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Should you have trusts in your estate planning?
Disclaimer: This article on testamentary trusts is intended for the purposes of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Estate planning is an important part of financial planning that involves making arrangements for the management and distribution of your assets after you pass away.
A trust is a legal arrangement that allows you to transfer ownership of your assets to a trustee who manages and distributes them according to your wishes. Trusts can be a useful tool for estate planning, providing several benefits that can help you achieve your goals. (For more information about the types of trusts, check out this article)
In this article, we will outline three reasons why you might consider adding trusts to your estate plan.
Why Consider Testamentary Trusts: When You Want to Keep the Details of Your Estate Private
One of the main advantages of using a trust is to help you maintain privacy. Unlike a will, which becomes a public document when it is filed with the court, a trust can be kept private.
When you transfer ownership of your assets to a trust, those assets are no longer considered part of your estate and are, therefore, not subject to probate. This means that the details of your estate, including the nature and value of your assets and the identities of your beneficiaries, remain confidential.
Privacy can be especially important if you have complex or sensitive family dynamics. For example, you may not be gifting to your children equally. Whatever the reason, you may want to keep the details of your estate plan private to avoid conflicts or misunderstandings. A trust can help you achieve this goal by keeping your wishes confidential.
This is also true if you want the size of your estate to be kept private. By transferring ownership of your assets to a trust, you can avoid the public process of probate, allowing you to keep the size and details of your estate private.
Why Consider Testamentary Trusts: To Care for Children or Dependent Adults
Another reason why you might consider adding trusts to your estate plan is to provide for the care of your children or dependent adults. If you have minor children, for example, you may want to create a trust to provide for their financial needs in the event of your death. A trust can be set up to manage and distribute assets on behalf of your children, ensuring that they are cared for and that their inheritance is protected.
Many parents opt to create a graduated trust for their minor children. This means that the trust is distributed on a graduated schedule as the children reach certain ages. At that point, the trust can be dissolved and the remaining assets given to them outright.
Similarly, if you have a dependent adult in your life, such as a child with special needs or an elderly parent, you may want to create a trust to provide for their ongoing care. A trust can be set up to provide for their living expenses, medical care, and other needs, ensuring that they are well-cared for after you pass away.
Why Consider Testamentary Trusts: To Avoid Probate
Another reason why you might consider adding trusts to your estate plan is to avoid probate. Probate is the legal process that occurs after someone passes away, during which their assets are distributed according to their will or, if they die without a will, according to provincial intestacy laws. Probate can be a lengthy and costly process, as it involves court fees, legal fees, and other expenses.
By setting up a trust, you can transfer ownership of your assets to a trustee, who manages and distributes them according to your wishes. Because the assets are no longer considered part of your estate, they are not subject to probate. This can help your beneficiaries avoid the costs and delays associated with probate, allowing them to receive their inheritance more quickly and efficiently.
Additionally, estate tax is imposed on estates that exceed a certain value. By setting up a trust, you can reduce the size of your estate and help lower your estate taxes. (Of course, you’d want to talk to your accountant or financial planner about how to maximize the tax savings you can achieve with a trust.)
These are just some of the reasons why you might consider adding trusts to your estate plan. With careful planning, you can use trusts to achieve your goals while ensuring that your beneficiaries are taken care of after you are gone.
Smart estate planning with Beeksma Law
Trusts can be a powerful tool for estate planning, providing several benefits that can help you achieve your goals. If you want to maintain privacy, provide for the care of children or dependent adults, or avoid probate, adding trusts to your estate plan may be a wise choice.
However, it’s important to seek professional advice when setting up a trust. There are many different types of trusts available, each with its own advantages and disadvantages. A qualified estate lawyer can help you navigate the complexities of estate planning and create a plan for your unique needs and circumstances.
At Beeksma Law, our team of experienced lawyers has the knowledge and expertise to create a comprehensive, personalized estate plan. Contact us today to learn more about how we can help you with your estate planning needs.
