CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
Property laws governing digital assets vary by prov - ince. In Ontario and British Columbia, executors are not expressly authorised by statute to administer and distribute digital estate assets, making it unclear whether they have the authority to administer digital assets without a court order. Other provinces have enacted legislation govern - ing access to and administration of digital assets. In Saskatchewan, New Brunswick, Prince Edward Island and the Yukon, legislation expressly authorises fiduci - aries to access and administer digital assets. Alberta also has legislation authorising executors to adminis - If provincial legislation does not expressly author - ise an executor to administer digital assets, a digital service provider may refuse to provide access to the deceased’s account or digital assets after probate has been obtained. In that case, the executor can usually obtain access through a court order. An executor may also be able to manage digital assets if the deceased’s will or codicil expressly grants that authority. Some digital service providers also permit limited digital estate planning. For example, Apple now per - mits iPhone users to designate “legacy contacts” who receive access to the user’s Apple account after death, including data. Facebook and Google users may also designate legacy contacts. ter “online accounts”. Digital Estate Planning 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 estate and tax planning. The types of trusts that appear most frequently, both during the settlor’s lifetime and as testamentary trusts, include: • family trusts, the beneficiaries of which are one or more family members 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 typically testamentary trusts used to assist in succession while reducing income tax and probate fees payable on death; • alter ego trusts, where settlors aged 65 and older may transfer assets into the trust on a tax-deferred basis and remain the sole beneficiary during their lifetime; and • spousal trusts, which benefit married or common- law spouses and can be used to protect the inter - ests of surviving spouses. Using foundations to promote philanthropic goals is more common in civil-law jurisdictions. In Quebec, a foundation can exist as a trust or as a legal person, and its use must be related to a cause that is benefi - cial to society. When trusts are used for estate planning, they avoid probate tax and preserve the settlor’s privacy. How - ever, enhanced trust reporting requirements have increased the administrative burden of using trusts. Other limitations include that: • some trusts are subject to statutory eligibility requirements; • under the attribution rules in the Income Tax Act, trust income and capital gains may be attributed to the transferor; and • trusts are subject to the 21-year deemed disposi - tion rule. 3.2 Recognition of Trusts To establish a valid express 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 intend to divest themselves of the trust property, and intend that it be held in trust for the beneficiaries. Title to the trust property must also be vested in the trustee, and all formalities required to create the trust must be satisfied. Trust arrangements where the settlor is the sole trus - tee, retains significant discretion over the manage - ment of the trust property and/or appoints a trustee
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