Our Wills & Estates Practice Group are dedicated practitioners who regularly handle matters relevant to the creation and preservation of wealth through estate planning, administration and litigation.
Our planning specialists work closely together to provide comprehensive advice, tailored to your specific needs and presented in a timely and cost-effective manner. Although they are specialists, our group also works with other practice areas and professionals to ensure that the action being taken is appropriate to the circumstances.
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Why Do I Need a Will?
Anyone who has property, RSPs or employment benefits, and anyone who has children needs a will. You should review your will every two or three years, or when you or your family experiences a major change in personal circumstances.
The Enduring Power of Attorney
An Enduring Power of Attorney (EPA) is a document that you sign while you still have capacity, which enables someone else to look after your finances when you cannot. If you do not have an EPA it will be necessary for someone to apply to the courts for an order of Trusteeship should you become incapacitated.
The Personal Directive
Should you become incapacitated, the Personal Directive gives your appointed agent the authority to determine where you live and the kind of medical treatment you receive, as well as other personal decisions not dealing with your assets.
In today’s popular culture people love to read about the will of a famous person or hear about the estate plan that went wrong and resulted in millions of dollars being left to a cat rescue centre.
However, it is not just the wealthy that need to consider estate planning; our clients are from all walks of life with needs as diverse as wanting to leave everything to their spouse to requiring a corporate restructuring to allow appropriate succession planning in a business.
In developing an estate plan, we start with the ‘here and now’ and move toward the future in a systematic fashion. We look at ways for you to retain as much of your wealth as possible and the various ways which you can pass your assets to the next generation or generations. Your wishes, coupled with your current responsibilities, are our paramount concern. We overlay tax consequences and other legal requirements in order to accomplish the appropriate planning. Download our Estate Planning Questionnaire - it's an important part of a thorough financial plan.
The lawyers in our team can assist in general estate planning, or more specifically in the drafting of wills, trusts, enduring powers of attorney and personal directives. McLennan Ross is also known for its expertise in the area of estate litigation.
You benefit from our experience and expertise, coupled with a common sense approach to the special, individual concerns of each client. Our aim is to provide you with the peace of mind that your assets are well protected.
If someone dies and you are named as executor there are many tasks to undertake and decisions to make. Usually there is need for an application to the Court for a Grant of Probate or a Grant of Administration as well as appropriate notification to creditors and beneficiaries. Tax issues, as well as other issues, surrounding the nature of the assets in the estate also need to be addressed. Finally, dealing with the various beneficiaries, including distribution to those beneficiaries is necessary.
We have seen over the years a trend towards more litigation in estates. Everything from allegations of lack of capacity to not providing adequately for those left behind are reasons for litigation. However, by working closely with our clients and taking the proper approach these matters can often be settled without litigation.
A trust is similar to a will, but instead of your assets being transferred to your estate when you die, your assets are transferred to the trust while you are alive, allowing you to maximize the benefits of your wealth.
A trust can be used in a variety of ways, from providing an education fund for a grand child to giving a charity a sizeable amount of money. Trusts can also allow you to reduce capital gains upon death and defer or minimize taxes.
…you die without a will or an appropriate will?
If you die without a will or without making an appropriate will, the provisions of the Wills and Succession Act (“WSA”) will determine how your estate is distributed. A person who dies without a will is legally described as “intestate”. Since the WSA will determine who receives your estate, you will be unable to ensure that the important people in your life are provided for, so speak to your legal advisor to ensure you have a will that reflects your wishes.
…you didn't get what you wanted under the will?
There are various grounds on which you may contest your inheritance, some of which include lack of capacity, undue influence, or lack of adequate provision for a dependant person. If you are not satisfied with your inheritance you should immediately consult with your legal advisor as there may be legal recourse available to you. Your ability to bring a claim to contest your inheritance is time sensitive. Accordingly, it is important that you do not delay.
…an estate has assets that cannot be sold (liquidity issues)?
On death, an individual is deemed to dispose of all of their property immediately before death for proceeds equal to the fair market value at that time (unless left to a spouse or a spousal trust). This can often result in substantial amounts of taxation on income and capital gains. The tax is payable when filing the terminal return.
If the estate does not have assets which are liquid, such as cash, then either assets from the estate must be sold or cash raised through financing. This can be very difficult but with some legal assistance there are steps which can be taken to satisfy this liability and avoid assets being sold or encumbered by a bank.
…you are in a second marriage?
It is crucial that you re-visit your estate plan when you remarry to ensure that it reflects your current wishes. You must also review your Personal Directive and Enduring Power of Attorney, as well as the beneficiary designations that you have made on any life insurance policies or investments and make the appropriate changes. A second marriage, like any other change in your personal or financial circumstances, is an important stage at which to review your estate plan.
…you have a dependent adult child?
If you have an adult child who is unable to earn a livelihood due to a physical or mental disability, you must make adequate provision for them in your will. If you do not, your child could bring a claim against your estate pursuant to the WSA. Given the complexities of planning for a dependant child, you should consult with your legal advisor to ensure that you are adequately providing for your child while not affecting their eligibility to receive government benefits.
…you have a child or grandchild who has addiction or other problems?
If you have a child or grandchild who has a substance abuse problem, providing for them in your will requires some careful drafting. For example, a trust could be used which allows the trustee to monitor the substance abuse and allot funds as needed for treatment or other costs as appropriate. There are many options available, which you should discuss fully with your legal advisor.
…you want to provide for charities through your will?
If you want to provide for charities through your will, it must be done specifically. Difficulties can arise where a charity is not properly named or an amount is not specified. The proper drafting of the charitable bequest is important, so meet with your legal advisor to ensure your wishes are met.
