Chap 9-10

Question 1

What part of family law falls under federal law ?

Answer 1

Marriage and Divorce & Income Tax Act

Question 2

What part of family law falls under provincial law ?

Answer 2

Marriage property and family support

Question 3

Consequences of a void marriage

Answer 3

Have a fatal flaw
Are not valid regardless of the position of the spouses
Are treated as if the marriage never happened
A child from a void marriage who would have been legitimate had the marriage been valid is considered legitimate

Question 4

Consequences of a voidable marriage

Answer 4

Are valid even though there is a fatal flaw until and unless someone brings the flaw to the attention of a court

Question 5

Child support and the federal Divorce act: what is taken into account ?

Answer 5

Type of custody (shared, sole or split) (see definitions in text box below)
Number of financially dependent children
Income of both parents, but it is calculated based on the income of the contributing parent, and
Province or territory in which the parents live.

Question 6

Child support, provincial rules

Answer 6

Apply when the parents are getting a divorce
Divorcing and the province of residence has guidelines
Apply when the parents are separating but were not married

Question 7

3 types of custody arrangement

Answer 7

• Shared custody
• Sole custody
• Split custody

Question 8

Shared Custody

Answer 8

Each parent has physical custody or access to the child or children for at least 40% of the time in a year.

Question 9

Sole Custody

Answer 9

The child or children resides less than 40% of the time in a year with the paying parent.

Question 10

Split custody

Answer 10

The children are divided between the parents, that is, a child or some children live with one parent, some with the other.

Question 11

Spousal support : general definition

Answer 11

Spousal support is separate and distinct from child support. It is intended to reduce the economic hardship arising from the divorce. It is also intended to promote the self-sufficiency of both spouses. Unlike child support, there is not a set formula. It is more subjective and takes into account many factors associated with the specific situation.

Question 12

spousal support at the federal level : 3 considerations

Answer 12

Length of time the spouses lived together
Functions performed by each spouse during cohabitation, and
Any support agreement already in place

Question 13

3 Goals of spousal support in the Divorce Act

Answer 13

Recognize any economic advantages or disadvantages for each,
Apportion any financial consequences arising from the child care costs,, and
Attempt to promote the economic self-sufficiency of each spouse

Question 14

Parental support

Answer 14

Although there is no federal law that requires a child to take care of her parent, some provinces do impose the obligation to support a parent in need if they provided care and support when the child was young. The support payment depends on the ability of both the parent and child to pay as well as other support obligations that may exist.

Question 15

Taxation of spousal support

Answer 15

Taxable if it is a periodic payment decided in court. Non taxable if it is a lump sum

Question 16

Property included in division of property (divorce)

Answer 16

Property acquired after marriage (usually – check the jurisdiction)
+
Increase in value of all assets (including pre-marital)
+
Income earned from all assets

Question 17

5 assets that are excluded from division of property

Answer 17

Proceeds from life insurance policies if recipient was “designated beneficiary”
Proceeds from gifts and inheritances
Damages from personal injury awards such as accident awards
Assets the couple have agreed by domestic contract to be excluded from division
Value of assets at the time of marriage

Question 18

2 forms of joint ownership

Answer 18

Tenants in Common

Joint Tenants

Question 19

Tenancy in common

Answer 19

Each has an undivided interest in the whole = each tenant does not own a separate part
Ownership does not have to be equal
Owner can pass their share (sell, bequeath) without permission of other owners
No Right of Survivorship
Deceased’s share is transferred according to a will / intestacy laws
Does not avoid probate
Transfer is public

Question 20

Joint Tenants

Answer 20

Tenants own the property equally
Owner cannot sell their share without permission of other tenant(s)
Right of Survivorship – deceased’s share ➔other joint tenants automatically
Cannot leave to another beneficiary in a will
Transferred before the will – is a non-estate asset
Not subject to probate / probate fees
Deemed Disposition upon death
Tax implications unless spouse is joint tenant (Spousal Rollover)
Principal residence is exempt from capital gains tax

Question 21

Power of attorney (POA)

Answer 21

Authorizes a person – friend, relative, lawyer, accountant) or a corporation – trust company – to manage one’s affairs when one is not able to do so

Question 22

2 types of power of attorney

Answer 22

Power of attorney for property

Power of attorney for personal care

Question 23

3 ways to distribute one’s estate after death

Answer 23

1) Provincial intestate laws. – apply if one dies without a will
2) Will.
3) Named beneficiaries – usually stipulated on life insurance policies, TFSAs, pension plans, RRSPs and RRIFs.

