CETA-1 (3rd ed) - Chap 01 - Introduction - for posting.pdf

Chapter 1 Introduction to the Law of Estates and Trusts Learning Objectives............................................................................................................... 1-3 1.1 Introduction....................................................

Chapter 1 Introduction to the Law of Estates and Trusts Learning Objectives............................................................................................................... 1-3 1.1 Introduction.............................................................................................................. 1-5 1.2 Rules that Govern a Fiduciary................................................................................. 1-7 1.2.1 The Document............................................................................................................ 1-7 1.2.2 Legislation.................................................................................................................. 1-7 1.2.3 The Courts................................................................................................................. 1-7 1.3 Legislation Governing the Administration of Estates, Trusts, and Substitute Decision-Makers....................................................................................................... 1- 8 1.4 Provincial and Federal Courts................................................................................. 1-8 1.5 The Common Law (All Students)............................................................................. 1-9 1.5.1 Provincial Courts...................................................................................................... 1-10 1.5.2 Federal Courts.......................................................................................................... 1-10 1.6 Quebec: A Civil Law Jurisdiction (All Students).................................................. 1-11 1.6.1 Common Law and Civil Law Jurisdictions................................................................. 1-11 1.6.2 Quebec: A Civil Law Jurisdiction............................................................................... 1-11 1.6.2.1 Public Law Matters in Quebec................................................................ 1-11 1.6.2.2 Private Law Matters in Quebec............................................................... 1-11 1.6.3 Civil Law in the Common Law System...................................................................... 1-11 1.6.4 The Role of the Courts in Quebec............................................................................ 1-11 1.6.5 The Books of the Civil Code of Quebec.................................................................... 1-12 1.7 Laws of Other Jurisdictions (in Canada and Beyond)......................................... 1-13 1.7.1 Domicile and Residence........................................................................................... 1-13 1.7.1.1 Common Law Only: Domicile................................................................. 1-13 1.7.1.2 Common Law Only: Residence.............................................................. 1-14 1.7.1.3 Quebec Only: Domicile and Residence.................................................. 1-15 1.7.1.4 Foreign Domicile Laws for Tax Purposes............................................... 1-16 1.7.2 Location of Assets (Immovables, Movables, and Location (Situs))........................... 1-16 1.7.2.1 Common Law Only: Immovables (or Interests in “Real Property”).......... 1-16 1.7.2.2 Quebec Only: Immovables..................................................................... 1-16 1.7.2.3 Common Law Only: Movables (Interests in “Personal Property”)............ 1-16 1.7.2.4 Quebec Only: Movables......................................................................... 1-16 1.7.2.5 Location (Situs)...................................................................................... 1-17 1.8 Legal Professionals................................................................................................ 1-17 1.8.1 Legal Professionals in Common Law Jurisdictions................................................... 1-17 1.8.1.1 Notary Public (Common Law Jurisdictions)............................................ 1-17 1.8.2 Legal Professionals in Quebec................................................................................. 1-18 Figure 1.1: Types of Fiduciaries, Responsibilities, and How Appointed................................... 1-6 Figure 1.2: Canada’s Court System – How the Courts Are Organized.................................... 1-9 Figure 1.3: Quebec Only: Books of the Civil Code of Quebec.............................................. 1-12  Introduction to the Law of Estates and Trusts Figure 1.4: Courts In Canada By Jurisdiction........................................................................ 1-19 1-2  Chapter 1 Introduction to the Law of Estates and Trusts Learning Objectives There are a number of situations where someone may be appointed to manage the affairs of another person while that person is alive or upon that person’s death. Each role has a different name and has different responsibilities. The names also vary between provinces and territories. This course uses the term “fiduciary” as a generic term to describe someone entrusted to assume one of these roles. This chapter introduces students to three fiduciary roles and the sources of the law that guide each of these fiduciaries when carrying out their many responsibilities. The three roles are: 1. executors (liquidators in Quebec) to manage the estate of a deceased person, 2. trustees to manage a trust, and 3. Substitute decision-makers (a generic term for someone with authority to manage the financial or personal affairs of