General Legal Services

What Happens When You Die Without a Will

By on Jul 10, 2015 in Wills and Estates

LawPRO, the company that provides professional liability insurance to members of the Law Society of Upper Canada in Ontario has prepared a brief video you may find helpful about what happens when you die without a Will. To view it, please click the following link: Ever wonder what happens when you die without a Will? In addition to the issues set out in the video, loved ones who survive you are left with a usually much more difficult burden to wind up your estate and often face delays in being able to access assets and to deal with debts of your estate if you did not leave a Will. Many people put off doing their Will. It seems like there will always be another day to do it and it can be hard to think about what would happen if you were gone. Please feel free to contact myself or my Legal Assistant, Danielle Morrow if would like my assistance with the preparation of your...

Read More

Joint Tenancy and Tenancy in Common – How they Differ

By on Mar 11, 2015 in Real Estate Law, Wills and Estates

Real Property can be held in different ways, the main two types of ownership are joint tenancy and tenancy in common. Joint Tenancy Joint tenancy is a type of ownership that comes with the benefit of the right of survivorship. This means where two people own property as joint tenants upon the death of the first joint owner, the property becomes wholly owned by the survivor. The transfer of transfer of title from the two joint owners (in the case of property owned by two people) should not require any court process. Property owned in joint tenancy generally by-passes the estate the first joint owner to die, and become property of the surviving joint owner(s). It should not be necessary to obtain a Certificate of Appointment of Estate Trustee (the court order that used to be called Letters Probate) to transfer the property. There will be no Estate Administration Tax payable on the value of the property being transferred when it passes outside the court process. Tenancy in Common Tenancy in Common is a type of ownership that does not have the benefit of a right of survivorship. In order to transfer the property on the death of one of the owners, an Estate Trustee needs to obtain a Certificate of Appointment of Estate Trustee (the court order that used to be called Letters Probate) to transfer the property. If the first tenant in common to die has a Will, the property can be distributed to heirs of the owner’s choosing. If the first tenant in common to die does not have a Will, for property located in Ontario, the property will be distributed according to the rules under Succession Law Reform Act, R.S.O. 1990, c.s. 26, for intestate succession. There will be Estate Administration Tax payable on the value of the property being transferred less the value of any mortgages registered against the interest of the deceased as it will have to pass through the owner’s Estate. Please note that the ownership of property and the transfer of property upon death can be complex. The above is intended to provide some general information to assist you in understanding how the type of ownership you have can affect your estate...

Read More

Executor and Estate Trustee Compensation

By on Aug 8, 2014 in Wills and Estates

Executors and trustees are entitled to be compensated for their work in the administration of estates, as provided in Ontario’s Trustee Act, R.S.O. 1990, c. T.23 (“Trustee Act”), s. 61(1), which says: “A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.” Unfortunately, the Trustee Act does not have any specific rules as to how an Executor or Trustee should calculate the amount of compensation he or she is entitled to. In Ontario, as in other Canadian jurisdictions, there is no tariff that has been specifically legislated that can be applied to the estate to determine an amount of compensation. However, that does not mean there is no guidance at all for Executors and Trustees. The reality is that over the years, the courts have used a general rule as to the percentages to be used when calculating the amount of compensation that an Estate Trustee is entitled to, and it is departed from only in special circumstances. In such cases, the court will reduce or increase the compensation or may permit a special fee. Otherwise, the case law generally uses the percentages below, called the tariff to determine the amount of compensation that the Estate Trustee is entitled to. The tariff at its present level is often calculated as follows: (a) 2.5% to 3% of capital receipts; (b) 2.5% to 3% of capital disbursements; (c) 2.5% to 3% of income receipts; (d) 2.5% to 3% of income disbursements; and (e) for ongoing trusts, 2/5 of 1% or 3/5 of 1% of the average annual market value of the trust assets as the fee for ongoing care and management, and 5% to 6% of income generated by the trust. The percentage has become so standard that it is almost automatically used by advisors to Executors and Trustees to help them determine an appropriate amount of compensation to claim for their work in manager the trust assets – work that is often time consuming and emotionally draining. Another method that is used in practice in estates because it...

