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.
For those of us who live and work in a common law world, it is hard to imagine that we are by far the minority. Most of the world is governed by a civil law regime, customary law or religious law. Continental Europe, Russia, China, Japan, South America, Mexico and some of Africa are governed by civil law. The common law tradition is peculiarly English in origin, and most of its former colonies follow it, including in the U.S. (except Louisiana), Canada (except Quebec), Australia, New Zealand and India.
People often wish to ensure confidentiality in doing their estate planning as an important goal. A trust is a common vehicle to do so, since court probate processes, which have been around for centuries, are public and once a will is probated it becomes a public document. The current government trend is towards greater disclosure of beneficial ownership, making achieving confidentiality in estate and trust matters much more difficult, if not impossible, in some cases.Obtaining a court grant of probate (or certificate of appointment of estate trustee with a will in Ontario), which is often required for an executor to be able to administer a person's assets after his or her death, involves the filing of the deceased person's last will with the court making it available to the public. In addition, the total value of a person's assets must be disclosed in the application form, as well as the addresses, and if minor beneficiaries, dates of birth, of all beneficiaries must be provided to the court. While a probate application is not exactly a newspaper article, it is available to anyone who wants to see it and who is willing to bother to take a look at the court file. Now in Ontario a fulsome list of all estate assets subject to probate is required to be filed after the court certificate is issued, although this is not a publicly-available document.
Much has been written in recent years about the role of the "trusted advisor". A trusted advisor plays a key role in achieving client goals in their best interests and is worth their weight in gold. To do so, a trusted advisor needs to be able to provide clients with sound advice based on experience but also on the ethical dimensions of their decisions.
In Canada, succession rights are often discussed in the framework of testamentary freedom - see for example our previous blog regarding testamentary freedom which discusses disinheriting a beneficiary such as a child who might expect to inherit. But in many parts of the world, a person not only cannot disinherit certain family members, it would not be accepted by society at large in such places that a person should be able to do so.
There are important decisions that need to be made when parents with young families prepare their wills, including who will act as guardian of their minor children should both parents die. Not only do parents want to ensure they are providing for their children financially, they also want to be confident their children will be cared for and raised by appropriate individuals. What are the specific issues that arise if the proposed guardian does not live in the same jurisdiction? By way of background, in Ontario, the Children's Law Reform Act deals with testamentary custody and guardianship of minor children (individuals under 18 years of age) and parents have the authority to appoint a "guardian" for custody of their minor children under their individual wills. However, this appointment is only valid for 90 days from the date of death of the deceased parent. Please see our previous blog for further details on the appointment process.
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.
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.
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.
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?