…you wish to provide for parties other than family members?
In your will, you are free to deal with your property as you choose, however you should know that if you have a spouse, common law partner, minor child or disabled child who have not been adequately provided for in your will, those parties can make a court application to be granted a larger share of your estate. This can be a contentious and costly process for your estate and your family members. You cannot stop those parties from making such an application, but by talking with your lawyer you can reduce the chances of this occurring by considering both your dependents, and any other parties you wish to benefit, when creating your estate plan.
…you become disabled?
In October 2009, the Alberta government made significant changes to the law regarding dependent adults. An applicant, often a close family member of the disabled person, must go through a complicated, time consuming and costly process in order to assist the disabled person with handling their financial and personal affairs. A lawyer is usually required, and the cost will often be at least $4,000, with the requirement for a retainer. For these reasons, it is crucial for everyone, regardless of their age or health, to have a Personal Directive and Enduring Power of Attorney. These documents allow the disabled person’s agent or attorney to make decisions and provide assistance immediately upon coming into effect, saving your loved ones the time, money and anxiety of trying to do so once the disability has occurred.
…you are concerned about succession of your business?
For most owners of a family business, the value of their shares represents by far the largest asset in their estates. It is important to properly plan for either the sale of that business to a third party or succession with the appropriate family members acquiring ownership.
Sale to a third party results in many tax issues and the obvious goal of maximizing after-tax proceeds. Transfer of the business to a family member means many other issues including who, if any, of your children can manage the business, how to treat all your children fairly, and how to transfer the value of the business to the children on a tax-effective basis.
…you get sued without a proper structure in place?
An individual who decides to carry on a business in their personal name will generally be personally responsible, as a sole proprietor, for the claims of creditors. If two or more individuals carry on a business, they will also be personally responsible, as partners, for the claims of creditors on a 'joint and several' basis.
Using a corporation to carry on a business is generally the first step to protecting an owner-operator from personal liability for the claims of creditors. The tax professionals at McLennan Ross are able to help you ensure the proper structure is in place for your business - whether a single corporation, a creditor-protection tiering of corporations or other innovative business vehicle.
…you have not filed tax returns in the last few years?
Failure to file income tax returns in Canada can have serious consequences both for an individual and a corporation. If the Canada Revenue Agency (CRA) becomes aware of your non-filing, at a minimum, they will charge you the income tax, late filing penalties and interest on the unpaid balances. In addition, penalties equal to 50% of the tax are possible if the CRA is of the view that you did not file your returns under circumstances amounting to gross negligence.
Finally, if non-filing is the result of an intent to evade tax, there is always a risk of criminal charges. The good news is that CRA’s Voluntary Disclosure Program allows you to come forward and avoid penalties and risk of prosecution.
Our team at McLennan Ross can advise you on the best course of action.
…you or a family member leaves Canada?
Leaving Canada for a vacation appeals to many; leaving Canada for good, or 'emigrating' to another country, and becoming a "non-resident" for Canadian income tax purposes, may result in significant tax payable.
Canadian income tax laws are based on the concept of 'residency'. If you, or a family member, are a 'resident' of Canada, but decide to leave Canada and become a 'non-resident', these income tax laws 'deem' you to sell your property (with some exceptions) for its fair market value. If your property is worth more than its tax cost, you will owe income tax to the Canadian government when you leave. Careful income tax planning for 'emigration' from Canada will ensure that you pay only the minimal amount of income tax necessary to comply with these rules - it's your right as a Canadian taxpayer.
The tax professionals at McLennan Ross can help you plan for your departure from Canada; or, if you want to stay, and just vacation abroad, we can help ensure you do the utmost to retain your income tax status as a resident of Canada.
…you have assets in another jurisdiction?
Then you may be responsible for taxation in that jurisdiction. For example, if you have a property in the United States from which you earn rental income you may be required to meet U.S. filing requirements and pay U.S. income tax.
It is also worth remembering that whenever you own property in another jurisdiction you will need to deal with those properties as part of your estate upon your death. In particular, if you own property in the Unites States you could be exposed to U.S. estate tax. Our team can help minimize your tax exposure with a customized estate plan.
…you are currently being audited by Canada Revenue Agency?
An audit by the CRA is a serious matter. You must cooperate fully with the CRA officer and provide them with all documents and information they request. Take time to talk to your lawyer and ensure the information and documentation provided is accurate and complete. Matters such as solicitor/client privilege should also be considered.
…you got involved in a charitable donation scheme, and the CRA wants to deny your donation?
Our team at McLennan Ross can assist with all of these issues. Making a donation to a worthwhile charity is often a 'win-win' scenario; your personal sense of satisfaction for donating to a good cause is met with a significant tax break - up to 50% of the donation for Alberta residents! However, some promoters are keen to take advantage of those who may be looking more to the donation tax break, than the programs and activities offered by the charity.
When the Canada Revenue Agency sends you an audit or proposal letter, requesting information on your 'charitable donation' or advising you that your 'donation' is being disallowed, and you now owe considerable income tax, interest, and perhaps even penalties, it's time to take a long, hard look at your tax filings. Ensure you have all documentation on the donation at the ready, then contact a tax lawyer to help you resolve your dispute with the Canada Revenue Agency.
Whether at the audit, appeals or Tax Court of Canada level, you need solid advice and a plan for your dispute. A consultation with a lawyer offers you a candid opportunity to disclose your affairs with the full protection of solicitor-client privilege, and can help ensure you choose the path that's best for you, and your family.
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