Question 24

How are assets passed if there is a named beneficiary

Answer 24

• Assets pass directly to the beneficiary without going through the estate
• Assets are not subject to probate fees.
• Give away before death
• Joint ownership of property
• Setting up trusts

Question 25

Dying Intestate (without a will)

Answer 25

Each jurisdiction spells how out how intestate assets are transferred Distinguish between spouse (inherits first) and common -law spouse / partner (does not inherit first) Province appoints an administrator (or personal representative) to act as executor if no volunteer from family All assets without a named beneficiary or held in joint tenancy:Go through the estate & Are subject to probate fees

Question 26

Probate fees

Answer 26

a fee charged by each province or territory for validating the will – before being distributed to the beneficiaries.

Question 27

Intestate rule if the deceased has a spouse and no relatives

Answer 27

everything goes to the spouse

Question 28

Intestate rule if the deceased has a spouse and relatives

Answer 28

everything goes to the spouse except in Quebec where: 2/3 goes to the spouse, and 1/3 is divided among parents, or brothers and sisters

Question 29

Intestate rule when the deceased has a child but no spouse

Answer 29

everything goes to the child or children per stirpes

Question 30

Per stirpes

Answer 30

“For each person descended from a family branch”. children of a deceased beneficiary share equally the deceased beneficiary’s portion. More common than per capita

Question 31

Intestate rule when the deceased has no spouse and no children

Answer 31

everything goes to the next of kin in the following orde: Parents Brothers and sisters per stirpes Nieces and nephews if no parents, brothers and sisters Other relatives according to their closeness The government if no surviving relatives

Question 32

Intestate rules : division of assets

Answer 32

assets are divided in preferential share (amount that goes to the spouse) and distributive share ( remaining amount divided according to intestate rules)

Question 33

possible division of property if a child dies intestate

Answer 33

- Per stirpes | - Per capita

Question 34

5 Assets not covered in a will

Answer 34

1) Property held in joint tenancy 2) Assets with named beneficiaries such as life insurance policies, TFSAs, RPPs, RRSPs and RRIFs. except if the will was prepare more recently 3) Business assets governed by a shareholders’ agreement or buy-sell agreement 4) Income from a trust where the trust agreement says the income stops on your death 5) Assets covered in a written marriage contract or a co-habitation agreement.

Question 35

Will : Common disaster clause

Answer 35

Avoid double probate fees by designating another beneficiary if the spouses should die 30 days of each other & Determines whose will dictates the distribution of assets

Question 36

Will : Ademption by advancement

Answer 36

a bequest to a beneficiary is reduced by gifts made before death unless there is a clause against ademption by advancement.

Question 37

13 Responsibilities of an executor

Answer 37

1) Arrange the funeral 2) Pay probate fees 3) Cancel CPP and OAS income and apply for survivor benefits 4) File the final tax return and get a tax clearance certificate 5) Act as the trustee and manage the assets of the estate. 6) Transfer any joint accounts to the surviving spouse and close any other bank accounts 7) Transfer or rollover RRSPs and RRIFs 8) Confer with the spouse about making an election to make a contribution to a spousal RRSP if there is unused contribution room 9) Complete claims for life insurance 10) Arrange for sale of real estate 11) Redirect mail and cancel subscriptions 12) Pay the debts of the estate and get receipts. 13) Distribute the assets according to the will.

Question 38

3 steps in calculating probate fees

Answer 38

1) Based on the total market value of the estate assets minus only a personal mortgage. 2) Identify which assets are subject to probate and which ones are not. 3) Apply the formula

Question 39

3 strategies to avoid probate fees

Answer 39

1) Name a beneficiary on life insurance and pension plans including RRSP & RRIFs. 2) Have a joint owner on investments: Joint tenants (with right of survivorship) OR Tenancy in common – assets are transferred according to the will = estate assets 3) Inter vivos (living) trust since the deceased does not own them at the time of death

Question 40

Passing on business asset : buy-sell agreement

Answer 40

Stipulates the terms under which the remaining owners or shareholders can buy the share(s) of a deceased owner or shareholder when one partner or shareholder dies Right of first refusal is defined – usually given to existing owners or shareholders Price can be fixed or according to a formula Need liquidity to buy the deceased share of business --- so that his estate will gain ownership

Question 41

Passing on business asset : share redemption plan

Answer 41

Corporation itself buys back the shares of the deceased at a fixed price or using a formula. Company can use life insurance and finance redemption with life insurance proceeds.

Question 42

4 ways of financing the passing on of business assets

Answer 42

- Sinking Funds - Sell Assets - Bank loan - Life insurance Policy

Question 43

3 ways to achieve Estate Freezes

Answer 43

1) Sell or give the assets to the beneficiaries now. 2) Transfer the assets into an inter vivos trust 3) Create a holding company