What is a Trust?The word “trust” has not been defined in the Income Tax Act (ITA), nor is there any definitive guideline to establish whether or not a trust exists. The concept of trust is derived from the English common law and has been defined in various ways by different authors. Generally, a trust is an equitable obligation binding a person (who is called a trustee) to deal with property over which he or she has control (the trust property) for the benefit of persons, who are called the beneficiaries (also known as “cestuis que trust”). The creator of the trust is usually known as the settlor. Unlike a corporation, a trust is not a legal entity, it is a relationship between the trustees and the beneficiaries. A trust is the separation of legal and beneficial ownership of property. Thus an individual could act in more than one capacity, that is, as a settlor, a trustee and/or a beneficiary of the trust.

Spousal consentWhen selling a matrimonial home like a principal residence or cottage, it is always necessary to have the non-title holding spouse consent to the sale.  For the purposes of real property, the term “spouse”, is defined as a married spouse and matrimonial home is as defined in the Ontario Family Law Act (R.S.O. 1990), therefore the term spouse does not contemplate common-law spouses in this situation.  The provisions in the Agreement serves as a warranty, the Seller is warranting that the property is being sold in accordance to the Family Law Act by ensuring that both spouses are consenting to the disposition of a matrimonial home.Urea Formaldehyde Foam Insulation Warranty (“UFFI”)

TAXATION AT DEATH AND PERSONAL TAX PLANNING Extension of Time for Filing ReturnsAlong with the extended deadline for the filing of the basic terminal return, there is a special deadline with respect to one of the elective T1 returns. This terminal return is needed when a qualifying spousal trust is created. There is no late filing penalty until 18 months after death (interest runs from normal deadlines) (ITA, s. 70(7)(a)). The personal representative is given time to determine whether or not, based on the notice of assessment, any additional tax saving could be introduced by identifying rights and things and declaring them as part of a separate return. Income Splitting and Non Arm’s Length DispositionsThough there are statutorily sanctioned breaks, much of estate planning can be regarded as an ongoing battle of wits between estate planners and those drafting tax legislation. There are two techniques, which the former engage in and the latter try to prevent: income splitting and

Choosing a closing date The closing date can be whenever the parties agree upon, however selecting a closing date on a weekend or statutory holiday will prevent your transaction from being registered because the land registry offices and the electronic registration system are unavailable.  If parties so choose to close on those days, alternative arrangements such as closing in escrow can be made with caution.  Other days such as the last day of the month or Fridays are typically very busy for real estate transactions for various reasons such as having the weekend to move in and concluding payment cycles.  Therefore, if possible, avoiding those days may be prudent especially if someone is planning on selling and buying on the same day.

Fixtures and chattelsThe specification of chattels versus fixtures happens to be one of the more contentious issues arising in a real estate transaction.  To recap past articles, generally chattels are generally easily movable property such as household appliances and furniture and fixtures are generally immovable property such as a well in the backyard or a kitchen island.  While the standard form Ontario Real Estate Association  (OREA Agreement) has made the chattels and fixtures issue simpler to specify, buyers and sellers should always take care in specifying exactly what stays and what goes.  The OREA Agreement states “Fixtures Excluded” and “Chattels Included”.  Should it be a fixture, it has to stay unless it is specifically excluded; conversely a chattel would not be included unless specified in the Agreement. The rule to follow is “when in doubt spell it out.” Extensive details in the chattel section (i.e., model, colour, serial no.) are recommended strongly because believe

The depositA deposit on a real estate transaction is regarded as consideration by the buyer to the seller to sell their property at a future date.  If a deposit is not given upon acceptance or with delivery of an accepted offer, the agreement will not be binding.  Therefore it is imperative that a buyer delivers the deposit in order to secure the transaction.  The amount of deposit is generally negotiated between the buyer and seller.  The seller will try to get the largest deposit possible to deter the buyer from default and conversely the buyer will want to provide a smaller one in case they default.  The rule of thumb on a typical transaction is  five percent (5%) up front however often buyers can negotiate deposits to be paid in installments or upon waiving certain conditions.The Ontario Real Estate Association standard form agreement of purchase and sale (OREA Agreement) gives two options regarding the timing of deposits. While the first is to have the deposit presented with the offer, the second is to have the deposit paid upon acceptance.

Forged cheques present a real threat to the ongoing viability of any business. As a small business owner you trust your employees to oversee marketing, sales, staffing and accounting. But what happens when you are not diligent in reviewing cancelled cheques, and worse your employee has forged cheques for the past several months. The first thing you should look to is the “verification of account” clause in that agreement you signed with the bank. In most cases, the verification of account clause requires you to report any errors, irregularities or omissions to your bank within thirty (30) days after the receipt of your account statement. Such was the case in a recent Court of Appeal decision, S.N.S. Industrial Products Limited v. Bank of Montreal.In S.N.S, the court of appeal considered a situation where forged cheques were drawn on its business account with the Bank of Montreal. S.N.S. ultimately sued the Bank of Montreal for all losses arising from the forged cheques and in doing so, relied on section 48(1) of the Bills

The property that is the subject of the Agreement of Purchase and Sale must be identified in the Agreement. The municipal address is the first component of the exercise. Then, there is the space to identify the side of the street upon which the property is located, a provision especially for instances, where the property has a municipal address on one street but actually fronts on another, such as a corner property. The address portion provides space to identify the municipality and region, county, or district (if applicable), where the property is located. Next, the dimensions of the property are given as “more or less”. There have been attempts to define the parameters of “more or less”, because a minor discrepancy in many transactions is encompassed by “more or less”. As property becomes more expensive, the concept of “more or less” becomes less forgiving. In fact, this issue becomes particularly important in areas where, for example, a minimum frontage is imperative so as to get a building permit. Referring to and attaching a survey identifying the property and its dimensions is one method for attaining accuracy. The other is inspection and taking measurements, despite its shortcomings, like inability to check precisely the wall thickness.

A contract by nature, the Agreement of Purchase and Sale (“Agreement”) brings with it all the obligations, responsibilities and procedures of contract law. A binding contract is composed of the elements of offer; acceptance; exchange of consideration; and the meeting of the minds. In the Province of Ontario, every real estate board has adopted the Ontario Real Estate Association (OREA) form of Agreement. Though this standard form of Agreement contains things common to many real estate transactions, a lawyer has to be competent in drafting additional clauses so as to accommodate local requirements as well as the requirements of the party the lawyer is representing.The partiesBuyerIf, prior to closing, the buyer decides to take title with another party (for example, a spouse deciding to put the property in both names), an amendment to the Agreement of Purchase and Sale is not necessary. It should be sufficient to give a written direction to the sellers in the matter.

Administration and probateWhen the estate of a member of the First Nation falls within the jurisdiction of the Indian Act, the procedures for administration and probate are found within ss. 42 to 50 of the Act along with the Indian Estates Regulations. It is essential to note that though the administration of an Indian’s estate falls within the jurisdiction of the Minister of Indian Affairs and Northern Development, the Department considers actual administration by departmental employees as a last resort. The Department’s view is that estate administration is a private family matter and should be done by the family, without assistance from the Department. The Department will intervene only when things are not as they should be.AppealsThe Minister’s powers in connection with the administration of estates are not unlimited. These are subject to review by the Federal Court under s. 47 of the Indian Act. The standard of review is that of correctness in approach to and resolution of matters.