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2 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
STEP Inside
EDITORIAL BOARD
Christine Van Cauwenberghe, Chair
Katy Basi
Bernadette Dietrich
Paul Festeryga
Elena Hoffstein
Joyce Lee
Barbara Novek
Shamim Panchbhaya
Corina Weigl
STEP Inside is published three times a
year by the Society of Trust and Estate
Practitioners (Canada), an organization
of individuals from the legal, accounting,
corporate trust and related professions
who are involved, at a specialist level,
with the planning, creation, manage-
ment of and accounting for trusts and
estates, executorship administration and
related taxes. STEP Canada has branches
in the Atlantic region, Montreal, Ottawa,
Toronto, Winnipeg, Edmonton, Calgary,
and Vancouver; and three chapters in
London and Southwestern Ontario, the
Okanagan Valley, and Saskatchewan.
Articles appearing in STEP Inside do not
necessarily represent the policies of
STEP Canada and readers should seek
the advice of a suitably qualified profes-
sional before taking any action in reli-
ance upon the information contained in
this publication.
All enquiries, comments and correspon-
dence may be directed to:
STEP Canada
One Richmond Street West,
Suite 700
Toronto, ON, M5H 3W4
www.step.ca
Tel 416-491-4949
Fax 416-491-9499
E-mail news@step.ca
Copyright © 2015 Society of Trust and
Estate Practitioners (Canada)
ISSN: 14960737
2014 Student Award WinnersEach year, STEP Canada recognizes the highest scoring students in our STEP Canada diploma courses; the overall diploma program; and on a qualified prac-titioner essay. Please join us in congratulating them on their accomplishments.
2014 Highest Mark, Law of Trusts CourseBecky Turcotte, CPA, CA: GGFL, Chartered Accountants, Ottawa
Becky is a supervisor in the tax department at GGFL, where she plays a leading role on the trusts and estates team. She is also involved in reorganizations, incorporation of new professionals, and GST/HST issues. Becky began with GGFL in the audit and assurance department and moved to taxation after obtaining her CPA, CA designation.
2014 Highest Mark, Taxation of Trusts and Estates CourseJustin Hoffman, CA, CFP: Davis Martindale LLP, London
Justin is a tax manager with Davis Martindale. He received his BComm in accounting from the University of Alberta in 2009, and has since been designated as a CPA, CA in 2012; a CFP in 2013; and a US CPA in 2014. Justin works primarily in Canadian and American tax compli-ance, domestic and cross-border taxation, and estate planning. He also received the highest mark in the law of trusts course in 2013.
2014 Highest Mark, Wills, Trust, and Estate Administration Course ; 2014 Highest Mark, Trust and Estate Planning CourseKenneth Keung CA, CPA (CO, USA), CFP, MTax, LLB, TEP: Moodys Gartner Tax Law LLP, Calgary
Kenneth, of Moodys Gartner Tax Law, provides a full range of tax-planning services to business owners. Passionate about the alleviation of poverty, Kenneth serves as vice-president of an affordable seniors’ housing non-profit organization. Kenneth is the first student ever to win more than one award in the same year.
2014 Highest Mark, Qualified Practitioner Essay: Tax Planning with Inter Vivos TrustsRobert Miedema, LLB, TEP: BOYNECLARKE LLP, Dartmouth
Rob is a partner at BOYNECLARKE LLP. He received his BSc from Queen’s University in 2002 and his LLB from Dalhousie University in 2005. In 2014, Rob received his TEP designation and a Lexpert Rising Star Award as one of Canada’s leading lawyers under 40. He is also a director of the Dartmouth General Hospital Charitable Foundation.
Gerald W. Owen Book Prize, Sponsored by Scotiatrust (awarded to the STEP Canada student who achieves the highest overall average in all four diploma courses)Katy Basi, LLB, MBA.(Fin), TEP: Barrister and Solicitor, Richmond Hill/Toronto
Katy’s practice focuses on wills, trusts, estate planning, estate administration, and income tax law, including incorporations and corporate reorganizations with an income tax focus. Before opening her own office, Katy practised income tax law for many years with a large firm. She also writes and presents regularly on estate-planning and income tax topics. In 2012, Katy received the highest mark in the law of trust course, and, in 2013 she received the highest mark
in the taxation of trusts and estates course.
!
!
PETER WEISSMAN, TEP
Chair, STEP Canada Education
Committee; Partner, Cadesky and
Associates LLP; Member, STEP Toronto
As the best provider of trust and
estate education in Canada,
STEP Canada is committed
to supporting its members in their
careers through professional develop-
ment, knowledge exchange, and inter-
action with fellow members. We listen
to our members, and encourage you
to express your ideas about the quality
and scope of our offerings. Our certifi-
cate in estate and trust administration
(CETA), for example, is the direct result
of requests from stakeholders.
With CETA off to a successful start,
we now offer two examination-based
programs for professionals who
want to further their trust and estate
knowledge and careers: the Canadian
diploma and CETA. Successful comple-
tion of the Canadian diploma course
offers a direct track to the trust and
estate practitioner (TEP) designation,
while CETA is an entry-level program
that provides a bridge to the Canadian
diploma program.
Since its introduction in 2009, the
STEP Canada diploma program has
been chosen by Canadian practitioners
who want to distinguish themselves
as specialists in the area of trusts and
estates. This four-course, self-study
program examines students in the
law of trusts; the taxation of trusts and
estates; wills, trust, and estate adminis-
tration; and trust and estate planning.
Candidates who enrol in this program
usually have a previous designation (in
STEP Inside •MAY 2015 • VOLUME 14 NO. 2 3
Diploma or CETA: Which Program Is Best for Me?
• Two years’ wealth industry work experience• Professional standards awareness module
(currently complimentary from www.step.org)
60 practice-level credits
• Diploma 2: Taxation of trusts and estates (20 credits)• Diploma 3: Wills, trusts, and estate administration (exemption with
QMF credits available for CETA certificate holders) (20 credits)• Diploma 4: Trust and estate planning (20 credits)
60 diploma-level credits
• CETA 2: Estate and trust administration (10 credits)• CETA 3: Estate and trust taxation (10 credits)• CETA 4: Certification examination (10 credits)
60 diploma-level credits
30 credits total
• Diploma 1: Law of trust (30 credits)
• CETA 1: Foundations (prerequisite for CETA 2) (30 credits) and/or• 1 year’s wealth industry work experience (30 credits maximum) and/or• Successful post-secondary learning experience (30 credits maximum)
60 entry-level credits
TEP
(24
0 c
red
its
+
app
licat
ion
)
Pra
ctic
e le
vel
Dip
lom
a le
vel
En
try
leve
l
Aff
iliat
e (
60
-12
0 c
red
its)
(6
0 c
red
its)
STEP Educational Offerings and how the CETA Program Leads to the Diploma Program
-Registrant
TEP
Tech
nic
ian
(1
20
-24
0 c
red
its)
law, accounting, financial planning, or
insurance) and are already employed
in the trust and estate industry. On
completing the diploma program,
students with the qualifying work
experience are eligible to become full
members of STEP and to use the TEP
designation. The diploma program is
currently thriving, with over 400 stu-
dents enrolled to date.
In June 2013, our members asked us
to develop a new program that would
provide quality education to workers
who support TEPs with the administra-
tion of trusts and estates. With the help
of a devoted and energetic committee
of volunteers from the major trust com-
panies, law firms, and the law clerk’s
association, CETA1 (foundations of
estate and trust administration) was
launched in November 2014. Fifty-
five students are currently enrolled,
and their first online examination will
take place in May 2015.
Registration for CETA2 will begin
in June 2015, at the same time CETA1
will be enhanced to include Quebec
Civil Code material where applicable.
Beginning in 2016, it is our objective
to offer French content in all courses.
A typical CETA student is employed
as or has an interest in becoming a trust
administrator, law clerk, paralegal,
retail banker, or wealth management
representative. To earn the certifi-
cate, CETA registrants are required to
complete three courses (foundations
of trust and estate administration,
advanced topics in trust and estate
administration, and estate and trust
taxation) and to pass the certification
examination.
On successfully completing the CETA
program, students will be eligible for
exemption from course 3 in the Cana-
dian diploma program (wills, trust, and
estate administration), provided that
they enrol in this program within five
years of completing the CETA program.
You can learn more about CETA and
all of STEP Canada’s educational offer-
ings at www.step.ca n
4 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
2014 GRADUATES
Please join us in congratulating the fol-
lowing graduates for 2014:
Mohammad Abbas, TEP, Toronto
branch
Katy Basi, TEP, Toronto branch
Leslie Beaumont, TEP, Calgary branch
Daniel Bélanger, TEP, Ottawa branch
Peter Berry, TEP, Ottawa branch
Carol Bower, TEP, Toronto branch
Jonathan Braun, Winnipeg branch
Timothy Briand, TEP, Winnipeg
branch
Holly Castle, TEP, Vancouver branch
Mayme Chung, TEP, Vancouver
branch
Peter Chwalisz, TEP, Toronto branch
Michelle Connolly, TEP, Toronto
branch
Robin Dales, TEP, Ottawa branch
Erin Devereaux, TEP, Toronto branch
Shawn Deyell, TEP, Toronto branch
Gordon Engel, TEP, Toronto branch
William Farrar, Toronto branch
Deanna Fisher, TEP, Calgary branch
Lisa Handfield, TEP, Calgary
Jody Hatto, TEP, Vancouver branch
Rebecca Hett, TEP, Calgary branch
Jamie Heuser, TEP, Calgary branch
George Hronis, TEP, Toronto branch
Yuri Isakov, TEP, Toronto branch
Steven Ivacko, TEP, Vancouver
branch
Kenneth Keung, TEP, Calgary branch
Mike Kidney, TEP, Atlantic branch
Christopher Kostoff, Toronto branch
Rathika Kumarakulasinkam, TEP,
Toronto branch
Chantal Lamothe, TEP, Montreal
branch
Helen Leong, TEP, Vancouver branch
Alanna Mayne, TEP, Atlantic branch
Jennifer McCaughey, TEP, Vancouver
branch
Christine McDonald, TEP, Vancouver
branch
Donald McKenzie, TEP, Saskatchewan
chapter
Emerita Juliano Mercado, TEP,
Toronto branch
Robert Miedema, TEP, Atlantic branch
Cindy Montgomery, TEP, Calgary
branch
Sanjay Naicker, TEP, Calgary branch
Suki Pang, TEP, Vancouver branch
Tiffany Patterson, TEP, Toronto branch
John Andrew Phillips, TEP, London
Southwestern Ontario chapter
Wendy Schuler, TEP, Winnipeg branch
Claudia Sgro, TEP, Toronto branch
Vincent Singh, TEP, Ottawa branch
Brad Taylor, TEP, Edmonton branch
Charlotte Tsang, TEP, Vancouver
branch
Kristie Ulrich, TEP, Calgary branch
Meghan Wharton, TEP, Toronto branch
Michael Winters, TEP, Vancouver
branch
Samuel Wong, TEP, Vancouver
branch
Tracey Woo, TEP, Toronto branch
Robert Worthington, TEP, Calgary
branch
Nathan Wright, TEP, Toronto branch
Elaine Yip, TEP, Toronto branch
M. JASMINE SWEATMAN, TEP
Managing Partner, Sweatman Law Firm;
Member, STEP Toronto
with the assistance of
LEIGH SANDS
Associate, Sweatman Law Firm
and
ANN M. SODEN
Executive Director, National Institute
of Law, Policy and Aging; The Elder Law
Clinic, Quebec
T he Supreme Court of Canada
released its decision in Carter
v. Canada (Attorney General),
2015 SCC 5, on February 6, 2015. It
determined that the ban on physician-
assisted suicide (in sections 241(b) and
14 of the Criminal Code) was uncon-
stitutional, and it gave the federal
government one year to correct this
unconstitutionality.