Read More

Canada/U.S. issues with Powers of Attorney for Property and Canadian Investments

By on Mar 19, 2014 in Wills and Estates

No matter how carefully a Power of Attorney for Property is drafted, appointing a U.S. resident to act as your attorney may result in the attorney being unable to process transactions with respect to Canadian Investments. I recently came across an issue in relation to grantors of powers of attorney for property who are Canadian residents and Canadian citizens with family in the United States. The issue relates to U.S. securities laws that serve to prohibit cross border dealings in securities by unregistered foreign brokers, even apparently with respect to Canadian investments. For purposes of this discussion, (I will call the grantor Albert). To illustrate the issue, let us say that Albert appoints a family member (who I will call Peter) who is a U.S. resident and citizen as his attorney for property. Let us also assume that Albert’s Power of Attorney for Property is properly drafted, signed and witnessed, is effective immediately, usable immediately and continues in the event of incapacity. Let us now assume that Albert has investments in Canada with a Canadian investment company and has been dealing with a properly licensed and registered Canadian Broker-dealer authorized to conduct business anywhere in Canada, but, not elsewhere (the “Canadian Broker”). Assume also that Albert has very little money in the bank and no other major assets anywhere in the world. Now let us assume that Albert is incapable with respect to property and needs Peter to step in to assist. The issue is whether the Canadian Broker could take any instructions from Peter who is a U.S. resident and would be primarily also be calling from the U.S. The concern for the Canadian Broker is if he accepts Peter’s instructions to, for example, draw money from Albert’s investments to pay for Albert’s nursing home care, would he be breaking the law? The risk for Albert is that Peter would not be able to act on Albert’s behalf at all. There is a general prohibition that is subject to some narrow exceptions. The general prohibition under U.S. law is such that a Canadian Broker, also often called a Financial or Investment Advisor is not allowed to take instructions even by phone from a person in the United States...

Read More

Understanding the Statement of Adjustments in Real Estate Transactions

By on Mar 10, 2014 in Real Estate Law

Below is a sample Statement of Adjustments with explanations for the various items on it. By way of summary, a Statement of Adjustments is used to calculate adjustments in a typical real estate transaction. They are usually prepared by the lawyer for the Vendor and sent to the lawyer for the Purchaser of a property. The purpose of the Statement of Adjustments is to calculate and show the calculations that determine the exact amount the Purchaser will have to pay to the Vendor on closing. It is divided into three columns: the first is a description of the item being adjusted, the second shows credits to the Purchaser and the third shows credits to the Vendor. The first item in a Statement of Adjustments is always the sale price of the property as agreed upon in the Agreement of Purchase and Sale. The second item is always the deposit paid by the Purchaser, which is typically held in the Real Estate Agent’s trust account. The remaining items will vary between transactions and can include property taxes, fuel costs, unmetered utilities, common expenses and mortgages that are being...

Read More

What Makes an Effective Power of Attorney for Property?

By on Oct 16, 2013 in Wills and Estates

  Did you know that your banking agreement probably gives your bank the right to refuse to allow your Attorney to close a bank account or transfer funds out of your bank account if the bank does not believe that your Attorney is acting in your best interests? For some people, this will come as a relief, for others as a source of frustration.   It is a good idea to choose someone you trust to assist you with managing your financial affairs when you are unable to. A document used for that purpose is called a Power of Attorney for Property. The person appointed to manage your financial affairs is called your Attorney. If the Power of Attorney is intended to be effective, that is to continue, in the event of your incapacity, the Power of Attorney will need special wording and is called a Continuing Power of Attorney – in Ontario at least. Some other jurisdictions may use different names for the document.   Many couples, for example, appoint each other as an Attorney for property. In cases where a couple treats their finances as shared, it may not be the intention of the couple to limit in anyway the ability of the other to manage funds in the name of the other member of the couple. If you want your Attorney, who may be your spouse for example, to be able to withdraw funds from a bank account to put all of the money into his or her account, then it will be important to include special wording to permit that. If you do not want your Attorney to be able to withdraw money for anything other than payment of expenses for which proof of payment can be provided (like a hydro bill), probably your banking agreement will protect you. To be certain though, you can provide special wording for that in your Power of Attorney.   Powers of Attorney for Property generally allow the Attorney or Attorneys named in the document to do anything the donor (the person who makes the Power of Attorney for Property) could do if capable, except make a will. That means they are powerful documents that can be abused. In...

Read More

Protecting Your Digital Assets in Your Will

By on Oct 4, 2013 in Wills and Estates

  What are digital assets and why should you care about them when you think about your estate plan? Today, almost everyone maintains a digital presence and it is increasingly common for individuals to have a significant amount of assets and personal information that are stored digitally. Your digital assets include all of your online accounts and digital files that you own.   Some digital assets have sentimental value – like photos, music and diaries. Some have financial value like your music or movie collection, your website domains or even an avatar. In other cases, it is not so much an asset that you might want to be concerned with but rather a right of access to an asset or a bill you receive and pay electronically or to personal files stored in cloud based digital repositories. This is because digital assets can also include files, usernames and passwords stored in a digital format, such as on a flash memory device or hard drive, as well as password-protected banking or accounts that exist online.   Ownership and Access to your Digital Assets   It seems straight forward that the use and access to your digital assets is to be enjoyed by you. If you lose your password, or username, you should be able to have some means of retrieving them or getting news ones from your service provider. However, what happens to your digital assets after your death? Without the proper planning and authorization in place as to the access and use of and or access to your digital assets or information or assets that you access through the internet, after your death it may not be possible for your beneficiaries, agent or other representative to gain access to your digital assets in order to organize or distribute them without obtaining a court order. Most service providers prohibit the use of an account by anyone other than the account holder, as well as the sharing of a username and password with others, even if that someone is your Estate Trustee. Alternatively, it may be that you have digital assets that you do not want some people to have access to.   What happens without Proper Planning for Access to...

