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Who needs an Individual Pension Plan?

Thursday, March 15th, 2012

Generally speaking, the Individual Pension Plan (“IPP”) is considered to be one of the most powerful pension planning vehicles, especially for those individuals at the highest tax bracket. Some of the features of the IPP are as follows: higher contribution limit and funding limit; creditor proofing; use in succession planning; and no tax implications for transfer. The case studies described below explore the types of individuals that can greatly benefit from IPPs:

Case Studies

Please meet Bob. Bob recently went through a transition during which he went from being an employee of a big energy corporation in Toronto to an independent contractor. His job duties remained similar and his place of work did not change. In addition, his Contribution Benefit Plan allowed a transfer of the pension to another plan at the commuted value. When he made a transition from an employee to a contractor, he incorporated his own business. Bob is not going to retire anytime soon and he is not sure of what to do now with a huge chunk of money that he now wants to save for his retirement.

Please meet Cindy. Cindy has been a dentist for seven years and her dentistry practice has been very successful. A few years ago, she started her own professional business by incorporating a professional corporation. Cindy is an employee of this corporation and also a shareholder. Some of her family members are also employed by the corporation. Cindy is concerned about the small contribution limit of her RRSP and would like to be fully prepared for the time when she retires from her practice.

Please meet George. George is a hardworking family man who is in his late forties. He is employed by a major corporation in Ontario, which provides a Defined Benefit Plan. George recently found out that the money sitting in his Defined Benefit Plan account is not bullet proof and may be jeopardized by any financial hardship experienced by his company. He is also very frustrated with the small contribution limit provided by RRSP’s, which is only $22,970 as of 2012. George feels that he is not saving enough money for his retirement and he wants to make sure that he does not become a burden to his children once he is retired. He is confident that he can live his life to the fullest after the retirement if his financial affairs are planned thoroughly.

If your life story is similar to that of one the individuals described above, you should definitely consider looking into what IPPs are all about.

Please click on the following link to learn more about the Individual Pension Plan: http://www.heydary.com/publications/Who-needs-an-Individual-Pension-Plan.html

 

Min K. Kim, B.Comm., J.D., LL.M.

 

Brief informational summaries about commercial and other litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

 

Posted in Tax Law, Wills & Estates Law | Add Comment »

Separated Couple Severed Joint Tenancy, says Ontario Court of Appeal

Tuesday, March 13th, 2012

The Ontario Court of Appeal recently reconfirmed the proper approach to consider a “course of dealing” that may lead to the severance of a joint tenancy in property. Hansen Estate v. Hansen, 2012 ONCA 112 involved a married couple that owned their matrimonial home as joint tenants at the time of the husband’s death. As a joint tenant, the wife would typically become entitled to exclusive ownership of the home upon the husband’s death, through her right of survivorship. However, prior to the husband’s death, the couple had been in the process of separating and dividing their matrimonial assets. Two of Mr. Hansen’s daughters from a previous marriage were the trustees for his estate, and they argued that the joint tenancy had been severed before their father’s death. If this were found to be the case, their father’s interest in the matrimonial home would revert to his estate, which Mr. Hansen had left to his daughters in his will.

The daughters brought an application for a declaration that the joint tenancy had been severed and that the estate was entitled to an “undivided one-half interest in the matrimonial home.” The application judge found that the joint tenancy had not been severed prior to Mr. Hansen’s death and dismissed the daughters’ application. The daughters appealed to the Court of Appeal.

In dismissing the application judge’s findings, Winkler C.J.O. considered one of the well-established approaches to severing a joint tenancy, namely, “whether there [is] a course of dealing sufficient to intimate that the interests of the parties were mutually treated as constituting a tenancy in common” (para. 5, citing Williams v. Hensman (1861), 70 E.R. 862 at 867). Winkler C.J.O. found that the application judge had erred when she dismissed the application for not fitting within a previously-established pattern of conduct in the case law. He reconfirmed that the proper way to approach the test is to determine the intentions of the parties through their conduct and whether, taken as a whole, the facts lead to the conclusion that the joint owners intended to treat the property as a tenancy in common.

In this case, there were several factors that suggested a course of dealing demonstrating an intention to sever the joint tenancy. After the breakdown of their relationship, the husband and wife each retained their own lawyers and agreed to prepare and exchange financial statements. They closed their joint bank accounts and transferred the money into separate accounts. The wife moved out of the matrimonial home and found a new apartment, and her name was removed from the household bills. The husband executed a new will that excluded his wife. Taking these factors into account, Winkler C.J.O. found that the joint tenancy had been severed before Mr. Hansen’s death, allowed the daughters’ appeal, and granted a declaration that the estate was entitled to an undivided, one-half interest in the matrimonial home.