The court held that the prohibition
against physician-assisted suicide
infringed the rights set out in section
7 of the Canadian Charter of Right and
Freedoms (life, liberty, and security of
the person) in an overbroad manner,
and was therefore in conflict with the
principles of fundamental justice:
Sub-section 241(b) and section
14 of the Criminal Code unjustifi-
ably infringe s. 7 of the Charter
and are of no force or effect to the
extent that they prohibit physician-
assisted death for a competent
adult person who (1) clearly con-
sents to the termination of life and
(2) has a grievous and irremedi-
able medical condition (including
an illness, disease or disability) that
causes enduring suffering that is
intolerable to the individual in the
circumstances of his or her condi-
tion [at paragraph 147].
The court also held that, as a prin-
ciple of stare decisis, lower courts
are not necessarily bound by higher
court decisions (such as the Supreme
Court’s decision in Rodriguez v. British
Columbia (Attorney General), [1993] 3
SCR 519). Rather, lower courts may
reconsider the rulings of higher courts
when a new legal issue is raised and a
change in the circumstances or the evi-
dence fundamentally shifts the param-
eters of a debate; such a fundamental
shift existed in Carter as a result of
modifications to the legal framework
for analyzing section 7 rights and new
evidence from permissive jurisdictions
about controlling the risk of abuse that
is associated with assisted suicide.
In the common-law jurisdictions,
the impact of Carter on attorneys for
personal care, lawyers, and medical
practitioners will ultimately depend on
how the government responds to the
court’s directives. Will there be new
legislation, or will the decision of the
Supreme Court guide future actions?
Until the government responds, the
ultimate impact of Carter in Canada
remains speculative.
If Parliament does nothing, the
Supreme Court’s decision clarifies the
law: if certain criteria are met, physi-
cian-assisted suicide is not prohibited
as a criminal act. The debate then shifts
from prohibition to determinations of
whether a person “clearly” consented
and had a “grievous and irremedi-
able medical condition” that caused
“enduring suffering” that was “intol-
erable to the individual in the circum-
stances of his or her condition.” These
considerations are primarily subjec-
tive. Courts will need to grapple with
various unique circumstances and act
as the final arbiter of whether the test
is or is not satisfied. Personal and soci-
etal debate and influences will start to
shape these judicial determinations.
Regardless of how Parliament
responds, Carter will add fuel to the
discussion that is currently being heard
across Canada. It will provide a spring-
board for diverse advocacy groups to
press their views. It will assist in the
modernization of Canada’s laws and
move Canada to the next stage in the
development of end-of-life rights. A
debate will ensue regarding whether
the Supreme Court, in allowing physi-
cian-assisted death, was allowing both
assisted suicide and voluntary eutha-
nasia and whether substitute decisions
makers will be able to clearly consent on
behalf of the patient.
In the civil jurisdiction of Quebec,
Carter will have additional ramifica-
tions. Quebec was the first province
to legalize doctor-assisted death as
part of its comprehensive end-of-life
legislation, An Act Respecting End-Of-
Life Care. Before the Supreme Court’s
decision, Quebec passed this Act pur-
suant to its powers to enact laws in
relation to health and health services,
which included providing aid in dying;
the Act could not constitutionally have
been framed in terms of euthanasia or
assisted suicide. Quebec’s Act allows
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 5
Carter v Canada: The Next Step in Canada’s End-of-Life Rights Evolution
a terminally ill patient of sound mind
who meets other criteria established
under the law to authorize a doctor
to administer continuous palliative
sedation and medical aid in dying. The
central issue created by the Act is the
meaning of “end of life,” a term that
the legislation does not define and that
will prompt debate and judicial inter-
pretations.
Unlike the perspective provided in
the Quebec legislation, the perspective
of the Supreme Court appears to be that
being at end of life is not a relevant crite-
rion when obtaining aid in dying. Thus,
a person with ALS can ask a doctor to
end her life if she satisfactorily demon-
strates that she has a grievous and irre-
mediable medical condition that causes
enduring suffering that is intolerable to
her in the circumstances of her condi-
tion, although she may not be at the end
of her life. In light of the Carter decision,
Quebec could be called on to consider
whether its legislation is too restrictive
because it extends only to persons in an
end-of-life situation.
The debates and public hearings
that took place before the appearance
of Dying with Dignity, the Quebec par-
liamentary commission’s report, took
more than two years. An additional 18
months was required to draft the law
and the elaborate policies and practices
to ensure that structures, guidelines,
and safeguards would be in place to
support the law. However Parliament
decides to respond to the Supreme
Court’s decision, additional time and
consultations will be necessary to
implement Carter, and the debate will
continue across the country.
Last fall, the Quebec public affairs
magazine L’actualité conducted a
survey of the provincial health minis-
tries on the subject of Quebec’s end-of-
life legislation, which was adopted by
Quebec’s National Assembly on June 5,
2014 and comes into force at the end
of 2015. The magazine reported that
the provinces were unready to debate
or uninterested in debating the matter
of medical aid in dying. Newfoundland
and New Brunswick responded simply
that the debate was not a priority,
while the other provinces expressed
an interest in following the evolution of
Quebec’s experience before formally
addressing the issue themselves.
Legislative change will be welcomed
at both the federal and provincial levels
following Carter, with each level of gov-
ernment playing its respective jurisdic-
tional role. It is an onerous task, and
time is short, both for the federal gov-
ernment in this election year and for
provincial governments that have not
yet formally entered the debate. Some
commentators have observed that the
Supreme Court has forced the hand of
governments. Others would argue that
politicians should no longer be reticent
about involving themselves in the end-
of-life care debate. n
6 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
WILLIAM FOWLIS, TEP
Partner, Miller Thomson LLP; Chair,
STEP Canada Awards Committee;
Member, STEP Calgary
CHRIS IRELAND, TEP
PPI Advisory; Treasurer, STEP Canada;
Member, STEP Vancouver
SHELAGH RINALD, TEP
President, Rinald Tax Advisory Inc.;
Member, STEP Vancouver
When a Canadian-resident
individual dies owning
appreciated shares of a
private corporation, the shares are
exposed to double taxation. The
Canadian Income Tax Act includes
p ro visio ns t hat ar e intended to
avoid these negative tax conse-
quences; however, the methodology
for taking advantage of these pro-
visions is not self-evident, and they
may not be available to the execu-
tors or the beneficiaries of an estate
without proper planning.
Part I of this article described how
double tax exposure arises, gave a very
general overview of the tax-planning
strategies that are available to mitigate
this exposure, and outlined the circum-
stances that are relevant when assess-
ing tax-planning strategies.
Part II elaborates on these tax-
planning strategies. Its purpose is to
describe the mechanics and tax con-
siderations involved in applying the
basic techniques for mitigating double
tax exposure. The following planning
techniques are highlighted:
• pipeline planning, which is used to
withdraw corporate surplus and
assets using the adjusted cost base
(ACB) of the shares held by the estate
that was created by the deemed dis-
position on the shareholder’s death
and was taxed as a capital gain;
• bump planning, which allows the
ACB of certain types of capital prop-
erty owned by the corporation to
be bumped to take the outside ACB
of the shares into account;
• pipeline planning combined with
bump planning, which creates a
tax-effective result by allowing the
corporate surplus to be extracted
effectively at the capital gains rate
incurred by the deceased share-
holder on death combined with
planning used to increase the inter-
nal ACB of the corporation’s assets
to at least the ACB of the shares to
the estate (this method allows for an
efficient extraction of capital from
the corporation and a reduction
of corporate taxes payable on the
future disposition of capital assets);
• loss carryback (LCB) planning,
in which a loss is created by the
estate, on the winding up of the
corporation or the repurchase of
the corporate shares, which is car-
ried back and offset against the
gain that is triggered on the death
of the shareholder; and
• hybrid planning, which is used if nei-
ther pipeline nor LCB planning can
be used to tax-efficiently mitigate
the double tax exposure on death or
the tax risks are too high (which can
often be the case); hybrid planning
involves the timely triggering of capi-
tal gains on the transfer of assets to a
subsidiary corporation to provide for
the tax-efficient repurchase of shares
by the corporation to the estate.
New tax legislation, passed on Decem-
ber 16, 2014, has significant implica-
tions for the planning that is outlined
in this article. Certain implications
that are apparent at the time of writing
have been identified here; however,
the detailed implications of the new
provisions will become known only as
the new rules are applied and as the
Canada Revenue Agency (CRA) clari-
fies its administrative positions.
Space restrictions limit the extent
to which the implications of these new
provisions can be explored in this arti-
cle. Readers are referred to the various
articles that provide a detailed review
of these provisions. Also because of
space limitations, tax planning is con-
sidered only in the context of private
corporation shares that are owned
by an individual at the time of death.
