qualify.  The Applicant was awarded interim support.

Rick Bickhram – Click here for more information on Rick Bickhram.

 

22 Nov

Encouraging Your Parents to Discuss Their Financial Matters

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Having an open conversation with your parents about their financial matters and the importance of estate planning is never an easy task. Medical studies have indicated that people who have lived through the Great Depression prefer to keep their financial affairs to themselves. This presents a challenging task for loved ones trying to discuss with their parents financial matters and particularly who is best equipped to handle their finances if they are unable or how they expect to pay for long-term care should the need arise.

The New York Times recently published an article entitled, “Talking with Depression-Era Parents About Money”. In this article, Tara Siegel Bernard, the author, suggests the different ways that adult children could broach the topic with their parents such as:

Show and Tell: “Adult children could talk about their own estate plans – a show and tell”. This forces the parent to give thought to their children’s estate plan and opens the door for the child to ask how the parents have handled their own affairs.

Parental Duty: “Appeal to their duties as parents.” 

Bring in a Pro: “Some parents may also feel more comfortable discussing their financial situation in front of a disinterested party, like a long time accountant, lawyer, or financial planner.” It appears that Ms. Bernard suggests having a disinterested party present could help the parent feel more secure, which likely would have the effect of the parent opening up about their financial matters. This sounds like a good idea; however, a word of caution, this suggestion also could lead to estate litigation, as arguments of undue influence could be advanced in the circumstances.

Timing: “Make sure you choose a good time and place to bring up the topic”. Obviously, having this sort of discussion at the family holiday party is not a good idea.  

Thank you for reading and have a good day.

Rick Bickhram – Click here for more information on Rick Bickhram.

 

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