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55 Cards in this Set
- Front
- Back
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What are potential outcomes of estate planning? |
establishing an inter vivos trust or education plan, reorganizing property ownership, making charitable contributions, restructuring his or her investment portfolio, effecting an estate freeze, preparing powers of attorney, adjusting his or her insurance coverage, and much more |
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What are the benefits to preparing an estate plan? |
Manage current income taxes Ensure sufficient liquidity exists in the estate Manage income taxes after death Minimize government interference Plan for replacement income Minimize disputes Anticipate needs and abilities of survivors Maintain business viability Provide peace of mind |
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Common Estate Planning Pitfalls |
Procrastination Excessive focus on tax avoidance Failure to look beyond the will Failure to look beyond the will |
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How might the federal Income Tax Act versus provincial property legislation differ in definition of a spouse? |
ITA: person to whom you are legally married Ontario: 2 married persons or 2 cohabiting persons (varies for each prov) |
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To what relationships does most provincial property legislation apply? |
only to parties involved in a legal, void or voidable marriage |
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What levels of government are involved in marriage and divorce? |
-federal government has power over both marriage and divorce -provinces have authority over the solemnization of marriage -provincial property and family support laws regulate the rights and obligations of the individuals entering the marriage |
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What benefits were lost/gained to same-sex partners because of changes in legislation legalizing same-sex marriage and common law status? |
LOST Ability to each claim a principal residence Exclusion from spousal income attribution rules Lost arm's length business dealings GAIN CPP survivor benefit and income splitting Spousal RRSP Pooled medical expenses, tax credit sharing |
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According to ITA, what constitutes c/l partners? According to ITA, what ends c/l status? |
-Have/support child together & live together in conjugal relationship for any amount of time -live together in conjugal relationship for 12 continuous months -NOT married, same or opp sex -ENDS only if separate at least 90 days BECAUSE of breakdown in relationship, not because circumstances cause them to live apart |
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How does provincial family law legislation treat same-sex and opposite-sex common-law partners in terms of spousal support obligations? How does provincial property legislation treat same-sex and opposite-sex common-law partners in terms of matrimonial property legislation and intestacy legislation? |
-common-law partner deemed as having same rights as a spouse in a valid marriage for spousal support obligations -some provinces do not grant any property rights to the common-law partner by virtue of his or her spousal-like relationship |
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What levels of government address spousal and child support issues at breakdown of relationship? |
-FEDERA Divorce Act addresses spousal and child support, as well as child custody and access during dissolution of a legal marriage (administered by provincial courts) -common-law couples must look to their PROVINCIAL family law to address spousal and child support issues |
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What are Grounds for granting a divorce per federal Divorce Act? |
Breakdown of the marriage deemed to occur only if 1. lived separate and apart for at least one year OR 2. adultery/abuse |
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What levels of government addresses divorce? |
-FEDERAL Divorce Act has uniform application across Canada. -Corollary relief, such as child support, governed by FEDERAL legislation -Division of property governed by PROVINCIAL legislation -Provincial courts administered procedures with respect to divorce matters |
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How is an annulment is distinct from a divorce? |
divorce granted under the Divorce Act terminates a valid marriage annulment declares that the marriage is not valid because it is either void or voidable |
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What are two types of annulments? |
VOID AB INITIO material fact that existed at the time of the marriage ceremony, usually relating to the capacity (already married, under age, mentally incompetent, prohibited degree of consanguinity (i.e., blood relationship), solemnization by an unauthorized party) VOIDABLE material fact that arises or is revealed after the marriage ceremony (sexual incapacity may make consummation impossible) |
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How is an annulment treated in terms of provincial family property and support legislation? |
-just like a divorce re family property and support legislation -Children of an invalid marriage have the same rights and obligations as children of a valid marriage |
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Is a separation agreement or separate residences required for legal separation? |
NO Both parties can continue to live under the same roof if there is no financially viable alternative, so long as both parties live separately and independently in the same dwelling Separation agreement is an optional domestic contract specifying terms of separation (property division, spousal support, child support) No such term as legally separated, and no legal formalities to separate |
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What is a descendant or issue? (same term) |
offspring who has descended lineally, includes biological and adopted children, children from previous union in which he was the parent, grandchildren or great-grandchildren and descendants thereafter |
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When is there a financial obligation of support for descendants? |
-if you are a parent -if child a minor or if adult child disabled, or in financial need while going to university -grandparents can voluntarily assume financial responsibility, but once the financial dependency is established, however, it can have financial implications (ITA) |
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To whom does the term ascendant refer? When is there a financial obligation of support for ascendants? |