Post mortem planning in the context of
shares that are owned through a trust
at the time of death will be considered
in a presentation by the authors at the
2015 annual national STEP conference.
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 7
Post Mortem Planning for Private Corporation SharesPART II: ALTERNATIVES FOR MITIGATING THE DOUBLE TAX EXPOSURE ARISING
ON THE DEATH OF THE OWNER OF PRIVATE CORPORATION SHARES(Part I appeared in the February 2015 issue of STEP Inside)
The following case study is designed
to illustrate the concepts described
above:
• At the time of her death, Muriel
owns voting preferred shares of
a company, Holdco, with a fair
market value (FMV) of $5 million,
and a nominal ACB and paid-up
capital (PUC).
• As a result of an estate freeze
undertaken several years ago,
the non-voting common shares of
Holdco are owned by a family trust
and have an FMV of $3 million and
a nominal ACB and PUC.
• The only asset that Holdco owns
is a tract of land with an FMV of
$8 million and an ACB of $2 mil-
lion. The land is capital property to
Holdco. There is no capital dividend
account (CDA) or refundable divi-
dend tax on hand (RDTOH) account
balance, and Holdco has no liabili-
ties at the time of Muriel’s death.
• The shares of Holdco are trans-
ferred to Muriel’s estate at the time
of her death. The estate qualifies as
a graduated rate estate (GRE) as
defined in the Act (pursuant to the
new tax legislation noted above).
The ACB of the preferred shares to
the estate is $5 million.
This discussion assumes that Muriel,
the estate, the beneficiaries, and
Holdco are all residents of British
Columbia. It also assumes BC per-
sonal top marginal tax rates, which
are currently 45.8 percent for ordi-
nary income, 22.9 percent for capital
gains, 28.68 percent for eligible divi-
dends, and 37.98 percent for ineligible
dividends. In addition, it assumes that
the personal capital gains rate is lower
than the corporate capital gains rate
(on a flowthrough basis to sharehold-
ers). The analysis pertains to income
tax matters only; readers who wish to
implement the following strategies
may also need to consider other forms
of taxation, such as commodity and
land transfer tax.
Tax Considerations for Pipeline and Bump PlanningIn general terms, the steps involved in
implementing pipeline and bump plan-
ning include the following:
1. A new corporation (Newco) is
incorporated. Muriel’s estate
is issued all of the voting non-
participating shares; non-voting
common shares are issued to the
family trust.
2. Muriel’s estate transfers its voting
preferred shares in Holdco to
Newco for $5 million. Consid-
eration for the transfer includes
a promissory note granted by
Newco equal to the FMV and
ACB of the preferred shares in
Holdco owned by Muriel’s estate,
or Newco preferred shares with
an FMV and PUC equal to this
amount, or a combination of the
foregoing. Because the value of
the preferred shares held by Muri-
el’s estate should not increase
after her death, there should be
no need to transfer these shares
on a section 85 rollover basis.
3. The family trust transfers its non-
voting common shares in Holdco
to Newco, likely on a tax-deferred
basis pursuant to section 85. The
consideration for this transfer is
either additional common shares
in Newco or preferred shares
in Newco with an aggregate
redemption amount equal to the
FMV of the common shares in
Holdco owned by the family trust.
4. Either Newco and Holdco amal-
gamate pursuant to section 87 or
Holdco winds up into Newco pur-
suant to subsection 88(1) to create
Mergeco (see the comments below
with respect to the timing for the
withdrawal of surplus).
Paragraph 88(1)(d) and its equivalent
in section 87 allow the ACB of the land
owned by Holdco to be bumped poten-
tially as high as the FMV of the land,
subject to certain conditions. How-
ever, in this case the bump is limited
to approximately $5 million because
the cost of the Holdco shares owned
by Newco are likely equal to $5 million
plus the nominal ACB of the non-voting
common shares transferred to Newco
by the family trust. The bump in the
ACB of the land allows Mergeco to sell
the land with the realized gain being
calculated on the basis of the bumped-
up ACB of the land.
The above steps may be imple-
mented either in the first taxation year
of Muriel’s estate or in a subsequent
taxation year. As a result, the timing of
pipeline and bump planning is more
flexible than the timing of other post
mortem planning approaches.
Pipeline planning works most effec-
tively on its own when the tax basis in
the corporate assets owned by Holdco
is greater than or equal to the ACB of
the shares in Holdco owned by Muriel’s
estate or when Holdco has non-depre-
ciable capital property and it is possible
to use bump planning in connection
with pipeline planning. If pipeline plan-
ning is used on its own when there are
unrealized increases in the value of
corporate assets and bump planning is
not available, it may be less tax-effective
than the subsection 164(6) LCB plan-
ning or hybrid planning alternatives. In
these circumstances, hybrid planning
may be most effective.
The CRA may consider pipeline
planning to be unacceptable surplus
stripping, with the result that the
promissory note or PUC created on
8 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 9
the transfer of the shares in Holdco
to Newco is taxed as a dividend to
Muriel’s estate pursuant to subsection
84(2). Much has been written about
whether subsection 84(2) should be
applicable in these circumstances,
and it is uncertain when the CRA might
view these transactions as unaccept-
able surplus stripping.
Pipeline planning is usually viable
when a subsection 84(2) assessment
will not occur or is highly unlikely to
occur – for example, when a corporation
has more than cash assets, continuing
investment, and/or business activi-
ties, and when the parties are able to
wait a sufficiently long time after the
initial pipeline transaction to withdraw
corporate surplus. It appears from CRA
advance income tax rulings that it is
generally safe to wait at least one year
before combining the corporations and
withdrawing the assets from Newco.
The bump rules are highly com-
plex and contain potential limitations,
pitfalls, and traps that may adversely
affect this planning:
• the bump is available only in
respect of non-depreciable capital
property, such as land, shares, and
an interest in a partnership;
• the bump amount can be limited or
eroded;
• there must be an acquisition of
control, only property owned
by the corporation at the time of
the acquisition of control may be
bumped, and the amount of the
bump is limited to the FMV of the
corporate property at the time of
the acquisition of control;
• a delay in implementing the bump
may reduce the amount of available
bump room; and
• the bump-denial rules contained in
the Act may apply.
If pipeline planning is used with bump
planning, Muriel’s estate can extract $5
million of corporate surplus, paying tax
at capital gains tax rates in the amount
of $1,145,000. At the Mergeco level,
the income taxes payable in respect
of the sale of the land are also reduced
because the gain is based on a bumped-
up ACB of $7 million. This planning
avoids $1,142,500 of corporate tax on
the sale of the land before taking into
account any refund of refundable taxes
that may be available.
The new income tax rules with respect
to estates and trusts do not directly
affect pipeline planning and bump
planning. However, because these rules
may adversely affect the use of LCB and
related hybrid planning, the opportunity
to use pipeline and bump planning may
become more important. As part of an
estate plan for a shareholder of a private
corporation, it is therefore advisable to
establish a corporate structure that can
effectively use pipeline and bump plan-
ning to achieve the most favourable post
mortem tax result.
Pipeline and bump planning is
complex and intricate, and, in many
circumstances, a blend of approaches
may achieve the best result. For exam-
ple, pipeline planning in connection
with hybrid planning may be comple-
mentary.
Tax Considerations for Loss Carryback PlanningAs explained in part I of this article,
LCB planning can be effective, if com-
pleted on a timely basis, because it can
eliminate the capital gains on death.
However, part I also refers to the tax
inefficiencies that occur when the full
amount of the dividend that results
from the LCB planning is not attributed
to the CDA and/or the RDTOH account.
If LCB planning were implemented
for Muriel’s estate but Holdco did not
have a CDA or an RDTOH account,
the $5 million of capital gains (tax of
$1,145,000) would be eliminated and
would be replaced by $5 million of
taxable dividends which would give
rise to taxes of $1,434,000 if all of the
dividends were eligible dividends, and
taxes of $1,899,000 if all of the dividends
were ineligible dividends. In other
words, additional taxes of $289,000 or
$754,000 would be payable. Pipeline
planning is one alternative to this situ-
ation, and hybrid planning (discussed
in the following section) is another.
Assume that Holdco has $5 million
in its CDA. Subject to the 50 percent
rule, the capital gains on death could
be replaced with a non-taxable capital
dividend (assuming that the capital
dividend election is made on a timely
and effective basis), thereby potentially
eliminating the tax arising on death.
However, subsection 112(3.2) and the
capital dividend stop-loss rules must be
considered. Under the stop-loss rules,
50 percent of the capital loss realized
by the estate and carried back to Muri-
el’s terminal return under subsection
…the post mortem planning that is undertaken to mitigate double tax exposure following the death of a shareholder will vary according to the
intentions of the beneficiaries, corporate and personal tax attributes…
164(6) may be denied (there are grand-
fathering provisions, a discussion of
which is beyond the scope of this arti-
cle). If the stop-loss rules apply, Muriel’s
estate is required to pay tax on a $2.5
million capital gain, or $572,500.
If the stop-loss rules otherwise apply,
an alternative to using the entire CDA is
to use only half of it and to implement
what is referred to as “the 50 percent
solution.” If this planning is imple-
mented, the capital dividend stop-loss
rules do not apply, with 50 percent of
the resulting dividend being a capital
dividend and the other 50 percent being
a taxable dividend (note that additional
planning must be implemented so that
there is no excess capital dividend elec-
tion). If the taxable dividend is an eli-
gible dividend, taxes of $717,000 are
payable; if the entire taxable dividend
is an ineligible dividend, taxes amount
to almost $950,000. These two amounts
are lower than the capital gains tax
on death if no LCB planning is imple-
mented ($1,145,000), but higher than
the tax payable if the stop-loss rules are
applied. However, $2.5 million of the
CDA is available for future use, result-
ing in significant additional tax savings
in the future, although the interests of
beneficiaries and other shareholders
may conflict.
The availability of RDTOH can also
result in tax efficiencies, particularly if
the dividends resulting from the LCB
planning are eligible dividends. The
refundable tax rate to the corporation of
33.33 percent of taxable dividends paid
is less than the highest marginal rate in
British Columbia for eligible dividends of
28.68 percent. If Holdco had $1,667,000
of RDTOH, $5 million of general rate
income pool (GRIP), and no CDA, the $5
million dividend resulting from LCB plan-
ning would lead to taxes of $1,434,000,
as noted above, with Holdco receiv-
ing a dividend refund of $1,667,000: a
net cash increase of $233,000. These
assumptions are arguably simplistic, but
they illustrate the effectiveness of using
RDTOH in LCB planning.