a person who is incapable). Upon completing this chapter students will be able to:  Identify the fiduciary roles responsible for the administration of estates and trusts  Identify the fiduciary roles responsible for making decisions on behalf of an incapable person  List the sources of law governing each type of fiduciary  Locate legislation relevant to estate and trust administration in their province  Locate legislation relevant to substitute decision-making in their province  List the federal courts in Canada  List the provincial courts in their province  Recognize when laws of another jurisdiction may be relevant to the administration of an estate or trust  Distinguish the concepts of domicile and residence  Distinguish real property and personal property (immovables and movables)  Identify the legal professionals in their province This is an introductory chapter. Students are expected to know the generic terms used within the text to describe different fiduciary roles as well as the terminology used in their own jurisdiction as indicated within the text. Quebec Only: Although these fiduciaries each have a name, depending on the nature of the responsibility, they are collectively referred to as administrators of the property of 1-3  Introduction to the Law of Estates and Trusts others and they are governed by the general rules pertaining to the administration of the property of others. These general rules are reviewed throughout this course. For purposes of this course, the generic term “fiduciary” is used to refer to all types of administrators in Quebec. REMINDER: Terminology varies significantly between provinces, and even more so within Quebec. For ease of reading, as terminology is defined one word or phrase is selected for purposes of the materials in this course. Jurisdiction-specific terminology is only used if required. See the Generic Terms Cheat Sheet for the full list of generic terminology. 1-4 1.1 INTRODUCTION A fiduciary is one who is responsible for managing property or making decisions for the benefit of others or on behalf of another. There are many examples where someone may have fiduciary duties to others. These include the directors appointed by shareholders of a company to oversee the management of the company or investment managers entrusted to manage an investor’s assets in accordance with an investment policy. The Certificate in Estate and Trust Administration, and this course in particular, is concerned with three very specific types of fiduciaries. They are:  trustees: those appointed to manage a trust for the benefit of others;  personal representatives (executors and administrators; liquidator in Quebec): those responsible for administering the estate of a deceased person and distributing the estate to the beneficiaries; and  substitute decision-makers: those appointed to make financial decisions on behalf of another person when that person is not capable of making his or her own decisions. This course introduces students to the laws that govern fiduciaries in these three situations. In each case one or more persons, a corporate trustee, or a public official is appointed to carry out a number of responsibilities. As fiduciaries they are required to comply with the terms of the document that appoints them to the role and carry out their duties honestly and prudently. Each role is reviewed in more detail in the next chapter. See Figure 1.1 Types of Fiduciaries, Responsibilities, and How Appointed for a list of fiduciaries discussed in this course, the nature of their role and responsibilities, and the method by which they are appointed. Unless otherwise stated, all further references to fiduciaries in this course are limited to one or more of these three roles. This Chapter also introduces the student to the legal systems that govern this area of the law in Canada. It explains why the laws of other jurisdictions may be relevant and it introduces students to the legal professionals who may both assist clients when appointing fiduciaries and assist fiduciaries when carrying out their duties and responsibilities. 1-5  Introduction to the Law of Estates and Trusts Figure 1.1: Types of Fiduciaries, Responsibilities, and How Appointed Type of Fiduciary Primary Role How Fiduciary is Appointed Administration of estates Personal Representative To administer the estate of a deceased person See Executor and Administrator Quebec: Liquidator and distribute assets to beneficiaries of estate Executor To administer the estate of a deceased person Common Law: Deceased person’s will (Grant of Probate) Quebec: Liquidator in accordance with the deceased’s will Quebec: Appointed by heirs or the court Administrator To administer the estate of a deceased person Common Law: Court order (Grant of Administration) Quebec: Liquidator and distribute assets to beneficiaries according Quebec: Appointed by heirs or the court to the law when there is no will or there is no executor Administration of trusts Trustee To manage assets for others and distribute in Appointed in a will, a trust deed accordance with instructions in the trust Common Law: May also be appointed by court or in a document declaration of trust. Quebec: May also be appointed by court. Substitute decision-makers (make decisions on behalf of another) Agent To carry out financial transactions for another A document or contract made by the parties. person in accordance with the governing Common law: See also attorney document, e.g. agent may carry out Quebec: See also mandatary transactions on the person’s behalf when the person (donor) is not available; or manage investments or assist with the listing and marketing of real estate Substitute decision- A person who makes decisions for someone A document or court ordera makera who is not mentally capable of making decisions Common law: Includes attorney under an enduring power of attorney, health care proxies and substitute decision-makers appointed by the court Quebec: Includes mandataries, curators, tutors Attorney (for financial A person who makes financial and legal A document affairs) decisions on behalf of a person who is Common Law: Often called an enduring or continuing Quebec: Mandatary to incapable power of attorney b the property Common Law: Attorney; donor Quebec: Protection Mandate Quebec: Mandatary; mandator Proxy (for health care A person who makes health care and/or Documents appointing proxies have many names and personal care personal care decisions on behalf of someone Common Law: The document names include: personal decisions) who is incapable directive, power of attorney for personal care, Quebec: Mandatary to representation agreement, and health care proxy. See the person Chapter 2 Trustees, Personal Representatives, and Substitute Decision-makers Quebec: The document is a protection mandate Guardian A person who makes financial and/or personal Court order; statutory guardianship (e.g. a certificate of Quebec: Curator or Tutor and health care decisions on behalf of an incapability) incapable person a See Figure 2.5 Substitute Decision-makers by Jurisdiction for the terminology for each type of substitute decision-maker by jurisdiction. b A power of attorney can also be used when the donor is capable. Note: in most common law jurisdictions, the attorney can also make decisions while the donor is capable if that is what the donor wants. See Chapter 11 at 11.2 Enduring Power of Attorney. 1-6  Introduction to the Law of Estates and Trusts 1.2 RULES THAT GOVERN A FIDUCIARY It is important for a fiduciary, and those advising a fiduciary, to be familiar with the various sources of the rules and laws that govern an administration. Every appointment begins with the governing document if there is one. Then one looks to relevant legislation. Finally one looks to the case law. 1.2.1 The Document Although some fiduciaries may be appointed by court and will be governed by the applicable legislation, many fiduciaries are appointed in legal documents (see Figure 1.1 Types of Fiduciaries, Responsibilities, and How Appointed). These documents set out the duties, powers, and instructions that will guide the fiduciary when carrying out the role and responsibilities. They are the starting point for determining what the fiduciary can and cannot do. In order to be valid these documents must meet a number of legal requirements Lawyers, and Notaries in Quebec, often prepare these documents.1 Those who specialize in this field of the law are skilled at recognizing the drafting requirements that may be required to meet a client’s particular needs and they are familiar with the many legal and tax rules that must be addressed to ensure the document is properly prepared. From time to time clients will prepare their own documents. 1.2.2 Legislation From time to time, even a well prepared document may fail to deal with some aspect of the administration. Sometimes the instructions in a document are incomplete or the document is silent on certain matters. Legislation fills in these gaps and also includes powers that may be required to ensure the fiduciary has the authority required to carry out the responsibilities. Legislation also provides default rules for appointing or replacing a fiduciary, and governs when and how the courts may become involved. Although relatively rare, legislation may also set out rules that override instructions or powers in the document. Tax legislation sets out the tax rules for individuals when living and on death and also includes rules for taxing the income earned by a trust and distributed to a beneficiary. 1.2.3 The Courts The courts have a role in applying the law and helping to interpret the law. For example, there may be a question about the meaning of particular words, the fiduciary may not be able to determine how to apply the law in a particular situation, or one party may complain that the fiduciary has not complied with his or her duties and wants to hold the fiduciary liable for losses or to remove the fiduciary. When the court is settling a dispute or answering a question, the court may create new law or interpret the law in a new way. 1 In British Columbia, a Notary Public is also permitted to prepare a will, power of attorney, or representation agreement. They cannot draft trust documents. 1-7  Introduction to the Law of Estates and Trusts 1.3 LEGISLATION GOVERNING THE ADMINISTRATION OF ESTATES, TRUSTS, AND SUBSTITUTE DECISION-MAKERS Most of the non-tax legislation that governs this area of the law is established by provincial and territorial governments. These include the laws that govern the making of wills, administration of estates, administration of trusts, and the appointment and monitoring of substitute decision- makers. Laws governing family matters and fraudulent transfers are also made by the provincial and territorial governments. While some federal legislation may be relevant (e.g. bankruptcy laws when an estate is insolvent, or the Indian Act when a deceased or incapable person is a status Indian), most federal legislation is not relevant to day-to-day administration issues. The only exception to this is the federal Income Tax Act.2 The Table of Legislation at the end of the course materials lists all legislation referred to in this course for each province or territory, as well as the applicable laws of the Government of Canada. The laws can be found online under the applicable government Websites. Another good resource for current legislation is CanLII – the Canadian Legal Information Institute found here: https://www.canlii.org. The site is in English and French and includes the laws and related regulations of each jurisdiction. CanLII