A copy of the Court of Appeal’s decision can be found at Hansen Estate v. Hansen, 2012 ONCA 112 (CanLII).

 

D’ette Bourchier, Hons.B.A., J.D.

 

Brief informational summaries about commercial and other litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

 

Posted in Civil Litigation, Family Law, Wills & Estates Law | Add Comment »

Power of Attorney for Property – Questions and Answers

Tuesday, January 18th, 2011

What is a power of attorney?

A power of attorney is a legal document which gives someone the power to act on your behalf. This person is called your “attorney”.

You can give someone a power of attorney for property if you want that person to help you manage your finances or if you are worried about becoming unable to manage your finances yourself. You may also grant a power of attorney for property for a limited period of time or for limited purposes. For example, if you plan to be abroad for a while, you may wish to appoint someone to manage your property only while you are away. “Property” includes your money, your home if you own one and anything else of value that you own.

What can my attorney for property do?

Unless you limit your attorney’s authority they can do almost anything with your property that you could do yourself. However, your attorney cannot make or change your Will or give a new power of attorney.

A power of attorney for property does not let your attorney make decisions about your personal care. For example, your attorney cannot decide where you will live or the medical care you receive. To name someone to make those decisions if the need arises you must give that person a power of attorney for personal care.

What is a general power of attorney for property?

A general power of attorney for property lets your attorney manage finances and property only while you are mentally capable. If you become mentally incapable of managing your property the general power of attorney for property ends and your attorney can no longer act. This type of power of attorney is usually used in business or for short-term temporary reasons.

What is a continuing power of attorney for property?

By granting a continuing power of attorney for property, the attorney is authorized to carry on acting for you even if you become mentally incapable of managing your property.

To be valid for this purpose the document must either be called a continuing power of attorney or state that it gives your attorney the authority to continue acting for you if you become mentally incapable.

When does a continuing power of attorney for property take effect?

The power of attorney takes effect as soon as it is signed and witnessed unless you state in the document that you want to take effect at a later date. For example, if you want it to take effect only if you are abroad you must make this clear in the power of attorney.

Powers of attorney documents are often kept in a safe place to use only in case of mental or physical incapacity at a later date.

Whom can I appoint as my attorney?

You can appoint anyone as attorney who is 18 years of age or older. It is important to give careful thought to whom you choose. Ask yourself: is the person trustworthy and good at handling money? Are they willing to act as your attorney? Do they expect to be paid? The answers to these other questions may help you choose your attorney.

Can I appoint more than one attorney?

Yes, but if you appoint more than one person as your attorney all of your attorneys will have to agree before any decision can be made on your behalf unless you state in document that they can make decisions separately. When two or more attorneys must agree on a decision they are said to be acting jointly. When the power of attorney states that the attorneys may make decisions together or separately they are said to act jointly and severally.

What if my attorney cannot or will not act for me when the time comes?

When you make your continuing power of attorney for property you can name a substitute attorney. This person can step in if your first attorney or attorneys are not willing or unable to act. The substitute attorney will have the same powers as the original attorneys. You can even also name more than one substitute attorney.

At Heydary Hamilton PC we are experts at preparing powers of attorney, wills and related documents. Call for an appointment or more information to help ensure that your wishes will be understood and carried out.

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Real Estate Law, Wills & Estates Law | 1 Comment »

How to Care for Your Pets after You’re Gone

Monday, November 29th, 2010

Unlike the ancient Pharaohs of old, we don’t get to take our pets (or spouses) with us when we die.

If you’re worried about your beloved Fido or Puss, you need to address their care if you’ll no longer be able to look after them.

In Canada, animals are considered a form of property.  They have no legal rights per se, so if granny has to enter a nursing home, or dies, chances are her beloved pet(s) will become an unwelcomed burden or some family member, or left in a shelter.

What to do?

1)      Carry a “pet card” with you, in case of an accident. It will notify the police and emergency services that you have a pet, and that it needs to be taken care of in the event that you cannot.

2)      Arrange for a trust in your Will, or Power of Attorney. Pets cannot receive money directly, but can benefit from a fund set up to care for them. Be realistic about how much to leave with the trust, and who is to administer it.

Pets are well named as “man’s best friend”. Be sure your friends are well looked after if you can no longer do so.

Doug Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Family Law, Wills & Estates Law | Add Comment »

Legal Tip for Common Law Spouses

Monday, November 22nd, 2010

I’ve been with my common law husband for over twenty years and we have dependant kids at home.  We never bothered to get married.  Don’t we have the same rights as married couples?