Without a GRIP and a CDA, the tax
on the ineligible dividends would be
$1,899,000, or $232,000 more than
the dividend refund. Hybrid planning,
as discussed below, should be given
further consideration.
Other issues to consider when
implementing the LCB planning strat-
egies include the following:
• The affiliated stop-loss rules in
subsection 40(3.6) should gener-
ally not apply to an estate because
of the exception in subsection
40(3.61) for losses that are subject
to subsection 164(6).
• LCB planning is usually imple-
mented either through a share
repurchase or through a windup of
the corporation. In Muriel’s case, the
repurchase of the preferred shares
is desirable because a windup of
Holdco would also result in tax to
the family trust (through a deemed
dividend on the common shares
owned by the trust) and a disposi-
tion of all of Holdco’s assets. Unless
the family otherwise intends to dis-
pose of Holdco’s assets shortly after
Muriel’s death, winding up Holdco
triggers additional tax.
• As a result of the new tax legislation,
only a GRE can take advantage of
the subsection 164(6) election and
the 50 percent solution. If Muriel’s
estate is not a GRE (for example,
if the executors failed to make
the necessary designation in the
estate’s first tax return), LCB plan-
ning may be seriously impaired.
Tax Considerations for Hybrid PlanningRisks of reassessment with respect to
subsection 84(2), insufficient net tax
basis in corporate assets, and the com-
plexities of bump planning can make
pipeline planning unfeasible. Further-
more, when an estate freeze has been
implemented during a testator’s lifetime,
timing issues and the risk of prepaying
taxes on the sale of corporate assets that
arise from LCB planning can make tradi-
tional LCB planning ineffective. In these
circumstances, hybrid planning can play
a practical and important role in mitigat-
ing double tax exposure.
In very general terms, the steps
involved in implementing hybrid plan-
ning are set out below.
1. Within the first taxation year of the
estate, Holdco’s assets are trans-
ferred to a subsidiary corporation
(Subco) pursuant to section 85.
Holdco elects proceeds of disposi-
tion that create a capital gain suffi-
cient to generate CDA and RDTOH
10 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
account balances in Holdco to
allow for the tax-efficient repur-
chase of shares from the estate
(as described in part I of this
article). The elected value of the
land transferred to Newco is $7
million to trigger a CDA balance
of $2.5 million and an RDTOH
account balance of $666,668.
To the extent that pipeline
planning is desirable with respect
to the existing tax basis in the
assets of Holdco, consideration
could be given to electing at only
$5 million and using pipeline
planning, as described above, to
allow for the future extraction of
the existing $2 million of basis in
the corporate assets. The tax risks
associated with subsection 84(2)
require careful consideration.
However, for the purposes of this
example, an elected value of $7
million is assumed.
2. After the transfer of assets to
Subco and within the first taxation
year of the estate, the $5 million
of preferred shares is redeemed
to the estate. A capital dividend is
declared pursuant to paragraph
112(3.2)(a) with respect to $2.5
million of the deemed dividend
arising on the share redemption.
Certain strategies require further
review to ensure that no excess
CDA dividend arises on the share
redemption. The remainder of
the deemed dividend is a taxable
dividend to the estate (which is
assumed to be ineligible in this
case) and gives rise to a divi-
dend refund to the corporation
of $666,668.
3. Assuming that subsections
164(6) and 40(3.61) and para-
graph 112(3.2)(a) are appropri-
ately provided for, a capital loss
of $5 million is triggered to the
estate on the share redemption,
which is carried back and applied
against $5 million of capital gains
arising in Muriel’s date-of-death
terminal return.
As a result of this planning, the ACB of
the land to Newco is $7 million, and
Holdco pays $475,000 of tax (after
recovery of the RDTOH) on the gain
that was triggered on the land transfer.
The estate pays taxes of $949,500 on
the taxable dividend arising from the
share redemption and recovers taxes
of $1,145,000 paid in Muriel’s date-
of-death terminal return through the
loss carryback. The net tax effect is
$1,424,500 paid by Muriel, the estate,
and Holdco on the $5 million capi-
tal gain that was inherent in Muriel’s
preferred shares of Holdco at the time
of her death. Although this tax cost
is $279,500 higher than the tax that
was originally paid in Muriel’s date-of-
death terminal return, this planning
may have the following advantages
over the pipeline and bump planning
that would otherwise preserve the
personal capital gains rate in Muriel’s
date-of-death terminal return:
• Hybrid planning mitigates risks
with respect to subsection 84(2)
and the bump-denial rules. In addi-
tion, it does not require an acquisi-
tion of control to allow for a bump
in the ACB of corporate assets.
• A bump can be realized with
respect to depreciable and eligible
capital property, which would not
otherwise be the case in bump
planning. If applicable, recapture
is triggered before any capital
gain when depreciable property
is transferred to Subco, and para-
graph 13(7)(e) must be considered
in determining the undepreciated
capital cost of the depreciable
assets to Subco.
• The extent and timing of the gain
to be triggered on the transfer to
Subco can be managed through
section 85. In particular, the gain
can be triggered on a timely basis
within the first taxation year of the
estate and the amount of the cor-
porate gain that is triggered can
be limited to the amount that is
required to mitigate the double tax
exposure of the estate.
Because hybrid planning requires the
transfer of corporate assets, there may
be additional complexity, particularly
when the assets have contracts, debts,
or other creditor claims associated with
them. Estate planning that is intended
to anticipate the use of hybrid planning
on a post mortem basis should there-
fore provide for the following:
• assets that may be transferred to
accommodate hybrid planning
should remain unencumbered
during the shareholder’s lifetime;
and
• a shareholders’ agreement should
give the directors the authority
to make the transfers or take the
actions that are necessary to facili-
tate hybrid planning, provided that
these actions do not prejudice the
tax position of other shareholders.
ConclusionAs can be seen from this case study, the
post mortem planning that is under-
taken to mitigate double tax exposure
following the death of a shareholder
will vary according to the intentions of
the beneficiaries, corporate and per-
sonal tax attributes, and the tax leg-
islation that applies at the time of the
shareholder’s death. It is crucial that an
estate plan provide sufficient flexibility
to implement the above-described tax
strategies as required. n
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 11
SUZANNE MICHAUD, TEP
Senior Advisory Counsel, RBC Law
Group, Royal Bank of Canada;
Member, STEP Toronto
Prudent money management
is a core skill of financial ser-
vice providers and a strength
of STEP professionals. Yet, for some
Canadians, financial matters can be
intimidating and present a barrier to
making good choices about the pres-
ent and the future. Limited financial
knowledge can be particularly trouble-
some when older Canadians find them-
selves at a disadvantage as they try to
understand their finances and their
estate and incapacity plans.
While individual financial institu-
tions place a priority on providing clear
and relevant information to their older
clients, they recognize that a collabora-
tive approach is required to help seniors
successfully manage their financial
affairs and make plans about their pos-
sible incapacity and eventual death.
The population of Canadians who
are 65 and older doubled between
1981 and 2009; it is expected to double
again by 2036. In addition, it is now
expected that the average 65-year-old
will live to age 84. Increased longevity
offers both opportunities and chal-
lenges for organizations and profes-
sional advisers working with seniors.
Banks welcomed the federal gov-
ernment’s renewed focus on seniors
and their financial abilities. They also
welcomed the government’s efforts to
create a national strategy for financial
literacy through the Financial Con-
sumer Agency of Canada (FCAC).
In April 2014, the government
appointed Jane Rooney as Canada’s first
financial literacy leader, and, in October
2014, Ms. Rooney introduced phase 1
of the government’s national strat-
egy, “Strengthening Seniors’ Financial
Literacy.” The full national strategy,
which will incorporate elements of this
seniors’ strategy, is expected to be pub-
lished later this year.
The mission statement for the
seniors’ strategy is straightforward: “To
strengthen the financial literacy of cur-
rent and future seniors by increasing
their knowledge, skills and confidence
to make responsible financial decisions.”
The strategy’s four goals are as follows:
• engaging more Canadians in pre-
paring financially for their future
years as seniors,
• helping current seniors plan and
manage their financial affairs,
• improving the understanding of
and access to public benefits for
seniors, and
• increasing the tools available to
combat the financial abuse of
seniors.
Specifically, the authors of the seniors’
strategy observe that “some may face
the potential of diminishing capabili-
ties as they age, which may affect their
ability to make good financial choices.”
One of the strategy’s objectives is to
ensure that current and future seniors
understand the potential financial
management needs of those who are
experiencing a loss of their mental
abilities.
12 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
“There is no easy or quick fix to improving the financial literacy of seniors and other Canadians.
Changing behaviour will take years, if not decades…. Despite the challenges, financial
literacy has the potential to be a powerful force in people’s lives…. As this seniors’ financial literacy
strategy and the next phases of the national strategy for financial literacy roll out, we hope
that interested people and organizations embrace these plans and use them to help advance the
financial literacy and well-being of Canadians.”
– Strengthening Seniors’ Financial Literacy, October 2014
Seniors Financial Literacy Strategy
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 13
The FCAC intends to encourage the
legal community to develop educa-
tional resources for seniors, as well as
for people who are named in powers
of attorney (POAs) “to improve their
understanding of responsibilities and
readiness to take on this role.” As well,
the federal government requested
t h a t C a n a d i a n r e t a i l
banks voluntarily pro-
vide clients with addi-
tional information about
powers of attorney and
joint accounts. The result
of this request is the
Commitment on Powers
of Attorneys and Joint
Deposit Accounts, http://
www.cba.ca/contents/
files/misc/vol-poa-joint-
account-en.pdf, whose
implementation began in
2014 and was completed
in March 31, 2015. Some
of the highlights of this
document are set out
below.
Banks do not provide
legal advice to clients, However, in
addition to providing general informa-
tion about powers of attorney and joint
accounts, they now
1. do not require the use of their
own form of POA, if they offer one
as a convenience to clients;
2. advise clients about the mini-
mum requirements for accepting
a POA as a signing authority on a
client’s account;
3. unless financial abuse is sus-
pected, advise attorneys or cli-
ents if their situation is complex
and requires additional review;
4. inform attorneys or clients of the
bank’s dispute resolution pro-
cess if the attorneys or clients
have a concern; and
5. provide training for frontline staff
to increase their awareness of the
bank’s policies and procedures
in these areas and the resources
available to assist with complex
situations.
