CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
Edward Island and the Yukon, legislation has been enacted that expressly gives fiduciaries the right to access and administer digital assets. There is also leg - islation in Alberta that authorises executors to admin -
person, and its use must be related to a cause that is beneficial to society. 3.2 Recognition of Trusts To establish a valid trust in Canada, “three certainties” must be present: • the certainty of intention; • the certainty of subject matter; and • the certainty of objects. The settlor must have the intention of divesting them - selves of the trust property, and must also intend it to be held in trust for the beneficiaries. Trust arrangements where the settlor is the sole trus - tee, retains significant discretion with regard to the management of the trust property and/or appoints a trustee who will be compliant in following the settlor’s instructions should be treated with caution so as not to give rise to a “sham trust”. The Income Tax Act does not permit taxpayers to avoid income tax conse - quences through the use of trusts in situations where the settlor retains a right of reversion in respect of the trust property and/or the right to direct the distribution of the trust property. 3.3 Tax Considerations: Fiduciary or Beneficiary Designation Trusts are deemed to be individuals under Canadi - an tax legislation. Accordingly, if a trust is resident in Canada or deemed to be resident in Canada, it is required to pay tax on its worldwide income. An otherwise non-resident trust will be deemed resident in Canada if there is a “resident contributor” to the trust or a “resident beneficiary” under the trust. The involvement of a Canadian as a beneficiary or trustee of a trust resident outside the country can expose that trust, and its income beneficiaries, to significant tax liabilities. 3.4 Exercising Control Over Irrevocable Planning Vehicles Typically, when dealing with irrevocable trusts, the trust property is incapable of reverting to the sett - lor’s possession and the trust cannot be amended or revoked after it is settled. However, the trust docu - ment may permit the modification of the trust by the
ister “online accounts”. Digital Estate Planning
Where provincial legislation fails to provide clear authority for estate trustees to administer digital assets, the estate trustee may nevertheless have authority to manage digital assets if this power is included in the deceased’s will or codicil. Some digital service providers also permit limited digi - tal estate planning. By way of example, Apple now permits iPhone users to designate “legacy contacts” who receive access to the user’s Apple account after the user dies, including all of the user’s data. Face - book and Google users may also designate legacy contacts. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Various types of trusts are employed in Canada as part of an estate and/or tax plan. The types of trusts that appear most frequently, both during the settlor’s lifetime and in the form of testamentary trusts, include: • family trusts, for which one or multiple beneficiaries are family members of the settlor who are entitled to distributions of capital and/or income; • Henson Trusts, which are described in further detail in 8.1 Special Planning Mechanisms ; • insurance trusts, which are most commonly tes - tamentary trusts used to assist in succession and to limit income tax and probate fees payable on death; and • spousal trusts, which benefit married or common- law spouses and can be used to protect the inter - ests of surviving spouses. Foundations are more common within civil-law juris - dictions in order to promote philanthropic goals. In Quebec, a foundation can exist as a trust or as a legal
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