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Toronto Ontario Estate Law Blog

Inheritance Tax, Wealth Tax and More Capital Gains Tax: The Future of Canadian Taxation?

With an aging population, and the trillion dollar transfer of wealth to occur in the face of a shrinking income tax base, and in the face of what some assert is an increasing concentration of wealth at the top, the burning question is whether new forms of death taxes will raise their head, as well as lifetime taxes as governments struggle to balance budgets, get rid of burgeoning deficits and generally try to put their financial house in order.

Death Taxes: Good or Bad and Why Do We Have Them?

In early February, I had the opportunity and pleasure of participating in a panel discussion of lawyers from several jurisdictions, including the U.S., Mexico, and Italy, at an international legal conference on the interesting topic "Inheritance Tax - Should More Countries Implement It?". We discussed and compared how our different regimes tax on death, as well as some of the policy issues relating to death taxes.

What is intriguing is how differently each country approaches these issues, and how different our tax regimes are.

Powers of Attorney Disputes and Remedies: Something's Got to Give

The unfortunate reality is that when it comes to incapable persons, and the Ontario processes to deal with disputes and rights enforcement for them, none of the available processes are without flaws. Even with good planning, substitute decision-makers can disagree with each other or medical professionals regarding the best treatment option, and loved ones can disagree regarding whether their family member still has capacity to make their own decisions or not, or whether one person or another should be making decisions for an incapable person. Whether it's the Consent and Capacity Board, the Court or the Office of the Public Guardian and Trustee, each has limitations, whether legal or practical, and each has drawbacks. Given our aging population and the increasing need to protect incapable persons in a dignified manner, it's not so much that "something's gotta give" but instead "something's going to give".

Heads Up On "Shacking" Up

Whether it's a first relationship for a millennial or a second or subsequent relationship for others including baby boomers and seniors, these days more and more couples are choosing to live common law rather than marrying. According to a 2017 census, 21.3% of all couples in Canada were living common law in 2016 compared to 6.3% in 1981. There is also a rise in people living common law before marriage. According to the census, 39% of married people aged 25 to 64 lived common law for an average of 3.6 years prior to marrying.

There may be a myriad of reasons for living common law depending on circumstances, but one myth that needs to be unraveled is the notion that it is simpler not to get married. Common law relationships have a unique set of considerations.

2020 Vision: Creating a Family Contingency Plan

With the start of a new year and a new decade, we tend to focus more than usual on important personal goals and objectives. One goal to consider is creating a family contingency plan.

Your plan can be short and simple, or lengthy and detailed. In brief, it entails creating a list of critical information of who, what and where. Who to call in an emergency, such as close relatives, key professionals including doctors, accountants, lawyers and other professional advisors. What you own, such as bank and investment accounts, retirement, pension and other plans, insurance, real estate, personal effects, including art, jewelry and other valuables and collectibles, and how assets are structured if there are any holding companies, trusts or other entities, and at which financial institutions property is held (including any safe deposit boxes), as well as any liabilities, such as mortgages, loans, lines of credit and credit cards. 

Tune Up for Twenty Twenty

The end of one year and the beginning of another is a good time to reflect, recharge, and take stock. Even if you don't celebrate the new year January 1st, it is also a good time to feel grateful for what you were able to complete and make resolutions about what you haven't completed. It may sound trite, but everyone should take the time to do this at least once a year.

In reflecting on the past year and considering what to do next year, take a few minutes and consider what resolutions to make regarding your estate planning. If you don't have a will and powers of attorney, you should make it a priority to get those documents in place. If you already have these basic documents, here are some resolutions to consider.

Death in a Digital Age

Your digital assets include everything from your smart phone and Amazon accounts to your social media accounts and web-based banking applications. The Uniform Access to Digital Assets by Fiduciaries Act (2016), as described below, defines a digital asset as "a record that is created, recorded, transmitted or stored in digital or other intangible form by electronic, magnetic or optical means or by any other similar means". A digital asset includes any electronic possession a person may have.

Getting Ready for the New Trust Reporting and Disclosure Rules

In a previous blog, "The Movement to Transparency and the Erosion of Privacy" we wrote about the global move to greater transparency by government and taxing authorities which they claim is necessary to combat money laundering and tax evasion.

As part of that agenda which the government asserts is necessary to ensure the effectiveness and integrity of the Canadian tax system, new income tax rules have been introduced which require trusts (with limited exceptions) to provide additional information. As well, certain trusts which may have had no reporting and disclosure obligations because they had no income will now be required to file a trust income tax and information return.

Change, It Is A-coming: Update on Estate Administration Tax

The current Ontario Government has implemented a couple of changes to the calculation of Estate Administration Tax ("EAT", often called probate fees) and the process for EAT refunds which are due to take effect January 1st. It has promised further changes to the deadlines for filing an Estate Information Return ("EIR") which is part of the EAT reporting regime.

These changes will affect all estates which go through the probate process, and raise the issue of whether advance planning might be beneficial for your estate to avoid or minimize EAT and its requirements.

Heading South For The Winter? Don't Forget Your Powers of Attorney

As colder weather approaches, Ontario snowbirds will start flocking to warmer climates. According to a 2018 study commissioned by The Canadian Trade Commissioner Service, close to 500,000 Canadian snowbirds spend their winters in Florida. Arizona and California are also popular destinations.

Many, if not most, will arrange health insurance in anticipation of travel, but consideration should also be given to incapacity planning. Who has the authority to manage a person's real estate assets, access financial accounts or pay bills upon incapacity? And likewise, who has authority to make health care and medical decisions on a person's behalf?

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