Read More

The Role of a Lawyer in a Typical Residential Real Estate Transaction

By on Jul 28, 2013 in Real Estate Law

What does a lawyer do in a typical purchase or sale of a residential home? Below is a chart with some definitions to follow that describes the main steps that a lawyer will take when assisting a client with the purchase or sale of their home.   Purchase Sale Review of the Agreement of Purchase and Sale and Status Certificate where applicable and note any deadlines to insure the deal proceeds as scheduled; Review the Agreement of Purchase and Sale and note any deadlines to insure the deal proceeds as scheduled; Arrange for and review the title search Obtain and review parcel register Request other required searches – tax arrears, common expenses, zoning, work orders, etc Obtain property tax information from client or from City Obtain information regarding satisfaction of conditions/deliverables (i.e. invoices to show repair work completed, clean water test obtained, septic permit) Receive, review and respond to requisitions, which might include following up with clients about things the clients are supposed to look after before closing Prepare and send requisition letter and closing documents required from Sellers and Sellers counsel on or before the requisition date Provide an undertaking to the buyers and their lawyer to pay out existing encumbrances (as provided for and agreed to in the typical Agreement of Purchase and Sale); Request and obtain title insurance or provide an opinion on title Obtain mortgage pay out statement if there is a mortgage Prepare transfer for review and completion by seller’s counsel Review draft transfer and complete missing information Prepare draft Charge as instructed by Lender for review and execution by client Attend with the clients for review and execution of closing documents and obtain keys from clients to be held in escrow; Attend with client for review and execution of closing documents and obtain remaining closing funds from client Prepare and deliver Statement of Adjustments to the lawyer for the buyers; Enter escrow closing arrangement with the lawyer for the sellers; Enter escrow closing arrangement with the lawyer for the buyers; Receive mortgage funds and rest of closing funds in trust Deliver closing package to the lawyer for the buyers, including keys; Review Statement of Adjustments and prepare certified cheques for sellers as directed by counsel and in keeping with the Agreement of Purchase...

Read More

Types of Businesses and How A Lawyer Might Help

By on Mar 31, 2013 in Corporate Law

  There are many types of businesses. This article touches on some of the key types of businesses and explains what a might be the typical role of a lawyer in providing advice or assistance to you in setting up your business or in having others join you in your business.   What does a lawyer do, how does a lawyer help with setting up a business?   A lawyer helps you to decide what type of business organization is best for you, sometimes with the help of your accountant.   Types of Businesses:   There are many types of businesses. The main types are described below. Sole Proprietorship – one owner, one decision maker, one person who is entitled to the profits, responsible for the risks and exposed to liability. Partnership – two or more owners, shared decision making, shared earnings which can be shared in any proportion and based on any triggering events agreed upon by the partners. Joint Venture – a type of partnership usually limited in scope to a particular project or specific goal. Corporation – can have one or more owners, owners are shareholders, directors run or manage the business – often owners and directors are the same person or people – benefits from limited liability. Limited liability means that without more, personal assets are protected. Sometimes the type of business structure is chosen for you depending on the people you are working with and the type of work you are doing.   How does a lawyer help with each of these?   Sole Proprietorship – People tend not to get help from lawyers to form a sole proprietorship, but, might seek help when entering into agreements with suppliers or service providers either to prepare or draft the agreement or when obtaining loans. Partnership – People often seek help with getting a partnership agreement put into place to set out their agreement. It can be very helpful to have a lawyer assist with things like what the parties ideas are about the types of contributions each partner is to make in terms of money, time, and other assets, entitlement to get involved in other businesses, what happens if someone gets sick temporarily, permanently or...

Read More

Death and Taxes

By on Mar 31, 2013 in Wills and Estates

  It has been said that the only two things we can be certain of are death and taxes. In my experience, there is a lot of misunderstanding about taxation on death. Taxes can impose a significant burden on an estate and where possible, should be considered as part of estate planning and will drafting. There are several types of taxes that arise in relation to and at the time of death. There are estate administration taxes that are payable under the Estate Administration Tax Act in the event that a Certificate of Appointment of Estate Trustee with or without a will is obtained in court. There are taxes that must be paid under the Income Tax Act. There may also be taxes payable upon the transfer of property under the Land Transfer Tax Act. This article will touch on and give some general information regarding the differences between these taxes, who usually pays them and whether they are avoidable. It is intended for general information purposes only and provides a review of what generally happens. For specific advice related to your particular circumstances, you should not rely on this information and should consult a professional advisor.   Is there a death tax in Canada?   There is no such thing as a death tax in Canada. That being said, there are taxes that are payable when a person dies.   What taxes have to be paid?   Income tax is usually the largest tax that a person will have to pay. It is the responsibility of the Estate Trustee to file what is called a Terminal T1 Return for the deceased. In that return, there is what is called a “deemed disposition” of all property. That means that, for example, if you own an office building it will be considered to have been sold on the date of your death and you would have to pay capital gains taxes on the office building as though the office building had been sold, even though it may not actually have been sold. All income earned in the year of death is also taxed as usual and any taxes owing have to be paid by the deadline for paying them which...

Read More