-anyone of whom that individual is a lineal descendant (parents, grandparents, great-grandparents) -if the parent is unable to support himself or herself, and especially if the parent provided care or support to that child as he or she was growing up. In some provinces, that obligation can extend to grandparents. |
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What are collateral relatives and degrees of consanguinity? |
-descended from a common ancestor, but in a different line - ie not your parent, child or grand/great -relationship of individuals by blood measured by degree. ie, your parent and child are 1st, your grandparent, grandchild & sibling are 2nd, your niece, aunt, and great grandchild/parent are 3rd |
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What levels of government addresses property division? |
Division of property and civil rights are governed by PROVINCIAL legislation. |
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When do the Federal Child Support Guidelines apply? |
-Legal divorce - common law or separating w/o divorce must follow PROVINCIAL fam law -It is mandatory that support amounts determined 1997+ follow Federal Child Support Guidelines. -Existing child support orders made under the Divorce Act made before May 1, 1997 follow these "guidelines" if either parent applies to change the support amount. |
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How do you determine which children must be supported? |
-children of both spouses <18/19 -children where acted in place of a parent (step-children) (guideline amounts are advisory only) -adult children dependent bc illness, disability, education |
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How do you define sole, split & shared custody in terms of the child support guidelines.? |
SOLE child resides less than 40% of the time, over the course of a year, with the paying parent SPLIT children are divided between the parents JOINT/SHARED each parent has physical custody of the children for at least 40% of the year |
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How do you determine child support in cases of split or shared custody? |
Eeach parent must calculate how much child support he or she has to pay to the other parent for children in custody of that other parent. Parent required to pay the higher amount would pay the other parent the difference between the two amounts. |
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What hardships or expenses allow adjustments to the Basic child support Amount? Who pays the extra expenses? |
HARDSHIP: high level of reasonably incurred debt, high child access costs, other child orspousal support obligations SPECIAL EXP: childcare expenses, med premium, med exp, extracurricular, post-sec edu -if reasonable, exp split proportionate to parents incomes (even if sole custody) |
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When are child & spousal support payments taxable/tax deductible? |
-all agreements after April 30, 1997, the child support is not taxable/deductible -agreements made prior to April 30, 1997, treated as taxable/deductible unless either/both parent(s) apply to the court to convert to new tax treatment |
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What are some FEDERAL child support enforcement measures? |
-suspend passports and marine licenses -locate using CRA data -garnish federal pension benefits -support PROV programs w $ -national public awareness campaign |
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What are some PROVINCIAL child support enforcement measures? |
-interest -garnishing wages -fed & prov data banks to locate -seizing and selling assets -lien/freeze on property -arrest warrants -suspending drivers' licenses and passports |
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How is UCCB taxed in case of single parent? |
If one parent and they claim one child for eligible dependent tax credit, UCCB can be taxed in hands of parent or in hands of the dependent for whom the dependent tax credit claimed. If no eligible dep tax credit, aggregate UCCB rec'd can be claimed on income of any 1 child that receives UCCB. NOTE: not always beneficial - ie Mel |
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What are some Child and Family Benefits? Which are no longer in force since writing of course? |
CCTB - income tested, tax free UCCB - taxable NCBS -national supplement, income tested, tax free CDB - disability (tax free, inc tested) CTC - child tax credit NEW: Canada Child Benefit CCB Jul 2016 GONE: UCCB & CCTB replaced Jul 2016 by CCB, Child tax credit gone |
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When and how do you apply for spousal support? |
-Under the Divorce Act application w divorce petition, or after the divorce is granted. cannot receive spousal support under the Divorce Act until the divorce is granted, with the exception of interim support -may have negotiated a separation agreement or sought spousal support during the separation under provincial family law -neither party barred from seeking corollary relief to override existing agreement during the divorce proceedings, just bc an agreement or order exists |
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How is spousal support determined? |
-No guidelines exist for spousal support -objectives are payments to Recognize any economic dis/advantage Financial consequences from childcare in/after marriage incl opp cost Relieve hardship & Promote self sufficiency -Consider time cohabitation, function of each spouse during cohab, any agreements, NO prejudice on conduct of either spouse |
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How does property division impact spousal support? |
Property division governed by provincial legislation, NOT Divorce ActIf province where divorce court also hears applications for the division of matrimonial property under provincial legislation, proceedings may be combined., thus court may consider how property division impacts a spouse's need for support |
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What are the time restrictions for support applications for common law couples who do not have recourse under the federal Divorce Act? What are time restrictions for provincial child support applications? |
-generally w/i 2 yrs of separation, but some provinces allow as little as three months
-not as important for legally married spouses undergoing a divorce because they can always apply for support once the divorce is granted (unless long period of separation) -no restriction for child support |
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How do you change existing spousal or child support order? |