A Beginner’s Guide to Trusts in Estate Planning
Disclaimer: This article on estate trusts is intended for the purposes of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
We have talked about estate planning, estate planning for blended families, your powers of attorney and your will. Now it’s time to talk about trusts. In this beginner’s guide, we’ll explain what trusts are, how they work, and their use in estate planning.
What is a Trust?
Trusts are the unsung heroes of estate planning. They can be used to pass on assets, manage those assets, determine how they are distributed and much more.
A trust is a legal entity that allows someone (the settlor) to transfer assets to a trustee. The trustee holds the assets for the benefit of one or more beneficiaries. They have legal ownership of the assets, but the beneficiaries have an equitable interest in the assets. The trustee is responsible for managing the assets and distributing them according to the terms of the trust.
Depending on the tax considerations and other factors, the settlor and trustee may be the same person. Additionally, either or both could also potentially serve as beneficiaries in certain cases.
How are trusts created?
There are two broad categories of trusts. Trusts can be created during the settlor’s lifetime (an inter vivos or living trust) or when they die (a testamentary trust).
The terms of a living trust are typically set out in a document that the settlor signs. It appoints a trustee (or trustees) and directs how assets should be held, managed and distributed. An inter vivos trust is created once you determine the terms of the trust and the beneficiaries, and property has been transferred to the trustee to hold in accordance with the terms of the trust.
A testamentary trust, on the other hand, is created once someone has died. It can be created pursuant to a will. It can also be created pursuant to a beneficiary designation made under an insurance policy, a registered retirement savings plan or a registered retirement income fund. The important thing is that a testamentary trust comes into existence when the settlor dies.
The trustee’s role
The role of the trustee in an estate planning trust is a critical one. The trustee is responsible for carrying out your wishes and managing and distributing the assets according to the terms that you have outlined. As such, it’s important to choose a trustworthy and capable individual or organization as your trustee.
The trustee’s primary responsibility is to manage and invest any assets placed into the trust. This includes making sure that all taxes due on income generated from those investments are paid on time, as well as properly filing any necessary tax returns related to them.
Depending on how they’re structured, the trustee may also have to make distributions at certain times or under certain conditions. The trustee has an obligation to exercise reasonable care when managing these assets and to act in the best interests of the beneficiaries.
Many of the same principles that we spoke about with regard to choosing an executor also apply here. When selecting a trustee, you should choose someone you trust and who is capable of carrying out their duties. Additionally, if you plan to have your spouse or another individual serve as a trustee, it’s important to also name one or more successor trustees, just in case.
Set up your estate planning with Beekmsa Law
At Beeksma Law, we believe that trusts do not get the attention they deserve. We are experienced in helping our clients create trusts that will protect their assets and carry out their wishes, both during life and after death.
We know how important it is to plan ahead. You have to do so to protect your hard-earned assets, provide for those you love, reduce taxes and make sure your wishes are followed. Whether you’re considering setting up a living trust, a testamentary trust or any estate planning tool, we can help. Contact us today to get started!
Do you understand your commercial lease agreement?
Disclaimer: This article on commercial lease agreement in Ontario is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Our office has been receiving more and more inquiries recently relating to commercial leasing disputes. This is to be expected to some extent – after all, we are in a recession – and we want to make sure that all of our clients are aware of their rights and responsibilities when it comes to their leases.
Of course, every situation and lease is unique. If you would like to discuss your lease, please get in touch with our office as soon as possible. We are well-versed in commercial tenant law, and we can provide you with advice and guidance on how to proceed.
Your Commerical Lease Agreement in Ontario
Many landlords reach out to us because they are having significant difficulties with their tenants, such as their tenants defaulting on rent or not following the terms of their lease. What are your options?
Well, what does your lease say? Generally speaking, your lease is going to be your ground zero. If you have a well-prepared lease, you have more options. On the other hand, if you do not have a strongly worded, clear, and enforceable lease, you have fewer options.
The reality is that there are not a lot of protections under common law or in the legislation, specifically the Commercial Tenancies Act. Your lease is your best form of protection. We cannot overstate it enough: if you are not sure if your lease will protect you from a difficult tenant, you do not want to wait until there is an issue to find out.
