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Disclaimer: This article on estate planning after divorce is intended for the purpose 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 before about how you want to regularly consider updating your will, especially after a major life event. One that we want to dive into in more detail is during a separation and divorce.
People are usually mired in other legal matters relating to their divorce and estate planning becomes an after-thought, something to handle after the dust settles. In this article, we will talk about why you should look at your estate planning sooner rather than later and what you should consider.
If you are currently separated or divorcing your spouse, we encourage you to book a complimentary consultation with our team to discuss your estate planning needs.
Changes to the Succession Law Reform Act
As of January 1, 2022, the law surrounding divorced and separated spouses was changed. A “separated spouse” means you have been separated for over three months.
For example, suppose you pass away and haven’t updated your will. Your ex is still listed as an estate trustee or beneficiary. Now, they are treated as if they had died before you and those particular sections of the will are revoked.
If you do not have a will (or die intestate), the Act now provides that a separated spouse will not benefit from the estate. Prior to this change, any legally married spouse, whether separated or non-separated, would benefit from the preferential share (the first $350,000) plus either the balance of the estate or an equal share if there are children. The Act no longer extends this entitlement to separated spouses, and they will not be entitled to this preferential share or any other portion of the estate.
When to see an estate lawyer
The law now provides protection for your estate after you have been separated for three months. However, the reality is that something could happen within those first three months. We advise seeing an estate lawyer as soon as you know that reconciliation is no longer an option.
In some separation agreements, there may be provisions that limit your ability to do certain things. You may be limited in making changes to the title to properties you own or change your powers of attorney. Therefore, it would be wise to update or create your estate documents before attending mediation or finalizing a separation agreement.
Property owned with your spouse
There are two ways to own property with someone else: as joint tenants and as tenants in common. Most times, when spouses own property, they own it as joint tenants. If one joint tenant were to pass away, the surviving spouse would take complete ownership of the property.
You may not want to have that kind of ownership with your estranged spouse, so what are your options? The good news is that you can sever your joint tenancy unilaterally (meaning you do not need their permission). This will move the ownership to what we call tenants in common.
The difference is that if you were to pass away before your property is dissolved, your estranged spouse does not take sole ownership of the property. That property becomes part of your estate and will be bequeathed to your beneficiaries.
Working with other agreements
In family law, there are agreements that must be considered, such as separation agreements or domestic agreements. You must make sure that your will and powers of attorney do not contradict those other agreements. If they do not align, you are opening your estate up to litigation. The courts will have to decide which document takes precedence.
Remember, if you have to get the courts involved, your estate will be spending up to tens of thousands of dollars. However, this situation is easily avoided by having documents drafted by an experienced attorney.
Reviewing your existing estate planning documents
You may have a will and powers of attorney already but are unsure how they hold up now that your family’s circumstances have changed. If that is the case, it is worthwhile to have your documents reviewed by an experienced estate lawyer, like the team at Beeksma Law. We will be able to tell you if your current documents still stand or if it is time to have them updated.
Estate planning after a divorce
As your family continues to change, you will need to consider how this affects your estate planning. We discussed this earlier, but you will want to consider how to protect the interests of all family members.
For example, say you remarry or enter into a common law relationship with a new partner. You will want to consider your children from your previous relationships and make specific arrangements in your will to ensure their financial security. On the other hand, you’ll want to provide for your spouse using vehicles like RRSPs and life insurance.
Expert guidance from the estate law experts at Beeksma Law
Our team of estate law experts at Beeksma Law recognizes that wills and powers of attorney are not static documents. They must be adapted to reflect the evolving circumstances of your family. We understand the importance of staying informed about changes in your life that may impact your estate plan.
Whether you are entering a new marriage, forming a blended family, or experiencing other significant life changes, our experienced professionals can provide the guidance you need. We will work closely with you to understand your unique situation. Our team can help you create an estate plan that protects the interests of all family members.