Banks continue to be key partners in
the financial literacy strategy. They
appreciate the importance of having
clients who are well prepared for their
retirement and senior years and who
have made reasonable and compre-
hensive plans to deal with their poten-
tial incapacity and eventual death.
Information is being made available
through traditional means, such as
seminars and brochures in branches,
as well as through online resources,
such as articles and videos (as an
example, see www.rbcadvicecentre.
com/tagging/56).
The incidence of financial abuse of
vulnerable people, including seniors,
appears to be on the rise. Banks can
play an important role in raising aware-
ness of this disturbing issue and pro-
viding advice about what their clients
can do to protect themselves from it.
When bank staff are confronted with
a potentially abusive situation, they
can speak to the client (if appropri-
ate), report the abuse to the police or
to a provincial office with investigative
powers to assist the victim, and file the
required regulatory reports.
The federal government has intro-
duced the Digital Privacy
Act in Parliament, which
amends the Personal
Information Protection
a n d E l e c t r o n i c D o c u -
ments Act. If passed, the
new legislation will allow
banks and other organi-
zations to notify officials
or a client’s next of kin
(not the abuser) if they
suspect that a senior is
the victim of financial
abuse.
STEP professionals
should be aware of the
role that they can play
in identifying, reducing,
and reporting the finan-
cial abuse of seniors.
There is little use in educating clients
about saving for their golden years if
their resources are stolen by a stranger
or (more often) a family member when
they are most vulnerable. Recognizing
that a POA or joint account can provide
an avenue for financial abuse, banks
welcome the opportunity of working
with STEP professionals to educate
clients, their legal representatives,
and their family members about the
responsible use of these tools in an
effort to increase the financial literacy
of all Canadians. n
SPOUSES IN SEPARATE HOUSES: THE DEFINITION OF SPOUSE IN BC MATRIMONIAL AND SUCCESSION LAW
ANDREA E. FRISBY
Associate, Legacy Tax + Trust Lawyers
Affiliate, STEP Vancouver
KATE S. MARPLES, TEP
Principal, Legacy Tax + Trust Lawyers
Member, STEP Vancouver
CLAIRE N. WILSON
Associate, Legacy Tax + Trust Lawyers
The BC Supreme Court has released
the first judicial consideration of the
definition of spouse in section 2 of
the Wills, Estates and Succession Act
(WESA), which came into force in Brit-
ish Columbia on March 31, 2014. Re
Richardson, 2014 BCSC 2162, is note-
worthy since the two persons found to
be spouses resided in different munici-
palities during their entire relationship.
This case provides the most recent and
clear authority that sharing a residence
is not determinative of spousal status
for the purpose of succession law in
British Columbia. Instead, shared res-
idence is merely one of many factors
that a court considers.
The case concerned the estate of
Philip Richardson, who died intestate.
Nancy Chen applied to the court pursu-
ant to WESA section 2(1)(b) for a dec-
laration that she was the deceased’s
spouse, and for an order that a notice of
dispute filed by the deceased’s brother
be removed, allowing her to obtain a
grant of administration without will
annexed of the estate. The notice of
dispute alleged that Ms. Chen was not
the deceased’s spouse. If Ms. Chen’s
application were successful, she would
inherit the deceased’s estate; if it were
unsuccessful, the deceased’s brother
would be the heir.
Under WESA section 2, a person is
considered to be a spouse of another if
the parties were both alive immediately
before a relevant time and either they
were married to each other or “they had
lived with each other in a marriage-like
relationship for at least 2 years.”
Molodowich v. Penttinen (1980),
17 RFL (2d) 376 (ONDC), a leading
authority with respect to the mean-
ing of “marriage-like relationship,”
sets out seven components involved
in varying degrees and combinations
14 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
I N T H E H E A D L I N E S
Under WESA section 2, a person
is considered to be a spouse of another if
the parties were both alive immediately
before a relevant time and either they were
married to each other or “they had lived
with each other in a marriage-like
relationship for at least 2 years.”
in a relationship of cohabitation. The
court described these components
under the following categories: shel-
ter, sexual and personal behaviour,
services, social support, societal sup-
port, economic support, and children.
Other authorities, including Austin v.
Goerz, 2007 BCCA 586, have empha-
sized that there is no checklist of fac-
tors to be considered in determining
whether someone is a spouse, and
not all of the above elements must be
present for a relationship to be found
to be conjugal. Historically, however,
sharing a residence has often been an
important factor in making a determi-
nation of spousal status.
While it was not disputed that Ms.
Chen and the deceased had shared
an intimate and exclusive relationship
for over 15 years, the deceased resided
and worked on Gambier Island, while
Ms. Chen resided and worked in
Surrey. The deceased visited Ms. Chen
in Surrey about every two weeks, and
Ms. Chen visited him weekly on Gam-
bier Island. The deceased referred to
his residence as “his place” and Ms.
Chen’s residence as “Nancy’s place.”
The deceased’s brother argued that
the separate residence arrangement
was a key factor in indicating that there
was no marriage-like relationship.
However, the court favoured Ms.
Chen’s evidence: she and the deceased
presented themselves as and were
considered to be an exclusive couple;
the deceased informed a witness that
he had not made a will but that he
was leaving everything to Ms. Chen;
during a 2006 trip to China, Ms. Chen
and the deceased participated in a
ceremony that resembled a traditional
Chinese wedding; Ms. Chen cared for
the deceased’s elderly parents; the
deceased cared for Ms. Chen during a
significant health incident; Ms. Chen
cooked and cleaned for the deceased;
and the couple travelled together.
The court also accepted Ms. Chen’s
evidence that she and the deceased
maintained separate residences as
a practical matter because it would
have been difficult for her to find work
on Gambier Island. Ms. Chen deposed
that she had work and family commit-
ments, including two sons from a pre-
vious marriage, and needed to live in
Surrey. The deceased had a good job
on Gambier Island and looked after
his parents there. The court concluded
that overall, despite the separate resi-
dences, the evidence supported the
finding of a marriage-like relationship
and declared that Ms. Chen was the
spouse of the deceased and the intes-
tate successor.
The court’s approach in Re Richard-
son is not the result of the enactment
of WESA, and it does not represent
a dramatic change in the law. How-
ever, it is a reminder for BC estate
planners that clients who have been
in a relationship for more than two
years cannot assume that their sig-
nificant other will not be found to be
a spouse simply because they do not
reside with the significant other. Over
the past decade, there have been a
number of cases decided under the
now repealed Family Relations Act and
Estate Administration Act in which the
courts explored and found increasingly
flexible boundaries in cohabitating
and marriage-like relationships. For
example, in Mazur v. Berg, 2009 BCSC
1770, a couple who resided separately
during their entire relationship in resi-
dences that were located within three
miles of each other and who spent the
majority of their time together at one
residence or the other were found
to be spouses. Similarly, in Roach v.
Dutra, 2010 BCCA 264, and Campbell
v. Campbell, 2011 BCSC 1491, parties
who had been living in a marriage-like
relationship for over two years were
not disqualified from being spouses
simply because they lived in separate
residences during at least part of their
relationships.
Planners may wish to discuss the
definition of a marriage-like relation-
ship with their clients and question
them closely if they are involved in
romantic relationships that display
some of the objective indicia of a mar-
riage-like relationship, even though
the clients are not cohabiting.
HOT OFF THE PRESS: NEW ESTATE ADMINISTRATION ACT FOR ALBERTA
NANCY L. GOLDING, TEP
Partner, Borden Ladner Gervais LLP;
Member, STEP Calgary; Member, STEP
Worldwide Council
On March 19, 2015, the lieutenant
governor in council ordered the proc-
lamation of the Estate Administration
Act, which will come into force on June
1, 2015. Bill 4, as it is now known, is
touted as making estate administra-
tion laws in Alberta more user-friendly,
accessible, and efficient. According
to the government of Alberta, “The
Estate Administration Act is intended
to serve as a road map for personal rep-
resentatives so they can better under-
stand and perform the administration
of the estate of a deceased person.”
Bill 4 is part of a multiyear project
that the government embarked on to
reform its wills, succession, and estate
administration legislation. The Estate
Administration Act follows the Wills and
Succession Act, which came into force
in February 2012 and brought about
substantial changes.
Section 51 of the Estate Administra-
tion Act provides that, unless a court
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 15
orders otherwise, the Act applies to
existing administration, applications,
and grants. Section 2 provides that
the Act applies when a person was
resident in Alberta on the date of his
or her death or when a person owned
property in Alberta at the time on his
or her death.
The Estate Administration Act codi-
fies processes and procedures that
were already in place and clarifies a
number of administration matters,
including the following:
1. Who has authority over the dis-
position of remains and funeral
arrangements is now specified.
2. It is made clear that Judges are
directed to hear applications pur-
suant to the Act.
3. A personal representative who
has a particular degree of skill
must exercise that degree of skill
in carrying out his or her duties
and is held to a higher standard
of accountability than a personal
representative who does not
have any particular degree of
skill.
4. The core tasks, responsibilities,
and liability of personal represen-
tatives are set out in detail.
These core tasks, responsibilities, and
liability of personal representatives
appear in one of the largest parts of the
Act. Section 5 sets out general duties
and section 7 sets out core tasks. Sec-
tion 7 addresses the consequences
that arise when a personal represen-
tative acts without a grant. Section 20
defines the authority of personal rep-
resentatives in the administration of
an estate, and a schedule pursuant to
section 7.2 provides examples of activi-
ties that may be included in the core
tasks referred to in section 7.1(a). The
schedule lists the specific duties of a
personal representative under the fol-
lowing topic headings:
• identifying the estate assets and
liabilities,
• administering and managing the
estate,
• satisfying the debts and obligations
of the estate, and
• distributing and accounting for the
administration of the estate.
Under each of these general topics, the
tasks are listed in detail – for example,
“arranging with a bank, trust company
or other financial institution for a list of
the contents of a safety deposit box.”
Sections 8 and 23 address the
consequences when a personal rep-
resentative does not fulfill his or her
statutory duties and responsibilities.