Most savvy commercial landlords have an exceedingly good lease that gives them all the rights and “hold the cards,” so to speak. So what does that mean for tenants?
Signing a commercial lease as a tenant
You may be so excited to find the perfect space for your growing business that you are ready to sign anything. However, you need to ensure that the terms of the lease protect you and your business as much as possible.
You have rights as a tenant, but if you sign away those rights when you sign your lease, then you cannot avail yourself of the remedies provided for in the Commercial Tenancies Act. You must understand what you are signing and the lease must be able to also serve your interests.
That is where we come in. Before you sign your rights away, talk to our team. Too often, we see great businesses with their hands tied by a landlord-provided lease, and we do not want that for you. We can help you understand what the terms really mean and negotiate the terms that will hold your business back.
Protecting your interests with Beeksma Law
At Beeksma Law, our comprehensive experience covers both sides of the table. For landlords, we can help with drafting and enforcing your leases. For tenants, our experience helps to ensure that your rights are protected while you sign a lease.
We believe in empowering our clients. When you are armed with knowledge, you can make informed decisions that are in the best interests of your business. We clearly explain the law and ensure you understand what is at stake before signing on the dotted line. Book a call with our team today – we are happy to hear from you!
Navigating Construction Liens in Ontario
Disclaimer: This article on Navigating Construction Liens in Ontario is intended for the purposes of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Construction liens are on the rise in 2023. As we mentioned in an earlier article, this is to be expected as litigation will increase during economic uncertainty. This also extends to construction liens. The good news is that you can protect yourself and your business by understanding:
- what a lien is,
- how it works, and
- when to act before the situation gets out of control.
As with all business matters, protecting yourself comes down to two actions: understanding your rights and working with someone to help you both prevent and react to a lien.
What are construction liens?
A construction lien is a legal claim that one party registers against a property that is undergoing construction or renovation. It’s a form of security for payment that ensures that you pay the contractors and subcontractors for the work and the materials supplied. The lien gives the claimant the right to sell the property to recover the money owed to them.
The Ontario’s Construction Act governs construction liens. It sets out the rules and procedures for registering and enforcing liens in Ontario. The Act applies to all construction projects, whether they’re residential or commercial and whether they’re new builds or renovations.
How do construction liens work in Ontario
A construction lien is a powerful tool that can have serious consequences for both property owners and contractors. Here’s how it works:
- A contractor or subcontractor who has provided services or materials on a construction project and has not been paid can register a lien against the property.
- The claimant must give notice of the lien to the property owner and other interested parties, such as the mortgage lender.
The lien must be preserved (by registering it on title or providing a notice of lien) within a specific timeframe. That timeframe is now 60 days after the last day of work or supply of materials. It was previously 45 days, but this changed as of October 1, 2019. Once a party registers a lien, the property owner cannot sell or mortgage the property until the lien is resolved.
The claimant (the person who registered the lien) must “perfect” the lien within 150 days of the last day of work or supply of materials. Perfecting the lien means commencing legal action to enforce the lien.
Protecting yourself as a contractor
As a contractor or subcontractor, it’s important to protect yourself from non-payment.
One of the best ways to protect yourself is to make sure that all contracts are in place before starting any work. The contract should clearly define the scope of the project, payment terms, deadlines and other relevant details, such as who owns any materials provided by the contractor.
Having an enforceable contract in place will help avoid disputes down the line if there is ever an issue with payment. It’s also important that you make all payments on time according to the schedule in your contract to minimize any potential delays or issues further down the line.
It’s important that you keep careful records. If you find you’re having difficulty collecting payment from a client or are getting a run-around, you will be ready to register a lien against the property owner. You will also need to be organized when it comes to ensuring that you register within 60 days. The courts will hold to that deadline, so make sure you do everything necessary to ensure you register your lien in a timely manner.
Protecting yourself as a property owner
If someone registers a lien against your property, it is a serious issue and can have a major impact on your ability to sell or mortgage the property. Outstanding liens delay a project, or, even more seriously, financial institutions may even freeze loans or lines of credit.
