CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
2.5 Transfer of Property Property may be transferred outright to an individual or a trust, or by adding another person as a joint ten - ant or tenant in common. Joint ownership is a com - mon mechanism for transferring property to the next generation on a tax-deferred basis. Unless the benefi - ciary of the property by right of survivorship makes the joint property their primary residence, the capital gain on the property will eventually be taxable at the time of its sale or deemed disposition at fair market value, which may occur at the time of death of the other joint tenant. Depending on the Canadian jurisdiction in which the property is located, land transfer taxes may also apply upon a transfer of title. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms In addition to gifts, assets may be transferred through joint tenancy and testamentary documents, trusts and corporations. Trusts are being used with increasing frequency throughout Canada, as they offer a number of advantages when estate planning, from deferring taxes to sheltering assets from creditors. However, when trusts are utilised in estate planning, it is impor - tant to remember that, if not properly constituted, the trust may be deemed void and the intended advan- tages of the trust may be lost. 2.7 Transfer of Assets: Digital Assets For the purposes of succession, digital assets are treated as personal property throughout Canada. Digital assets may comprise records that are creat - ed, transmitted or stored in digital or other intangible forms by electronic means, such as emails, contact information and written documents. Certain digital assets also carry significant monetary value (eg, cryp - tocurrencies). The applicable property laws vary by province. In Ontario and British Columbia, executors are not expressly authorised to administer and distribute digital estate assets, making it unclear whether they have the authority to administer digital assets without a court order. The legislation in some other provinces directly addresses access to and the administration of digi - tal assets. In Saskatchewan, New Brunswick, Prince
relief from an estate if they qualify as a dependant of the deceased. An adult child may also inherit the parent’s estate by successfully challenging the par - ent’s will. 2.4 Marital Property Prenuptial and Postnuptial Agreements Contracts can be used by married spouses and com - mon-law partners in Canada to manage spousal dis - putes that may arise in the future. However, such con - tracts may not prevent claims being brought against the estate of a surviving spouse. If both parties to a marriage contract do not obtain independent legal advice when the agreement is exe - cuted, it may not be enforceable. Marital Property In all Canadian jurisdictions, married spouses have enforceable rights in respect of family property, includ - ing assets accumulated during the spousal relation - ship, subject to certain exemptions. On separation, married spouses have the right to an equalisation of net family properties, being the equivalent of one half of the marital property. The matrimonial home typically constitutes an asset of the marriage, even if it was owned by one spouse alone prior to marriage. In most provinces, surviving spouses have the option of inheriting under the deceased’s last will, or electing to receive an equalisation payment. An equalisation payment will be particularly helpful if the deceased left the spouse inadequate financial support. In several jurisdictions (Ontario, British Columbia and the Yukon), bequests left to the deceased’s spouse may be void if the parties were separated at the time of death. A bequest will also be revoked in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba and the Yukon if the deceased and their spouse were divorced. As noted in 1.2 Exemptions , the transfer of capital property from the deceased to a married spouse will not trigger capital gains tax.
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