Pursuant to section 8, if a court is satis-
fied that a personal representative has
refused or failed to perform a duty or
core task, the personal representative
can be ordered to perform that task,
conditions can be imposed on the
personal representative, the personal
representative can be removed, and a
grant can be revoked.
Section 10.1 sets out the tasks,
obligations, and duties of a personal
representative who does not apply
for a grant of probate. Formerly, there
were no such legislated rules, and
there have been many cases involving
personal representatives who took no
formal steps, and failed to inform other
parties or beneficiaries that they were
not applying for a grant of probate. The
Act now specifies a list of duties and the
requisite information and notice to be
provided to family members; it also
provides prescribed forms.
Sections 26, 27, and 28 cover the
ranking of debts and marshalling. The
Act sets out how debts and liabilities
are to be apportioned against par-
ticular assets in an estate. Section 28
states that real estate is to be dealt with
in the same manner as personal prop-
erty within each specified category; it
is not to be dealt with last.
It remains to be seen how the Estate
Administration Act will apply to estates
that are “not concluded” when it
comes into force, and what steps, if
any, must be taken to comply with the
new legislation for estates which are
“not concluded”. Section 51 allows for
an application to determine whether
and to what extent the Act applies to
assist parties who require clarity.
The Estate Administration Act should
assist personal representatives and
beneficiaries in understanding the
process of estate administration, the
duties and responsibilities of personal
representatives, and the liability that
can arise from a failure to satisfy these
duties and responsibilities.
16 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
Section 51 of the Estate Administration Act provides that, unless a court orders otherwise,
the Act applies to existing administration, applications, and grants.
2015 AMENDMENTS TO THE SASKATCHEWAN POWERS OF ATTORNEY LAWS
BEATY BEAUBIER, TEP
Partner, Stevenson Hood Thornton
Beaubier LLP; Chair, STEP Saskatoon
KAREN CRELLIN
Associate, Stevenson Hood Thornton
Beaubier LLP
On January 1, 2015, amendments to
Saskatchewan’s The Powers of Attorney
Act, 2002 and The Powers of Attorney
Regulations came into effect.
Definitions of spouse and dependant
were added to the Act. A “spouse” is
someone who is legally married to the
grantor or who is cohabiting or has
cohabited with the grantor as a spouse
for at least one year (if the couple has a
child together) or two years (in all other
cases). A “dependant” means a child of
the grantor who (1) is less than 18 years
old or (2) is 18 or older but is under the
grantor’s charge or unable to withdraw
from the grantor’s care or to obtain the
necessities of life as a result of illness,
disability, the pursuit of reasonable
education, or other cause.
New section 16.1, which addresses
gifts made by a property attorney from
a grantor’s estate, creates a significant
change in the law. Before the amend-
ments, gifts were not addressed in
either the Act or the regulations. Sec-
tion 16.1 states that a property attor-
ney cannot make a gift from a grantor’s
estate, unless
1. the portion of the estate to be
gifted is not needed to meet the
grantor’s, his or her spouse’s, or
his or her dependant’s needs;
2. on the basis of the grantor’s
previous actions while he or she
had capacity, the property attor-
ney has reasonable grounds to
believe that the grantor would
have made the gift if he or she
had the capacity to do so; and
3. the value of all gifts made in a
year does not exceed $1 million.
The above exceptions to the rule
against making gifts from a grantor’s
estate are subject to any limitations
or conditions in the power of attorney
document itself. A court can authorize a
property attorney to make a gift that is
outside the scope of the exceptions set
out above, if the court is satisfied that
making such a gift would be appropri-
ate. Property attorneys cannot make a
gift to themselves without the court’s
approval.
Section 17 deals with fees charged
by attorneys. Previously, an attorney
was able to charge a “reasonable fee”
for services rendered. In accordance
with section 17, from 2015 onward an
attorney is not entitled to charge a fee,
unless
1. the fee is set out in the power of
attorney document,
2. the court has made an order set-
ting a fee for service, or
3. the fee that the attorney charges
is not more than the fee set out in
the regulations.
The regulations state that a property
attorney may charge fees equal to
2.5 percent of the money received
and payments made by the property
attorney on behalf of the grantor per
month. If there is more than one prop-
erty attorney, the fees must be divided
among them either equally, as agreed
between them, or as determined by
the court. A personal attorney may
charge a fee of $15 per hour for time
spent on the grantor’s affairs.
A number of changes have been
made to the law governing the obliga-
tion to provide an accounting, includ-
ing the following:
1. When an attorney charges a fee,
an annual accounting must be
made in a prescribed form to the
grantor (if he or she has capac-
ity). If the grantor does not have
capacity, this annual account-
ing must be made to other des-
ignated people, including the
public guardian and trustee
(PGT), if necessary.
2. R e g a r d l e s s o f w h e t h e r t h e
attorney charges a fee, if the
grantor requests an account-
ing, the attorney must provide
it in the prescribed form. When
the grantor lacks capacity, a
designated person on behalf of
the attorney may request the
accounting.
3. The PGT has the power to investi-
gate the accuracy of the account-
ing. If the attorney does not
provide an accounting as directed
by the PGT or as otherwise
required, the court can order an
accounting or terminate the attor-
ney’s authority under the power
of attorney document. Before the
amendments, the court did not
have the authority to terminate
the attorney’s appointment under
these provisions.
4. When the attorney’s authority
under the power of attorney ter-
minates as a result of the grantor’s
death or otherwise, the attorney
(unless the grantor has died and
the attorney is the sole benefi-
ciary of the grantor’s estate) must
provide a final accounting in pre-
scribed form within six months of
the date of the termination. The
PGT can carry out an investiga-
tion to determine the accuracy
of the accounting. If the attorney
fails to account, the court may
make an order requiring the final
accounting.
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 17
18 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
ORDERING AN INTERIM DISTRIBUTION
JOAN E. JUNG, TEP
Partner, Minden Gross LLP; Member,
STEP Toronto
The recent Ontario Superior Court case
of Parson v. McGovern, 2014 ONSC
1785, illustrates the principles that are
applicable when a beneficiary seeks a
court-ordered interim distribution
from an estate. The facts of the case
are relatively simple. A brother and
sister were the two equal beneficia-
ries of their mother’s estate. The sister
and an unrelated individual were the
estate trustees. Approximately three
years after the mother’s death, the
brother brought a motion seeking
a substantial interim distribution to
both beneficiaries. At the time that the
motion was brought, the parties were
proceeding with a contested passing of
accounts. The substantial asset in the
mother’s estate was a house in which
the brother had resided rent-free for
almost 2.5 years after the mother’s
death. The brother had interfered
with the sale process, and the estate
trustees ultimately had to seek a writ
of possession and a court order to sell
the house.
Within days of the closing of the
house sale, the brother advised
the estate trustees that he wanted
an interim distribution. The estate
trustees advised that they would
prepare estate accounts and make a
distribution when the accounts were
approved. The accounts were pro-
duced approximately two weeks later,
and a court date was obtained for the
passing of accounts. The estate trust-
ees proposed to make an interim dis-
tribution to each beneficiary, keeping
approximately $100,000 in reserve,
if each beneficiary signed a waiver
of passing of accounts and release of
trustees; if the beneficiaries did not
sign such a waiver, the trustees would
pass the accounts before making any
further distribution.
The brother refused to sign the
waiver and release. Shortly thereaf-
ter, he brought a motion to compel
the estate trustees to make an interim
distribution of almost all of the remain-
ing assets of the estate to both benefi-
ciaries before passing accounts.
The court held that the following
five factors should be considered when
deciding whether to order estate trust-
ees to make an interim distribution to
beneficiaries:
1. Are the estate trustees deadlocked
about the exercise of discretion? In
the earlier case of Re Blow (1977),
18 OR (2d) 516 (HCJ), a deadlock
among the trustees was identi-
fied as a situation in which the
court had jurisdiction to inter-
vene in the exercise of discretion.
In Parson v. McGovern, there was
no deadlock.
2. Have the estate trustees acted
with mala fides? This factor had
also been identified in Re Blow.
It was derived from the House
of Lords decision in Gisborne v.
Gisborne (1877 HL), which is the
starting point for considering the
extent of supervisory jurisdiction
over the discretion of trustees.
In Parson v. McGovern, the court
noted that the estate trustees
had proposed an almost final
distribution but proceeded to
arrange to pass their accounts
when one beneficiary refused to
sign a release and waiver, and
alleged trustee negligence.
3. Have the estate trustees failed to
exercise their discretion? The court
noted that it had jurisdiction to
intervene even in the absence
of mala fides if a trustee failed to
exercise a power of discretion.
In Parson v. McGovern, however,
the court noted that the estate
trustees did not refuse to exercise
their discretion but rather exer-
cised their discretion in deciding
not to make an interim distribu-
tion.
4. Have the estate trustees behaved
unreasonably or breached their
fiduciary duty and duty of good
faith and fairness to the benefi-
ciaries? The court noted that the
estate trustees did not act with
any unreasonable delay; rather,
the brother caused delay by con-
tinuing to reside in the mother’s
house. The estate trustees had
invested the sale proceeds and
were taking steps to pass their
accounts. The court also noted
that the brother sought damages
only against one estate trustee
(his sister), which was illogical
and revealed the personal feel-
ings at issue.
5. Would a beneficiary suffer undue
prejudice if an interim distribution
were not made? Because the pass-
ing of accounts would take place
in a short time, the court decided
that the brother would suffer only
minimal prejudice.
On the basis of these factors, the
brother was unsuccessful. While the
facts of the case seem clearly to lead
to the result, Parson v. McGovern is
helpful for its elucidation of the prin-
ciples applicable when a beneficiary
seeks court intervention in an interim
distribution.
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 19
BENEFICIARY DESIGNATIONS IN QUEBEC
JENNIFER LEACH
Associate, Sweibel Novek LLP
It is well settled that Quebec law does
not recognize beneficiary designa-
tions in registered retirement savings
plans (RRSPs), unless the RRSP is a life
insurance product, such as a deferred
life annuity (see articles 2379(2) and
2393(2) of the Civil Code of Québec).
When such a designation is properly
drafted in the contract, article 2455
provides that the proceeds of life insur-
ance payable to the designated benefi-
ciary do not form part of the succession
of the insured. Beneficiary designa-
tions made in RRSPs and other invest-
ment vehicles that do not resemble life
insurance annuities are ineffective. The
proceeds of such investments auto-
matically form part of the deceased’s
estate in Quebec, to be distributed
according to the terms of the will or
the laws of intestacy.
