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

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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.