Joint Tenancy : 5 Common Issues

It has become very popular in British Columbia to transfer property (assets) into joint tenancy.

Usually, it is done as a vehicle to reduce probate fees and legal fees upon the death of the owner of the property. Generally speaking, it is good to have joint tenancy between a husband and wife, because it simplifies matters and saves money. Furthermore, when couples have joint tenancy, it becomes a fairly simple procedure to transfer property from a deceased joint tenant into the name of the surviving joint tenant(s). What complicates joint tenancy is when other parties are added to the title, such as children.

Below outlines 5 common problems:

1. Gift or Trust?

If the property is transferred from one parent into the names of the parent and one of the parent’s children, it can become an issue as to exactly what interest the child holds in the parent’s property. For instance, if the interest is solely held for estate planning purposes and there was no real intention to gift the property to the child, then the child would not hold the property in trust for the parent and parent’s estate.

What is a corporate minute book and why you need one?

A corporate minute book operates as the official record of your corporation’s activities. Any and all corporate transactions that involve your corporation should be documented in this book. Below are some documents that must be included:

• Articles of incorporation

• Corporation by-laws

• Registers of directors, officers, and shareholders’

• Resolutions of the directors and officers

• Notices and registrations filed with the registry

• Share certificates

• Meeting minutes

• Shareholders’ agreement

Bare Trusts: Advantages and Disadvantages

Bare Trusts

A bare trust is a legal structure that facilitates the separation of legal and beneficial ownership over a property.

Generally, it's used in a real estate context. A bare trustee company is created which is a BC corporation that holds the legally registered title on the property.

The beneficial ownership remains with the person who originally purchased the property. The beneficial owner is the person or persons who continue to make all arrangements; they're responsible for leasing the property, receiving rents and reporting income.

The beneficial owner is the real owner of the property.

The bare trustee company is the one that is actually on the title, the company name is registered in the land title office (the “LTO”). From a tax perspective, the trustee company isn't going to be reporting any taxes at all because they don't actually beneficial ownership of the property.

In this article, we'll cover off some of the nuances of that and ensure that if you are thinking about making use of the principle rents exemption that you are doing it properly. So the first thing you want to keep in mind is that the exemption needs to be reported.The principal residence exemption allows you to sell a property and not pay any tax on it, the capital gain that you would normally accrue from the sale of that property doesn't apply. Since 2016, the CRA has required that this exemption be reported on your personal income tax return. So you want to make sure that you're working with your accountant to ensure that that is done.The second criteria is that residence exemption is only going to apply to a property that you actually live in. So a property the CRA uses the term 'ordinarily inhabited.' So while there's not a specific set number of days that the CRA sets out that you are actually resident inside of the home, it is the CRA if they assess and looking deeper into whether the exemption actually applies or not.

Below are 10 key steps to ensure your estate plan is successful:

1. Document Storage

Make sure to store your estate planning documents safely. If you have a safe deposit box, store your important papers there. Give your executor a copy of your estate planning documents and advise them on where the originals are stored.

2. Make copies of your Will and provide to your executor and beneficiaries

It is in your best interest to provide a copy of your will to beneficiaries. This reduces the possibility of confusion. It is unlikely you will ever change your will, but even if you do, providing a copy of your Will to your beneficiaries does not mean you can’t change it.

3. Inform your Power of Attorney

If you have power of attorney, they should be able to access your safe deposit box. It may be a good idea to have your attorney as a signatory on your safe deposit box. Additionally, keep one original Power of Attorney in your home so that your attorney can retrieve your documents.

4. Create a list of assets and liabilities

Parr Business Law can provide you with an estate planning checklist. Please contact us. Additionally, many financial institutions provide an estate planning checklist. Be sure to also include the names of your lawyer, accountant, and other contact people. Additionally, make sure your list of assets and liabilities is always readily accessible to your executor and your attorney.