A recent judgment of the Quebec
Court of Appeal, Boudreault v. Lafor-
est, 2015 QCCA 162, confirms both
the Quebec civil law and the income
tax implications of effective beneficiary
designations in Quebec. The case con-
cerns the appeal by the liquidator of
the estate of Mr. Jean Boudreault (the
testator) of a judgment by the Quebec
Superior Court (2013 QCCS 4575). The
testator died in 2009, leaving a will
in which he named his common-law
spouse, Ms. Bertrade Laforest, as liqui-
dator of his estate. Under the will, Ms.
Laforest received the house in which
the couple had resided, the testator’s
RRSP, and the proceeds from the sale
of the testator’s client list. Shortly after
the testator’s death, his daughter, Ms.
Johanne Boudreault, learned that she
had been designated by the testator as
a beneficiary of another RRSP, this one
held in the form of a deferred annuity
contract with Industrial Alliance and
valued at $227,306.51.
The value of the annuity was prop-
erly included in the testator’s 2009 tax
return, triggering tax payable to the
Canada Revenue Agency and Revenu
Québec. However, when the taxes
came due, the estate of the testator
had insufficient liquidity to pay the
debt. Ms. Boudreault offered to pay the
taxes, in the amount of $121,270.95,
and other amounts owing by the
estate, on the understanding that she
would be reimbursed once the family
home had been sold. No agreement
to this effect was signed. When Ms.
Boudreault was not reimbursed, she
brought a claim against Ms. Laforest
personally and as liquidator of her
father’s estate.
At trial, Labrie J found in favour of
Ms. Boudreault, ordering Ms. Laforest
to pay her $134,985.29 plus interest
in respect of the income taxes paid
on behalf of the estate and other inci-
dental expenses paid for Ms. Laforest
by Ms. Boudreault. This decision was
upheld by the Quebec Court of Appeal.
While the testator’s will provided
for the transfer of his RRSPs to Ms.
Laforest, the annuity contained a valid
beneficiary designation; therefore,
pursuant to articles 2450 and 2455 of
the Civil Code, it did not form part of the
testator’s estate but passed directly to
Ms. Boudreault. However, for income
tax purposes, because the designated
beneficiary was neither the testator’s
spouse nor his financially dependent
child or grandchild, the testator was
deemed to have received, immediately
before his death, an amount equal to
the fair market value of the annuity
(under subsection 146(8.8) of the
Income Tax Act and section 915.2 of
the Loi sur les impôts).
Because, for civil law purposes,
the annuity did not form part of the
testator’s estate, Ms. Boudreault could
receive the annuity without assum-
ing any of the tax and other debts of
the estate. Moreover, for income tax
purposes, Ms. Boudreault could not
be held jointly, severally, or solidarily
liable for the taxes owing by the estate
in respect of the annuity (under sub-
section 160.2(1) of the Income Tax Act
and section 1034.1(1) of the Loi sur les
impôts).
The testator had worked as a repre-
sentative of Industrial Alliance for 49
years and knew the civil and tax law
implications of designating a benefi-
ciary of the annuity. Because the tes-
tator had expressed no intention that
his daughter pay the income taxes
associated with the annuity, the Court
of Appeal confirmed that she should
receive the annuity free of income
tax. Ms. Boudreault should therefore
be reimbursed for the taxes and other
expenses that she paid on behalf of
the estate, together with interest that
had accumulated in respect of this
debt.
Beneficiary designations made in RRSPs and other investment vehicles that do not resemble
life insurance annuities are ineffective.
20 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
“I DESPISE MY BROTHER – REMOVE HIM!”: SIBLING STRIFE IN APPLICATIONS TO REMOVE ATTORNEYS AND PERSONAL REPRESENTATIVES
SARAH DYKEMA, TEP
Associate, McInnes Cooper; Member,
STEP Atlantic
In two recent decisions, the Nova
Scotia Supreme Court examined
the tests applied by courts when an
application is made to remove a per-
sonal representative or an attorney
for cause. Both cases involved sibling
conflict, which is not a reason, in and
of itself, to remove an individual from
his or her fiduciary position. In Willisko
v. Pottie Estate, 2014 NSSC 389, the
court removed the personal repre-
sentative, noting sibling strife as one
factor among many, while in Vernon v.
Sutcliffe, 2014 NSSC 376, brother co-
attorneys were not removed for cause,
despite their sisters’ low opinion of
their actions while acting on behalf of
their mother.
In Willisko v. Pottie Estate, an appli-
cation was brought four years after
the testator’s death by a sister of the
personal representative to remove
her pursuant to section 61 of the Pro-
bate Act, which includes the authority
to remove a personal representative
who is “neglecting to administer … the
estate.” Mr. Pottie had died in August,
2010, naming his daughter Valerie
Murphy as his personal representative.
In his will, he made several bequests,
with the residue to be shared equally
among his nine children. Ms. Murphy,
who acted as his attorney before his
death, had assisted him with his bank-
ing, using accounts that she held
jointly with him.
The court noted that Ms. Murphy
had completed “some of the required
tasks” in her role as personal represen-
tative, but, as of June 2013, she had still
not filed for probate. At that time, her
sister Ms. Willisko brought an applica-
tion to produce a will for grant of pro-
bate. Ms. Murphy appeared but did
not produce the will. However, when
advised that if she failed to produce the
will, an application would be brought
to remove her as personal representa-
tive, she found the will later the same
day.
Despite producing the will, Ms.
Murphy still did not apply for pro-
bate, and took the position that the
bank accounts that were jointly held
with her father at the time of his death
were hers alone, not estate assets to be
divided among the siblings. She main-
tained that she would never apply for
probate as long as she was acting as
personal representative, that she was
not in a position to look after the best
interests of her siblings, and that doing
so was not her responsibility.
In reviewing the relevant consid-
erations in removing a personal rep-
resentative, the court noted that a
personal representative should not
be removed lightly or without good
reason based on the evidence, and that
interfering with a testator’s wishes is
a “delicate exercise.” The court found
that in addition to the duties and
responsibilities set out in the Probate
Act, a personal representative has
other duties, which include acting dili-
gently, not delaying the settlement of
an estate, and being constantly ready
to account. While the court stated
that the hostility between Ms. Murphy
and her beneficiary siblings did not
in and of itself constitute grounds for
removal, a conflict of interest between
Ms. Murphy and her siblings did.
On the basis of all the evidence,
the court removed Ms. Murphy from
her role as personal representative.
In addition to the discord between
Ms Murphy and her siblings, the
court pointed to her delay in pro-
ducing the will, her failure to apply
for probate, the conflict of interest
relating to the bank accounts, and
her refusal to act in the best interests
of the beneficiaries.
In Vernon v. Sutcliffe, Jean Sutcliffe’s
two daughters brought an applica-
tion pursuant to section 5(1)(c) of
the Powers of Attorney Act to have
their two brothers removed from their
role as attorneys, and to be named as
attorneys in their place. The daughters
claimed that their brothers could not
be trusted with the power they derived
from the power of attorney (POA) and
that they did not act in their mother’s
best interests. As in Willisko, the ani-
mosity between the siblings ran high,
but in contrast to Willisko, it did not
constitute cause for removal. Since
beginning to act as attorneys for their
mother, the sons had liquidated invest-
ments, sold her home, and placed her
in a care facility. The daughters took
issue with each action.
The court confirmed that the legal
test in (Re) Isnor Estate, [2001] NSJ No.
659 (SC), for the removal of attorneys
appointed under a POA is not “what is
in the best interests of Jean Sutcliffe”;
rather, it is a narrower test. To continue
to act as an attorney, it is not neces-
sary to provide the best available care
or the most financially and medically
prudent care; instead, it is necessary to
undertake care in good faith and in the
donor’s interests. In this case, the court
found that the brothers should not be
removed for cause because they acted
in good faith in an attempt to secure
the best interests of their mother,
despite the fact that their sisters had a
very different opinion about what her
best interests might be. n
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 21
Recently the national awards
committee of STEP Canada,
Chaired by Bill Fowlis, exam-
ined the criteria and the frequency of
its existing awards and identified addi-
tional areas of excellence deserving of
formal recognition. A summary of all
current national and regional awards
follow, including winning criteria and
recipients.
STEP Canada – Volunteer of the YearThe Michael Cadesky Volunteer of the
Year Award is presented annually at
the STEP Canada National Confer-
ence. It is the national Chair’s honour
to select the Canadian member of STEP
who best demonstrates magnanimous
voluntary contribution.
2005 – Larry Frostiak
2006 – Kim C.G. Moody
2007 – Grace Chow
2008 – Margaret O’Sullivan
2009 – Kathleen Cunningham
2010 – Ed Northwood
2011 – Paul LeBreux
2012 – Nancy Golding
2013 – Ian Worland
2014 – Pamela Cross
2015 – to be announced June 19th
If the recipient is male, the gift is a set
of custom-made cufflinks; if female,
the gift is a custom-made broach. Both
are designed and crafted to elegantly
represent the STEP logo by a Toronto
area jewellery designer.
STEP Canada - Best National Conference Presentation First presented in 2012 to honor the
speaker(s) who delivered the best con-
ference presentation at the previous
year’s conference, the voting process
is incorporated into the post-confer-
ence survey that is sent electronically
to everyone in attendance. The awards
committee recently restructured this
award so that for the 2015 conference
there will be two categories, one for
plenary presentations and one for con-
current sessions.
2011 Conference: Trends in Tax
Litigation by Al Meghji
2012 Conference: STEP/CRA Round
Table by Paul LeBreux, Kim GC
Moody, Michael Cadesky, Steve
Fron, and Phil Kohnen
2013 Conference: Capacity and
Our Clients - Comments from the
Trenches by Corina Weigl, Stephen
Alsace, Kathleen Cunningham,
and Kathrine Smirle
2014 Conference: Practitioners’
Update: Trust and Estate Law by
Tom Grozinger
The prize is a copy of, Lend Me Your Ears:
Great Speeches in History by William Safire.
STEP Canada - Best Article Published in STEP InsideStarting with Volume 13 published in
the 2014 calendar year, this award will
be presented annually to the author
of the best writing published by STEP
Canada in its national newsletter, STEP
Inside.