The only remedy that you, as a homeowner, have against a construction lien relates to the work done. Did the contractor complete the requested work? If the contractor did not complete the work, then you may have grounds to dispute the lien.
It’s important to note that the standard is not whether or not the contractor completed the work to your standards. It is whether or not they did the work under the contract to the level of a “reasonable contractor”.
You can also include in your contract a “holdback”. This means that you can withhold a specified amount of funds from the contractor until the lien has expired or been released. It is important to consider this option as it may give you some protection against construction liens in the future. For example, if a subcontractor registers a lien for non-payment by the contractor, you can use the funds in your holdback to cover part or all of that subcontractor’s claim.
Of course, always make sure that you do your research and hire a reputable contractor before commencing any construction project.
Dealing with construction liens: Don’t wait!
As with most legal matters, the more proactive you are, the better. Whether you are disputing work done to your home or waiting for payment as a contractor, do not wait! Contact us right away to ensure we can resolve it in a timely and cost-effective manner.
Whether you are a contractor or property owner, understanding construction liens and how they work is important in order to protect yourself from potential financial losses. At Beeksma Law, we help our clients deal with construction lien matters and can provide you with the legal advice that you need. Contact us today for more information. ?
Buying a Book of Business in Ontario
Disclaimer: This article on buying a book of business is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
In many businesses, entrepreneurs have to face the question of succession planning. Will the business be sold to someone? Should it pass on to a family member? Will it merge with another organization? These are all important questions to consider, and having a plan in place can help ensure that the business continues to be successful.
Many professionals are getting older (for example, the average financial advisor is now in their 50s), with retirement looming on the horizon. For new professionals in the field, this may be the expansion opportunity that you’ve been waiting for. After all, what better way to expand than to acquire a well-established adviser’s clients and business?
Expanding your business this way is no small matter. Making sure that your interests are protected – whether you are the purchaser or the seller – requires legal expertise, good advice and a savvy business sense.
In this article, we will talk about buying this specific type of business and different areas that you need to consider.
What is a “Book of Business”?
When acquiring a financial advisor’s business, you will likely be purchasing the book of business. This is the advisor’s client list and their associated assets. It typically includes detailed information about each client (e.g., contact details, relationship history, and account balances).
However, buying a book of business is an intangible asset and can be difficult to value. It is much different than buying (for example) a retail location with merchandise, equipment and the associated liabilities. The right legal and financial due diligence is required when considering such a purchase and its potential for success.
Much of the value behind a book of business lies in its “goodwill” or the value of the relationships between the advisor and their clients. Factors like trust, satisfaction with services rendered, as well as reputation can have a major effect on whether or not a client decides to stay with the business after an ownership change.
Questions to Consider
When considering buying a book of business, there are many questions to consider, such as:
- How will you determine the value of the book of business? Will multiple appraisals be required? When should the seller provide a finalized list of clients and their assets?
- What will the transition period look like? How will the clients be informed? Will the seller make introductions and work towards a smooth transition? How will existing staff, if any, be retained and/or rewarded for their loyalty?
- What other financial obligations (such as taxes) need to be taken into account when making the purchase?
- What kind of non-competition clause should you include to ensure that the seller does not take business away from you?
Of course, each transaction is unique and will have its own specific requirements. It is important to have experienced advisors and lawyers on your side to make sure that you are getting the best deal possible.
Buying a financial advisor’s book of business can be an exciting opportunity for entrepreneurs looking to expand their businesses. However, it requires careful consideration and due diligence in order to ensure that all parties
Take the next step with Beeksma Law
Whether you are looking to buy another advisor’s book or sell your business, Beeksma Law can help. Our team of experienced lawyers can guide you through the process and make sure your interests are protected every step of the way.
With our experience and expertise, our clients can rest assured that the deal will be as hassle-free as possible. As entrepreneurs ourselves, we know what your business means to you and take it just as seriously as you do. To learn how we can help you buy or sell a book of business, contact us for a consultation today.