Common law couples have some of the same rights as married couples, particularly with respect to support obligations and child custody, but in a number of key areas, common law couples are considered as “singles”.  Examples:

(a)   If a common law couple separates, there is no right to equalization of property;

(b)   There is no concept of the “matrimonial home”.  If the common law couple live in a home that is owned solely by one of them, the owner can sell or mortgage the home without the consent of the other partner.  This is not the case with the “matrimonial home”.

(c)    There are no automatic inheritance rights.  If a common law spouse dies, the survivor is not entitled by right to any of the deceased’s property.

There are solutions to these issues, short of actually getting married, but its best to act before an unfortunate event occurs.  Having a valid will allows common law partners to ensure their loved ones are protected.  A will allows individuals in common law relationships to determine how their property should be distributed upon death.  Common law spouses can have their wills designed so that they can enjoy inheritance rights like married couples.

Samantha Nessan

Doug Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Family Law, Wills & Estates Law | Add Comment »

Asset Rich but Cash Poor: Should Seniors Leverage Their Home to Fund Retirement?

Wednesday, November 10th, 2010

Many senior retirees face a financial dilemma: they have a growing need for cash to fund such desires as travel, home repairs, and assistance for their children or grandchildren or just to meet their daily expenses. They’ve discovered that their pensions, CPP and Old Age Security payments are just not enough.

Perhaps one of the couple has suffered from an illness such as a stroke, or advancing dementia, or has to move into an assisted living facility. But what if the remaining spouse wants to stay in their home? How does a couple manage to pay for a retirement home and at the same time maintain the family home?

Perhaps, one of the couple has died. The survivor wants to stay in the home, but has lost the Old Age Pension of his/her partner. With the death of a spouse or partner, a reduction in pension for the survivor may follow. Household costs remain high but the income is now reduced.

Many seniors want to remain in their own homes as long as they can.

It’s the home they may have raised their children in and it’s familiar territory. They know the neighbors and the neighbors know them. But if the senior can no longer cover the costs, or even if they just want to do that “once in a lifetime cruise”, what are the choices available to them?

A choice made by many seniors is to leverage the equity built up on their homes by:

Sell the home:

While this is not exactly “leveraging” the home, selling a home which may have become too big, or too expensive to handle, and moving into a smaller home (bought or rented), is a frequent choice. The proceeds of the sale are not subject to capital gains tax.

Mortgaging the Home:

If they qualify, a senior could mortgage the home. This provides cash for whatever the senior requires, but regular payments with interest will have to be made.

Seniors may find it more difficult to mortgage insofar as they must demonstrate that they have sufficient revenue to meet their continuing payments.

Renting the Home:

Some seniors will move on and rent their home to others. They maintain ownership and create additional income from rent with which they could fund their lifestyle (or even a new home for themselves)

It is possible to rent the home, and at the same time mortgage it for additional cash needs. It is the homeowner who has the ability to mortgage, not the tenant.

Reverse-Income Mortgages:

Reverse mortgages are a relatively new development. They are generally available only to seniors who own their home outright.

The “reverse” in reserve mortgages means that, unlike traditional mortgages, no regular payments are required. The senior receives a cash advance – usually not exceeding 40% of the value of the home (equity), which he or she can use for any purpose. It is tax-free.

Instead of regular payments, interest on the amount(s) advanced is accumulated on the amount loaned until it is repaid.

The mortgage becomes payable when the home is sold, or the owners die.

The Advantage:

The attractiveness of a reverse income mortgage is the fact that no regular payments are required, unlike a traditional mortgage.

Seniors have additional funds to use, and can stay in their own home. However, taxes and insurance still must be paid.

Disadvantages:

Reverse income mortgages are subject to higher interest rates than traditional mortgages – sometimes twice the rate.

Unlike traditional mortgages where the debt decreases with payments, the reverse mortgage debt increases over time.

There may be significantly higher fees associated with arranging a reverse mortgage, and any outstanding mortgage will have to be paid off using the proceeds of the reverse mortgage. Taxes and insurance must continue to be paid, as with any other type of mortgage.

Conclusion:

Whatever the retiring senior chooses to do, it is important to consult his or her respective financial advisor and legal counsel.

A person’s home is his or her castle, more often than not, his or her most important and valuable asset. A decision to use its equity to fund retirement plans should be made only after careful consideration of the options available.

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Real Estate Law, Wills & Estates Law | 2 Comments »

Why Review Your Will? (and Power of Attorney)

Thursday, October 21st, 2010

Only about half of adults in today’s society have made wills and / or Powers of Attorney.

But for so many, once they’re signed they are quickly forgotten.

Wills speak from the moment of death, not from when they’re signed. Powers of Attorney are effective the moment they’re signed, but rarely acted upon until incapacity sets in. Much can change between the time Wills and Power of Attorneys are signed and the time they are needed.