Making a Charitable Legacy Part of Your Estate Plan

Throughout drafting many Wills in our law practice, we have noticed the majority of people do not provide for charity. Here are four top reasons why the current generation does not provide more to charity:

1. Misunderstanding of the Benefits of charitable giving

There is substantial misunderstanding surrounding the taxation of estates and the benefits of charitable giving. Many people do not realize that RRIFs and RRSPs will go into their income at the time of death (or, if there is a surviving spouse and a rollover of funds, on the spouse’s death). Obviously, this can create a substantial tax liability with items such as RRSPs, RRIFs, and capital gains. Because most charitable bequests are tax-deductible, there is a substantial benefit to providing for charity within your estate plan.

5 Ways To Protect Your Family Financially in Case of Unexpected Passing

Family Estate Planning

Estate planning is so important, yet it is overlooked by many because it may be viewed as being challenging and complicated and bringing about morbid thoughts. However, one of the smartest things you can do is to leave all of your affairs in order so that there is no uncertainty or tough decisions to be made by your loved ones. When undertaking the process of Family Estate Planning, there are some strategies that can be used in order to reduce the financial impact on your estate following your death.

1.Have a Will in place

What is a Joint Venture Agreement?

As a small business owner, it is important to know the ways in which you can explore different opportunities should you wish to. A joint venture is one of those ways and it is described below along with some of its pros and cons.

What is a Joint Venture Agreement

A joint venture is an agreement between two or more people or companies to work on a new business project together. The parties in this arrangement agree to combine their resources in taking on this new project. It is important to distinguish a joint venture from a partnership. In a partnership, the parties have come together to operate a “business in common”. Whereas in a joint venture, the parties have come together for a specific project, but they continue to retain full ownership of their own company.

The joint venture agreement is a legally binding document that should be drafted with the assistance of a lawyer. Here are some examples of what a joint venture agreement should include: the type of venture, the start/end date, details of each party, the resources each party is contributing and the responsibilities of each party moving forward. Working with a small business lawyer can be extremely beneficial when drafting this agreement as he/she will be working with your best interest in mind and can ensure that you are protected by the contract.

What should you watch out for in contracts?

There are numerous reasons why you may enter into a contract while you are running a small business. The important part is to always know exactly what you are agreeing to and how a breach of contract may affect you and your business. Here are some factors you should consider before signing a contract…

1. Know who you’re dealing with

A contract will tie you with another party for a specific amount of time. It is therefore important that you conduct thorough research and get to understand exactly who the other party is. If it is a company you are dealing with, you can check with the Better Business Bureau to check their reputation. A small business lawyer may also be able to help if they have had dealings with this other party in the past.

How to Terminate an Employee: 4 Steps

Terminating an employee is not something anyone wants to do, but sometimes there is no other choice. As a small business owner, it is important that you take the appropriate steps when doing so, in order to protect yourself and your business.

Here is a brief outline of the steps that you should be taking.

1. Keep a record of issues

It is a good idea to note down all issues as they arise. You can address these issues as they come up and set in place a plan for improvement. Having a record of all issues and how they were addressed will provide you with justification for termination if there is no improvement from the employee. It will also help the employee understandwhy they are being terminated.

Who can Challenge my Will?

A death in the family is often a very emotional time and although a Will may not be the topic of discussion at that time, it is nevertheless very important to know the basics surrounding Wills and potential issues that may arise. In almost every province, a testator is allowed to exercise almost complete discretion over the distribution of their estate. However, BC has some of the most sympathetic laws in all of Canada.

In BC, the Wills, Estates and Succession Act (WESA), provides dependents such as a spouse and/or child with a legal right to challenge a Will. Under s.60,

if the will-maker dies leaving a Will that does not, in the court’s opinion, make adequate provisions for the proper maintenance and support of the will-maker’s spouse and/or children, the court may order a provision that it thinks just and equitable in the circumstances.

Corporate Will | How To Minimize Probate Fees

Multiple Wills?

Most people in Canada don't have a single will, nevermind multiple wills, so why on earth would anybody need a corporate will? The reason is simple, corporate properties such as shares don't need to go through the process of being probated. Wills are normally probated or proven through the court.This is a court-approval process that takes time and cost money.

