During the June 10, 2016 Toronto STEP Conference Roundtable, the CRA was asked to provide its views on paragraph 8 of IT-3054, which states:
- Once a trust qualifies as a spouse trust under the terms of subsection 70(6), it remains a spouse trust and is subject to the provisions affecting such trusts (for example, paragraph 104(4)(a)) even if its terms are varied by agreement, legal action or breach of trust. However, these events may cause other provisions of the Act to apply, such as paragraph 104(6)(b) and subsections 106(2) and 107(4).
They confirmed that a spousal trust that meets the requirements of subsection 70(6) will qualify not only for a tax-deferred rollover of property to the trust under subsection 70(6) but will also be subject to a deemed disposition on the spouse’s death pursuant to paragraph 104(4)(a) (potentially delaying the application of the 21 year deemed disposition rule). This is the case even if the trust’s terms are varied (for example by agreement, legal action or breach), subsequent to the establishment of the trust but prior to the death of the spouse or the 21st anniversary of the trust. The key time for assessing whether a spousal trust meets the requirements of subsection 70(6) and 104(4)(a) is at the time of the trust’s creation.
And now for something completely different. At a recent presentation I received a question from a social worker who is frequently asked to assist clients who are close to death with preparing Wills. The clients are often too weak to write themselves. She informed me that it was not uncommon for workers to be asked to prepare and sign a holograph Will on the client’s behalf.
Unfortunately, the provisions of the Succession Law Reform Act (the “SLRA”) state that a holograph Will must be entirely in the testator’s own handwriting:
6. A testator may make a valid will wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or signature of a witness. R.S.O. 1990, c. S.26, s. 6.
As a result, these deathbed Wills would not be valid. If the testator is too ill to write his or her wishes, care should be taken to ensure that the requirements for the execution of formal Wills set out in the SLRA are satisfied. Whenever possible, it is good idea to encourage the client to involve a lawyer – a deathbed Will prepared without the guidance of a lawyer may very likely cause more problems for the client’s estate than it solves.