Solicitor Client Privilege

­Solicitor-Client Privilege Generally   Solicitor-client privilege (also known as “legal advice privilege”) operates to protect communication between a lawyer and his/her client from disclosure to third parties.  The privilege belongs to the client and can only be waived by the client.  Solicitor-client privilege is not time sensitive and does not expire.   Communication is subject to solicitor-client privilege when three …

Donations Made By Graduated Rate Estates

In 2016, the Department of Finance introduced the “graduated rate estate” (GRE).  Since that time, any special relief in the Income Tax Act which applied to testamentary trusts now only applies to GREs.  There are various advantages to an estate which is designated a GRE.  One of the most significant benefits relates to testamentary donations.   What is a Graduated …

Milne Decision Overturned

In September 2018, the decision of Milne Estate (Re)[1] was released and cast doubt whether the long-standing practice of preparing two Wills—one, which is submitted to court for probate and the second, which is not and is used to reduce probate fees  (also known as Estate Administration Tax)—could continue to be used as an estate planning tool in Ontario to …

A Trustee’s Duty to Disclose

Family trusts are often used as part of tax and estate planning.  When a trust has been settled, the trustees should be aware of their duty to disclose.   Trustees owe a fiduciary duty to act in the best interests of the beneficiaries and there are practical reasons for why beneficiaries need information about the trust: to complete their tax …

Employee Stock Option Plans

Deemed Benefit and Tax under Section 7   Section 7 of the Income Tax Act[1] taxes an employee’s benefit derived from the exercise of rights under a legally binding agreement with an employer to sell or issue shares to the employee.  Section 7 applies where a corporation has agreed to sell or issues shares to the employee.  If there is …

The CRA’s Civil Liability

The tax system in Canada is a self-reporting system.  Taxpayers are expected to calculate their taxes and pay as necessary and the  Canada Revenue Agency’s (CRA) role is to administer Canada’s tax laws. Lately, taxpayers have achieved some success in the civil courts holding the CRA liable for abusive audits and tax collection practices.  The (limited) success ought to serve …

Choosing a Business Vehicle

There are three common types of legal structures for a business: sole proprietorship, partnership, and corporation.  The advantages and disadvantages of each structure are explained below.   Sole Proprietorship   This structure is informal and easily created.  The business and the operator are the same to legal and tax authorities.  The business’s profits, debts and responsibilities are those of the …

Minimizing the Estate Administration Tax (also known as “Probate”)

Applying for Probate   Applying for probate is the process of registering the deceased’s Will with the Ontario Superior Court of Justice and applying for a “Certificate of Appointment of the Estate Trustee” (the executor).  Probate also requires the payment of the estate administration tax.   A Will must be probated in order to formally pass assets from the deceased …

Estate Administration Basics

When a close friend or family member passes away, you may be responsible for dealing with their affairs, which includes administering their estate.  There is usually no need to rush to administer the estate.  Usually, the first duty required of the estate trustee is to deal with the funeral arrangements.  The estate trustee has an obligation to deal with the …

Multiple Wills

In Ontario, a deceased’s Will is registered with the Ontario Superior Court of Justice and an application is made for a “Certificate of Appointment of the Estate Trustee with a Will.”  This process is referred to as probate.  Probate also requires the payment of the estate administration tax (“EAT”) (formerly referred to as “probate fees”).  The EAT is approximately 1.5 …