Transferring Your Business to the Next Generation

So, there are some common mistakes that people often make when they are transferring a business to the next generation. The biggest mistake is that business owners will set the value of their business at a dollar and sell it for a nominal value to the next generation because they essentially want to gift it to the next generation. The problem with this is that the Canada Revenue Agency (CRA) will take a look at that transaction and will assess the value of the shares at the actual fair market value of the shares. So, if the Canada Revenue Agency discovers that the actual fair market value of your business is a million dollars, then they will adjust the selling point of those shares from a dollar to a million dollars, which means that the seller will be hit with the capital gains tax on that amount.

What are the important tax benefits of a family trust?

Family trusts are both powerful and poorly understood structures that can provide significant tax benefits for high-income Canadians. Family trusts are a complex subject and should be reviewed in-depth with your accountant and your lawyer to determine if they are a good fit for you. Today I’m going to discuss two of the most important tax strategies that can be used through a family trust.

First, the multiplication of the lifetime capital gains exemption.

If your family trust is structured to own shares of your privately held corporation, you can multiply the lifetime capital gains exemption on the sale of those shares by making use of the exemption for each of your beneficiaries. A family trust with four beneficiaries, such as yourself, your spouse and two children, could potentially use the LTCGE four times, permitting you to enjoy an exemption of $3.5m on the sale of your company shares at 2020 rates.

Family Trusts | What Is It & How Do They Work?

A family trust is a structure that facilitates the distribution of wealth to the beneficiaries named in the trust. Typically, your children, grandchildren, spouses are named as beneficiaries.

How does it work?

A trust agreement will set out a trustee and name one or more beneficiaries of the trust. A trustee is responsible for distributing the assets held within the trust, and typically has wide and even absolute discretion to determine who receives what, and when. A beneficiary may receive distributions from the trust, but they do not have a legal entitlement to those funds, which shores up the level of control that can be exercised over the trust funds.If you have more money than you need to live on during your lifetime, then you can give the funds to your children outright as a gift - but then you wouldn’t have any control over what they do with the funds. That’s ok for some people, but if you want to retain control over when those funds are used, a family trust can allow you to put aside funds for them and allow you to control when those funds are actually distributed to them - if at all. This can be helpful if you have, for example, a disabled child or a child that you don’t trust to use the funds wisely.

5 Reasons Why Using Free Legal Contracts Isn’t Helpful

Free legal contracts are widely available online and using them may seem like the perfect way to save money while protecting your business. However, free legal contracts can end up costing you more while not protecting your business as you had hoped. Here are a few reasons why you should not use free legal contracts.

1.Choosing the wrong contract

Free legal contracts are available for you to use at your discretion. Most people will select one based on the title, but this may result in different consequence than intended. This means that your small business may not have the protection that you think it does. Each contract has important differences and determining which one is best suited for your particular situation should be discussed with a small business lawyer.

Commercial Leases in Vancouver

Signing a commercial lease is a big step for your small business. A lot goes into this process and it is important that you have all of the necessary information before signing. Here are some important factors you should consider after you have found a property that you like.

Seek legal advice

A small business lawyer can assist you in many ways when it comes to starting up your small business and maintaining it. This is especially true when it comes to negotiating and drawing up contracts. A small business lawyer will not only get you the best deal possible, but he/she will also ensure the terms of the contract provide you and your business with protection.

Key Elements of a Strong Shareholders’ Agreement

A shareholders’ agreement can go a long way in helping set up your business for long-term success. Thinking about unpleasant situations is never fun but it will help in the long run if and when these situations arise. Putting in place a shareholders’ agreement will equip you and your fellow shareholders with the necessary tools to tackle those situations. Here are some elements that should be included in all agreements.

Process for appointing directors and their duties

This section should outline how directors will be appointed. Some examples include each shareholder appointing a director, each class of shares appoints a director, or appointing them through a majority vote. Potential investors may also want a representative on the board, so that must be considered. The responsibilities of the directors should also be laid out clearly.