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O'Sullivan Estate Lawyers | Toronto Trust and Estate Law Blog

A Happy Ending for Basket Clauses

Many people who live or have assets in Ontario are concerned about the amount of Estate Administration Tax (probate fees or "EAT") that will be payable on their death given the high rate of approximately 1.5% of the value of estate assets. One common estate planning technique for minimizing EAT is the use of multiple wills (for a discussion of techniques to minimize EAT please see our advisory "Planning to Minimize Estate Taxes"). While multiple wills have long been accepted by the Ontario courts and are specifically provided for in the Ontario Rules of Civil Procedure, the recent Ontario decision in Re Milne Estate held wills that contain "basket clauses", which are commonly used in multiple will planning, to be invalid. Fortunately, the decision was recently overturned on appeal, and now that the appeal period has expired for that decision, the issue appears to have been settled.

For Richer or for Poorer: Differing Rights for Spousal Property Division on Death in Canada

When it comes to spousal property division on death within the Canadian context, many different laws govern. Under constitutional law, property rights fall within provincial and territorial jurisdiction, and with ten provinces and three territories that means thirteen different jurisdictions, each with their own unique laws to govern what happens on death.

What is interesting but also perplexing is how much these laws differ from each other, and as a result, how moving to a different Canadian jurisdiction can significantly impact rights on death arising out of marriage or a common law relationship. It is an issue that is not on the radar when a decision is made to move to a different Canadian jurisdiction, whether because of a new job, for retirement, or to be closer to family.

Posthumous Use of Reproductive Tissue: Who Decides?

The law concerning assisted reproductive technology ("ART") occupies a unique space where the autonomy of the human body intersects with property rights, which historically at common law did not extend to the human body or body parts. The world's first in-vitro baby was born in 1978, but it was only much later that the law began catching up with ART. The first legislation in Canada that governs ART - the federal Assisted Human Reproduction Act (the "AHRA") - was introduced in 2004 which launched a code on the uses and prohibitions regarding human reproductive tissue. The AHRA mandates that reproductive tissue shall only be used with the donor's free and informed consent that is provided in writing, but the AHRA has also opened the approach toward treating reproductive tissue as property, employing terms such as "use" and "creation" and the prohibited actions of "purchase" and "sale".

Never Too Young To Start: Family Law Considerations for Millennials

In a prior blog on millennials and estate planning, I discussed its importance for the younger generation and the unintended consequences that can result from failing to have proper planning in place. In today's blog, I hope to take that notion a step further by discussing family law implications that should be considered by millennials as they progress through relationships, living situations, and even marriage.

Before marrying or cohabitating with a spouse or partner, it is important to assess the legal implications of this important step. The first consideration is to understand the difference in legal rights that arise between being in a common law relationship and being legally married. With 53 per cent of Canadian adults feeling marriage is unnecessary (including millennials who are moving further away from the marriage trajectory), a common misconception is that a common law partner has the same rights and legal standing as a married spouse.

The Movement to Transparency and the Erosion of Privacy

We live in a world in which personal privacy is under siege, or perhaps simply not valued as much by many as it was by prior generations. As we reach the end of 2018, this year has seen a number of scandals involving significant data breaches and cyber hacking involving corporate behemoths as well as foreign governments which have shown how personal information is being surreptitiously obtained and illegally traded for corporate gain or used for political intelligence and influence. Technology, the internet and social media have developed far faster than the ability to understand them and their full implications and effects, and certainly for our lawmakers to regulate and legislate in respect of them.

At the same time, governments worldwide are keen to ensure greater transparency they claim is necessary in order to combat money laundering, counter financing of terrorist activity and fight tax evasion. In the European Union, on May 30, 2018 the Fifth Anti-Money Laundering Directive was adopted, and requires member states to bring it into domestic law by certain dates in 2020.The key amendments include more access to beneficial ownership information so that member states must now not only make available information on the beneficial owners of companies to those with "legitimate interests" but now extends this to trusts, and now requires that information on beneficial ownership of companies should be made available to the public.

Unknown Unknowns: Pension Rights and Estate Planning

While it is less common these days for employment benefits to include a pension, many individuals still do have either a pension (not including the Canada Pension Plan, which is subject to its own rules and which is not the subject of this blog) or a locked-in retirement account (LIRA) which was created from former pension funds. While these funds, particularly LIRAs, tend to be thought of as if they are RRSPs or RRIFs, it is important to remember that the rights associated with them, including the right to designate a beneficiary, are not always the same.

In Canada, pensions rights under provincial and territorial jurisdiction are governed by fairly rigid statutory rules. Under Ontario pension legislation, surviving spouses generally have the right to receive either a survivor's pension or a lump sum payable on the death of their spouse (or possibly a choice between the two, depending on the pension plan in question). As well, a surviving spouse's rights take priority over the rights of any other individual who might otherwise be entitled to the pension proceeds, as well as over the beneficiaries or interested parties in the pension recipient's estate. This "super-priority" applies regardless of the pension recipient's wishes, and despite any beneficiary designation made by the pension recipient. When it comes to testamentary freedom, pensions restrict such rights in favour of spouses.

Death and Taxes: The Buck Does Not Stop Here

Everyone knows that death and taxes are two of life's certainties, but some of us may not appreciate that our tax liabilities don't disappear on death and that our legal representatives become responsible for sorting out our unfinished tax business.

Some tax liabilities are expected to arise on or after death, such as those from the deemed disposition of capital assets on death and from other income inclusions that must happen in the terminal year, as well as from any provincial estate administration tax. However, our ordinary lifetime income tax compliance that should be completed on an annual basis is not something that should be left for family members and others to sort out after we die, as the repercussions can be significant.

Safekeeping of Estate Planning Documents: Digitally Challenged?

As estate practitioners, we continually remind our clients to update their estate planning documents and ensure they reflect their current intentions. A further key consideration is how estate planning documents should be properly recorded, stored and safeguarded.

In order to embrace the digital era, the legal community has made significant strides in digitizing legal documents, particularly in the areas of corporate law (documents are often signed digitally including in major transactions) and document-management. We are frequently asked by our clients whether wills can be digitally signed and stored. Although several jurisdictions, including Nevada and Florida, have introduced or proposed legislation for digital wills (please see our blog on this topic), no legislation has been introduced in Canada. What are the procedures for properly recoding and safely storing original documents?

Simplicity vs. Oversimplicity in Estate Planning

Often people who are doing their estate planning have one overriding goal in mind: keep it simple. The so-called "KISS" principle is attractive, and may be appropriate for some. But for many, simplicity can be oversimplicity. Instead of being cost-efficient in the long term and allowing a streamlined estate administration process, oversimplicity can create more complications, increased taxes, disputes and, all too often, litigation than could have been avoided if their planning had been more comprehensive.

Embracing Change - A Postscript

The STEP (Society of Trust and Estate Practitioners) Global Congress held in Vancouver in September, 2018, attracted delegates from over 37 countries and six continents. It was a truly global think tank in which we explored, probed, deconstructed and debated some of the most important changes that are, or will in future, shape and impact the world of family inheritance and succession planning.

As Chair of the Program Panel Committee, it was particularly exciting for me to see how the two-dimensional communication of countless emails and international conference calls to develop the Congress became a three-dimensional reality of speakers and delegates from around the world who convened for this biennial event to learn about strategies, new developments, ways of thinking and approaches in family succession.

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