-Either spouse or a third party can apply for a variation (ie social welfare agency) Material fact related to the condition, means, needs, or other circumstances of either spouse must have significantly changed |
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What are limitations to the Federal Divorce Act with regard to dealing with breakdown of relationships? |
-Only addresses spousal/child support when or after divorce granted. -Does not address division of property, common law relationships or separations |
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How does the Provincial legislation deal with breakdown of relationships? |
-Can address support prior to divorce or for c/l -divides property & pension credits
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How do provinces define self-sufficiency requirement in terms of spousal support? |
-standard of living that was enjoyed prior to a breakdown -equire applicants for support to strive for self-sufficiency -may deny support if the applicant is clearly self-sufficient -may withdraw support later if recipient does not make efforts to become self-sufficient |
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While most provinces allow spouses to opt out or pre-determine spousal support, when would courts override that agreement? |
-paying spouse in default of agreed payment -contract is inadequate in light of the circumstances of both spouses at the time the agreement was signed -spouse becomes a public charge or is need of public assistance |
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When are spousal support payments tax deductible ? |
If periodic - at least 1/yr If lump sum to catch up on support arrears Dependent has discretion with use of funds Fixed amount determined in advance |
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When are spousal support payments not tax deductible? What is another tax benefit afforded if payments are not tax deductible? |
Lump sum pre-payment of support Less frequently than annual limitations on use of allowance Irregular payments based on bills as they arise Can claim spousal tax credit if not deducting payments |
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When are legal fees paid regarding spousal support deductible/not deductible? |
ARE enforce a support order NOT establish a right to support, or to vary or contest an existing support order |
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When would a biological or adoptive parents NOT have an obligation to provide for their children? |
-Age of majority 18/19 -One province says only under 16 yrs -child 16+ voluntarily withdrawn from parental control -parental rights have been severed by the courts for the welfare of the child |
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When would persons in loco parentis incur a child support obligation? (stepparents/cl "parent"/ a person who has expressed his intention to act in a role that is normally reserved for a parent, in terms of providing for the child's financial needs) |
Obligation exists if loco parentis, but may only be required to pay to the extent that the child's other natural parent is unable to or does not provide for that child |
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When do the federal Child Support Guidelines will NOT apply? |
When child support is sought for a child born out of wedlock Must use provincial guidelines, not federal |
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What is the Paras Formula and how do courts often vary this formula? |
Paras: calc sum req'd for total child support, then divide sum in proportion with respective incomes of parents Vary: subtract basic living amt from both parents' income, then apportion costs of remaining income, taking into account tax treatment of support payments |
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Child support has not been tax deductible since April 30, 1997. What about contracts prior to that? |
-Any amended contracts varying amount, are subject to new tax rules -if parents jointly sign or one parent applies to convert the old order, new rules apply |
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What is the tax implication of parental support? |
The payment is considered to be a gift as there are provisions in the Income Tax Act that specifically address parental support |
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How will payments or support be impacted by bankruptcy of a payor in default? |
-bankruptcy will not wipe out his or her obligations under a support order, including either periodic or lump-sum payment obligations -may eliminate his or her obligation for an equalization payment |
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How do some provinces describe the factors to be considered when making a support order for ANY dependant? |
-dependant's capacity to contribute to his or her own support -respondent's capacity to provide support -legal obligation of the respondent or dependant to provide support for another person |
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What are some ways a support orders can bind the payor's estate?
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-require the payor to obtain life insurance, and to designate irrevocably his or her dependent -name the dependent spouse or child as the beneficiary of his or her pension plan |
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How can a dependant seek relief from estate under provincial relief legislation? |
-Normally, the claim for relief becomes a claim against the residue of the estate just as any other debt (ie after specific bequests paid) -judge can rule that support takes precedence over the instructions in the will and have estate provide support using either capital or income generated by estate |
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What option is available to the surviving opposite-sex common-law partner if a statutory authority does not exists for claim under the dependants' relief legislation for support? |
Claim a constructive trust or a resulting trust -ie. created a benefit to the other, suffered a detriment in doing so, and there is no legal reason that he or she not be compensated, the court can find that there exists a constructive trust and each is holding ½ of the property in trust for the other -asset acquired by both, but only in name of deceased, claim resulting trust |
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What is a concern for same-sex, common-law partners re support as a surviving dependant of the deceased? |
depending on the province of residence, the estate assets of a deceased same-sex, common-law or opposite-sex, common-law partner's intestate estate may not be available to the surviving partner |