The Editorial Committee of STEP
Inside nominates three articles from
the immediate past volume of issues
and provides them to the Awards
Committee each January. Selected
articles will be assessed for their origi-
nal thought and significant relevance
and value and benefit to the scope of
STEP Canada members. The winning
author and his/her article title, as
determined by the Awards Committee,
will be announced in the May issue of
STEP Inside and acknowledged at the
awards luncheon that takes place at
the national conference each June.
The first recipient of this distinc-
tion is Mark Handleman for “Whose
Mistake?”, October 2014, Volume 13,
Issue 3.
The winner is presented with a
beautiful fountain pen to inspire future
writing for STEP.
STEP Canada - Branch and Chapter Volunteer of the YearStarting in 2015 this Award is pre-
sented annually at the Annual Branch
Meeting of each local STEP Branch (or
Chapter to the local member who has
made extraordinary voluntary contri-
butions to STEP over time. In addition,
award winners will be announced at
the STEP Canada National Conference.
Selection for this award will be made
by the local Branch or Chapter Chair by
March in each year.
Atlantic: Andrée Godbout
Montreal: Roanne Bratz
Ottawa: Laurie Lord
Toronto: Ted Polci
Winnipeg: Larry Scarth
STEP Canada: Awards of Excellence and Outstanding Volunteer Contribution
22 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
Edmonton: Kathryn Charr
Calgary: Nadja Ibrahim
Vancouver: Alison Oxtoby
London & Southwestern Ontario:
Chris Delaney
Okanagan: Alison Oxtoby
Saskatoon: first recipient will be in 2016
The award is a custom engraved
trophy.
STEP Canada - Education AwardsDIPLOMA PROGRAM
Each year four awards are presented to
the students who achieve the highest
mark on their final exams, one for each
of the four STEP Canada courses.
Law of Trusts
2010: Natalie Malech
2011: Sarah Dykema
2012: Katy Basi
2013: Justin Hoffman
2014: Beckey Turcotte
Taxation of Trusts & Estates
2010: Ngoc Day
2011: Godfrey Yu
2012: Jody Hatto
2013: Katy Basi
2014: Justin Hoffman
Wills, Trust and Estate Administration
2011: Janice Elmquist
2012: Michelle Desrosiers
2013: Claudia Sgro
2014: Kenneth Keung
Trust and Estate Planning
2011: Jason Rideout
2012: Natalie Malech
2013: Paul van Galder
2014: Kenneth Keung
THE GERALD W. OWEN BOOK
PRIZE
This award is presented annually at
the STEP National Conference to the
STEP student who achieves the highest
overall combined mark of all four STEP
Canada Diploma Courses. The prize
was established in 2011 by Gerald’s
friends and colleagues at Scotiatrust,
where he spent 16 years of a long and
distinguished career – one spanning
two continents and 43 years in total –
in the Estate and Trust Services indus-
try. The prize is a copy of Donovan
Waters’ Law of Trusts in Canada.
2011: Nathan Bender
2012: Natalie Malech
2013: Rishma Jessa
2014: Katy Basi
QUALIFIED PRACTITIONER ESSAY
This award is presented annually to the
Qualified Practitioner Program student
who achieves the highest mark on an
essay.
2012: Jennifer Tokarek
2013: Jagruti Gandhi
2014: Robert Miedema
CERTIFICATE IN ESTATE AND
TRUST ADMINISTRATION
To be first presented in 2017 and then
annually after that, this award will go to
the student who achieves the highest
average mark on the exams for CETA
courses 2, 3, and 4.
STEP Canada - Law School Awards ProgramFirst awarded for performance in the
2014-15 academic year, STEP Canada
provides a $1,000 scholarship to the
student with the highest academic
achievement in a selected industry-
related course at the following universi-
ties: the University of British Columbia;
Osgoode Hall Law School, York Univer-
sity; Dalhousie University; Western Uni-
versity; and the University of Alberta.
Results from some universities are
pending at the time of writing. n
STEP Inside • MAY 2015 • VOLUME 14 NO. 2 23
IAN WORLAND
As I write this, my last mes-
sage as chair, on a mild and
sunny April morning in Van-
couver, I can’t help thinking
what a privilege it has been
to serve as the chair of STEP
Canada for the past two years.
During this busy time, our organization has enjoyed many
successes and developments. Although there is much to say
on this subject, space permits me to mention only a few of
the highlights here.
On June 18 and 19, we will be holding our 17th national
conference. I hope to see and meet many of you there. Our
conference attracts approximately 30 percent of our mem-
bership, a very high proportion in comparison with the
attendance statistics of other professional associations.
The Program Committee released a brilliant final program
in early March, and it has attracted a rush of registrations.
There are good reasons why our conference is the largest
STEP event in the world!
The Education Committee will be inviting all students
to attend a special student session at the national confer-
ence, either in person or via webcast on Thursday afternoon.
The panel, made up of senior practitioners and an award-
winning student, will address the following subject: “You’ve
Just Been Named Executor: Now What, STEP by STEP?” The
presentation will highlight the content of all four diploma
courses and its application to estate administration, start
to finish. Immediately after this session, students will be
invited to attend the student reception, where our top-
scoring students in each course will be presented with their
achievement awards. The award recipients are featured in
this issue of STEP Inside. My congratulations to each of them.
Our certificate in estate and trust administration (CETA)
program, which I have mentioned in previous reports,
is attracting new registrants all the time. This program is
delivered online and currently has 57 students, who come to
it from various trust companies, law firms, and accounting
firms. In due course, we will be adding Civil Code of Québec
content and translating the entire program into French to
provide greater benefits to members and potential mem-
bers in Quebec. If you know people who might be inter-
ested, either in a stand-alone certification or in a path to
the diploma program, please encourage them to consider
enrolling.
The Strategic Planning Committee has begun to work
with the Member Services Committee, the Education Com-
mittee, and the two technical committees to ensure that the
priorities identified by our members in the 2021 consulta-
tion process are addressed. These committees are currently
examining ways to develop endorsements and partnership
programs with other organizations; ensure that our public
policy directives are current; collaborate with the global
secretariat; and expand our member educational offer-
ings, including translating our existing programs into both
French and English.
The Trust and Estate Technical Committee, led by Kath-
leen Cunningham, continues to encourage provincial
branches to review the Uniform Law Conference of Canada’s
Uniform Trustee Act and consider how it might be promoted
in each jurisdiction. The committee recently circulated
a survey on banking protocol with respect to trusts and
estates to all members. We will be reviewing the results of
this survey at our June board meeting and considering how
we can use them to improve the banking experience for our
members and their clients.
The Tax Technical Committee is preparing a response to
a request from the Ontario Ministry of Finance (the minis-
try responsible for the Estate Administration Tax Act, 1998)
for a submission from STEP Canada on draft legislation to
ensure that stakeholders are aware of their options when
submitting an estate information return. On March 20, the
Tax Technical Committee shared STEP’s submission with all
members through an eNews communication.
STEP Canada recently presented three $1,000 schol-
arships – one to the student with the highest academic
achievement in a selected industry-related course at three
universities: the University of British Columbia; Osgoode
Hall Law School, York University; and Dalhousie University.
After the spring semester, the students with the highest
academic achievement at Western University and the Uni-
versity of Alberta will be similarly acknowledged. Thanks to
the National Awards Committee for establishing these five
awards and thereby introducing STEP to many future TEPs.
24 STEP Inside • MAY 2015 • VOLUME 14 NO. 2
Last year, our national conference topped 600 registrants
for the first time ever. During the past two years, our mem-
bership has grown more than 10 percent, to an all-time high
of over 2,170 trust and estate practitioners (TEPs) and stu-
dents studying for their TEP designation. STEP Canada now
boasts eight regional branches, three regional chapters, and
a national office in Toronto. This continued growth confirms
that the education, events, networking opportunities, and
tireless efforts of our committees are relevant and valuable
for you, our members.
It is you who make our organization the success that it
is. During the past two years, I have enjoyed meeting and
exchanging ideas with a great many of you, both at home in
Vancouver and on visits to Calgary, Winnipeg, Saskatoon,
Toronto, Ottawa, and Halifax for board meetings and branch
and chapter events. I have also had the pleasure of meet-
ing many of you at our 15th and 16th national conferences
in Toronto, the leaders’ forum in London in 2013, and the
inaugural STEP Worldwide Global Congress in Miami last
November. I hope to continue to have opportunities such
as these after my term as chair is over.
In concluding, I would like to acknowledge the extraor-
dinary dedication and support that I have received from
others over the past two years. At my side throughout my
term – and always offering sound advice in the manage-
ment of STEP – have been the past chairs; my colleagues
at STEP Worldwide; and our national board, especially the
other members of the STEP Canada Executive Committee:
Deputy Chairs Tim Grieve and Ruth March, Treasurer Chris
Ireland, and Secretary Pamela Cross.
The eight regional branches would not have been able
to operate without the dedicated leadership of the branch
chairs (also members of our national board) and their execu-
tives. Similarly, our three new chapters would not have
been launched without the vision and efforts of the chapter
chairs: Michael Bondy, Geoffrey White, and Beaty Baubier.
Finally, the dedicated team at the STEP Canada national
office, led by Janis Armstrong and Michael Dodick, have
supported and strengthened the work of each of us. It is
no coincidence that STEP Canada has taken so many leaps
forward since Michael and Janis took the helm, and we all
owe them a special thanks.
There are many others who are not mentioned here,
each of whom is underserving of the oversight, for which I
apologize. The extraordinary commitment and involvement
of our staff and volunteers from across Canada have made
the role of national chair an easy and rewarding one, and
have enhanced the significance of STEP to its members in
Canada and abroad. It gives me great pleasure to know that
my successor, who will take the reins on June 17, will be
leading a strong and vibrant organization supported by so
many generous and dedicated volunteers and future lead-
ers. We can all be very proud of the work that we have done,
and will continue to do, to enhance the professional experi-
ences not only of our own members but also of the trust and
estate industry as a whole. n
Named best 2014 STEP Inside article:
MARK HANDLEMAN for “Whose Mistake?” October 2014, Volume 13, Issue 3
Starting in 2014, to be awarded annually to the author
of the best writing published by STEP Canada
in its national newsletter, STEP Inside.
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