Contact us today to discuss your estate planning needs. We are here to support you and ensure that your estate plan remains relevant and effective as your family evolves.
Disclaimer: This article on the foreign buyer ban in Canada is intended for the purposes of providing information only and is to be used only for the purposes of guidance. Please note this article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Update: March 2023
The regulations to this Act were amended as of March 27, 2023. The following amendments were made:
- Those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations can purchase a residential property if:
- they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase; and
- do not purchase more than one residential property.
- This no longer applies to mixed-use or vacant land.
- Private corporations can buy residential property so long as they are controlled by less than 10% by a non-Canadian.
On January 1, 2023, a new law will come into effect stating that non-Canadians cannot buy residential property for two years. This law aims to prevent foreign investors from unduly impacting the Canadian real estate market. You likely have already seen something to this effect on the news. However, it’s important to understand the more nuanced detail of this law.
This article outlines who this law does and does not apply to and what it means for real estate professionals. Of course, we welcome you to contact our office if you need any clarification.
Coming into effect – what does that mean?
Simply put, non-Canadians cannot enter into or assume purchase and sale agreements as of January 1, 2023. An agreement entered into or assumed before January 1 is valid even if the transaction closes after January 1, 2023.
What is a Non-Canadian?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act identifies a non-Canadian as someone who is:
- not a Canadian citizen
- not a person registered as an Indian under the Indian Act
- not a permanent resident
- a corporation incorporated in a jurisdiction outside of Canada
- a Canadian corporation that is not publicly traded and whose shares are owned by someone who falls under 1-3 above.
Let’s explain that last point a bit further. To illustrate, imagine a holding corporation that wants to buy an investment property. Four shareholders own shares in the corporation. Three of the shareholders are Canadian citizens; however, the fourth is not a Canadian citizen, registered under the Indian Act, or a permanent resident.
As of January 1, 2023, that corporation would be prohibited from purchasing residential property in Canada. This would remain true as long as the non-Canadian shareholder directly or indirectly owns shares in the corporation.
Who does this law not apply to?
However, the Act sets out some instances where non-Canadians may purchase residential property, namely where the purchaser is:
a. a temporary resident (as defined by the Immigration and Refugee Protection Act);
b. a protected person within the meaning of subsection 95(2) of that Act;
c. an individual who is a non-Canadian, but purchases residential property in Canada with their spouse or common-law partner. That spouse or common-law partner must be a Canadian citizen, permanent resident, person registered under the Indian Act or someone who falls under point a) or b) above.
Simply put, this allows people with strong ties to Canada to purchase a home, even if they are a non-Canadian.
Purchases by Non-Canadians
It’s worth noting that while a purchase made by a non-Canadian would be legally binding, the court can order the purchaser to sell the property at a price no higher than the purchase price.
What does this mean for real estate professionals?
Subsequently, real estate professionals, including realtors, mortgage brokers, notaries, and lawyers, must be vigilant to ensure that their transactions do not contravene the Prohibition on the Purchase of Residential Property by Non-Canadians Act. If you are a real estate professional, you may need to add some new processes, including:
- verifying that your clients are not non-Canadians;
- completing all necessary due diligence to ensure that a corporation’s shareholders comply with the requirements of the law; and
- understanding how the law applies to temporary residents and protected persons.
The Act outlines severe consequences for professionals involved in a non-compliant transaction, such as fines of up to $10,000. Real estate professionals should take the time to familiarize themselves with their legal obligations and ensure they are meeting them.
Beeksma Law and Understanding Real Estate Law
At Beeksma Law, we want to help you understand and comply with the foreign buyer ban in Canada. We provide comprehensive legal services to assist clients with all aspects of real estate transactions, including buyer representation, purchase and sale agreements, documentation review, and more.
As well we enjoy working with other professionals to make sure that everyone involved in a transaction understands their legal obligations. We provide free consultations so that you can learn more about our services and how we can help you comply with the foreign buyer ban in Canada. Contact us today to book an appointment!