For Example:

a)      A Will is revoked by marriage;

b)      A significant change in assets, for example; acquisition of an out-of-province vacation home;

c)      Start up a business;

d)     Executors and guardians may die or grow too old or incapacitated to act;

e)      A spousal separation does NOT revoke a will (your ex would still inherit your estate!);

f)       A home-made or “Kit” Will may actually be improperly executed so as to be void, or so confusing as to defeat your intentions;

g)      Your children’s inheritances may not be protected;

h)      You may be paying too much tax on your estate.

For any of the above reasons it is important to regularly review your Wills and Power of Attorneys to ensure your intentions will be carried out.

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Wills & Estates Law | 1 Comment »

Millennium Author’s Estate in Disarray

Tuesday, October 19th, 2010

Swedish editor Stieg Larsson is famous for his wildly popular Millennium trilogy (“The Girl with the Dragon Tattoo”), published after his death in 2004.  Over 46 million copies have been sold post humously and movies are in the works.

Alas, Mr. Larsson died intestate i.e. without leaving a will.

Before his death Larsson lived with his common-law wife of 32 years, Eva Gabrielsson, but on his death his estate by law went to his surviving father and younger brother, not to Eva.  Larsson’s estate is now estimated to be worth over US$20 million, but his wife is entitled to none of it.

“Common law spouses” do not have inheritance rights in each other’s estates.  What appears to be the case in Sweden also is the case in Ontario.

The simplest way to ensure common law spouses inherit from each other is to provide for it in a legal will.  Failure to do so can result in tragic consequences, even after death.

Source: CBS News Sunday Morning – “The Mystery of Stieg Larsson”

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Wills & Estates Law | Add Comment »

Can Your Will Defeat Your Will?

Thursday, October 7th, 2010

Our loved ones are sometimes prone to poor decisions when it comes to money – especially inherited money. Consider the following:

Dan was a retired contractor who had built up a substantial business over his long working life.  His Will provided for a smooth transition of this valuable company to his family upon his death.  After Dan’s wife died, and feeling somewhat lonely, he sold the family home and moved to a beautiful retirement residence.  In the new residence Dan met a lovely widow named Alice.  The two became enamoured and decided to marry for companionship.  Unfortunately, Dan died three months after his marriage to Alice.  To everyone’s surprise it was discovered that the pair had not updated their Wills.  They were unaware that the law automatically revokes (cancels) the Wills of persons who marry.  Because Dan had no Will when he died, by law Alice inherited a large portion of his estate.  This estate was supposed to go to his family but instead went to someone that Dan never intended it to benefit.  Moreover, Dan’s plans for the orderly transfer of his business were in disarray.  If Dan or his family had thought to check to see if his estate plan and Will were up-to-date either just before or immediately after he re-married the unfortunate consequences of an intended disposition of his estate could have been avoided.

Now consider Michael:

Michael’s grandparents appointed his mother, Jennifer, to be the guardian of an education fund they established for him in their Wills.  Michael was six years old when his grandparents died.  Unfortunately, Jennifer was not particularly well-versed in making financial decisions.  Before Michael reached the age of majority the value of his fund had diminished considerably.  His dreams for a Master’s degree were dashed.  By making provisions for the proper management of the trust fund this sad result could have been prevented.

In both cases Wills that had been done to protect families were either out-of-date, or the planning was not sufficiently thought out to succeed.

Your Will can both provide for and protect your family, but only with thorough planning.  To make sure that members of your family are adequately protected from others and themselves, contact us for a review of your estate plan.

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Wills & Estates Law | Add Comment »

What Do Lawyers Do to Assist in the Administration of an Estate?

Monday, October 4th, 2010

1.      Lawyers make sure that all of the legal documents related to the estate are prepared and executed properly;

2.      Lawyers help to develop trusts, powers of attorney, wills and to advise on estate planning;

3.      Lawyers can more easily probate ones will, arrange for the appointment of guardians and arrange for the  appointment of a trustee in the event there is no will;

4.      Lawyers have a role in assisting to protect and preserve the assets of the estate;

5.      Lawyers have a role in arranging for the security of the family;

6.      Lawyers assist to minimize taxes;

7.      Lawyers can act as executors, trustees or power of attorney, and sometimes as directors and guardians;

8.      Lawyers can address complex issues such as dealing with prior marriages, children from prior marriages, lawsuits, business interests, creditors, to name a few;

9.      Lawyers can assist to resolve disputes or complaints amongst family members/heirs.  They can act in making application to pass accounts;

10.  Lawyers are in a good position to advise family members on all of their related legal needs.

Douglas J. Green


Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.

Posted in Wills & Estates Law | Add Comment »

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