also has a “note up” feature that allows users to look for cases that considered the legislation or a specific section of the legislation. Throughout this course, students will be referred to the laws of their province or territory found in this legislation. Although the course often summarizes the relevant rules found in the legislation, students are encouraged to read the legislation and become familiar with the text, especially if they plan to pursue the Certificate in Estate and Trust Administration. Although some provisions can be complicated and intimidating to a person not trained in the law, most legislation in this field of study is often relatively easy to understand and makes one more comfortable with the laws generally. Quebec Only: Quebec students are required to be familiar with the provisions of the Civil Code of Quebec identified in this course. 1.4 PROVINCIAL AND FEDERAL COURTS Canadian courts hear matters related to estate and trusts administration, the appointment and/or oversight of substitute decision-makers, and the application of tax laws. The court’s role includes:  reviewing applications for a grant of probate or administration appointing the executor or administrator of an estate, or in Quebec the designation of liquidators and trustees,  reviewing and approving fees, 2 The income tax rules (Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)) that govern estate and trust administration are introduced later in this course (see Chapter 8 Personal Tax Returns Due on Death). The details are reviewed in the the third course in the Certificate program, Estate and Trust Taxation course (CETA 3). Hereafter referred to as CETA 3. 1-8  Introduction to the Law of Estates and Trusts  providing advice on the interpretation of a will or trust, or  settling disputes between parties. If one party is not satisfied with the outcome, the party may appeal to a higher level court. Generally, each province and territory has a provincial or territorial court that will hear criminal and family law matters. They also have a superior court that hears all non-criminal matters, including estate and trust-related matters. These courts are usually called a Superior Court, Supreme Court, or court of Queen’s Bench. Each jurisdiction also has a court of appeal. The chart (see Figure 1.2 Canada’s Court System – How the Courts are Organized) illustrates this general hierarchy. Some jurisdictions have additional specialized courts for probate matters and small claims. Figure 1.2: Canada’s Court System – How the Courts Are Organized Source: Government of Canada Website: Retrieved July 29, 2014 at http://www.justice.gc.ca/eng/csj- sjc/ccs-ajc/page3.html For a list of the courts, by jurisdiction, see Figure 1.4 Courts in Canada By Jurisdiction at the end of this chapter. 1.5 THE COMMON LAW (ALL STUDENTS) In addition to dealing with specific disputes or carrying out specific functions, when a court hears a case it may have to interpret or apply legal principles to clarify or settle the law for a given set of circumstances. Many court decisions are written decisions and, as decisions are made, they establish legal precedents. Over time a body of law, often called case law (or judge- made law), has evolved in each province. Sometimes this body of law is referred to as 1-9  Introduction to the Law of Estates and Trusts jurisprudence. This system of law is known as the common law. The common law is a system of law that was developed in England and has been adopted by the British Commonwealth countries. 1.5.1 Provincial Courts When a case is decided, the principles or rules established are binding on all lower courts in the jurisdiction of the court. For example, if a decision of the Queen’s Bench in Saskatchewan is appealed to the Court of Appeal for Saskatchewan, the decision of the Court of Appeal will be binding on all future decisions of the Court of the Queen’s Bench in Saskatchewan. Decisions of other provinces may also be considered and/or adopted by a court if the circumstances are similar. For example, if the Ontario Court of Appeal recognizes and accepts the decision of the Court of Appeal for Saskatchewan, the decision becomes binding in lower courts in Ontario as well. The Canadian courts also look to other jurisdictions with a common law tradition, such as the United Kingdom, Australia, and New Zealand, for guidance and legal analysis. Examples of case law that govern this field of study include:  The test for testamentary capacity to make a will (see Chapter 3 The Law of Wills): This common law rule was established in a case decided by an English court in 1870. The case has been cited and followed ever since.  The factors for deciding how much an executor should be paid: When there is no contract setting out the compensation and the court has to establish the executor’s compensation, the court will consider five factors (see Chapter 9 Compensation and Expenses). These five factors were set out in an Ontario case in 1905 and continue to guide the courts today. 1.5.2 Federal Courts Federally, there are three courts for specific kinds of cases – the Federal Court, the Federal Court of Appeal, and the Tax Court of Canada. The Tax Court of Canada is the court that deals with matters related to the Income Tax Act. The decisions of the Federal Court of Appeal are binding on its lower courts. The top court in Canada is the Supreme Court of Canada. It is the final court of appeal from all other Canadian courts. The Court must grant permission for a case to be heard at this level. Decisions of this Court are binding on all Canadian jurisdictions. Many of the written decisions for the cases heard by courts in each of these jurisdictions can be found on CanLII and on the websites for the court. 1-10  Introduction to the Law of Estates and Trusts 1.6 QUEBEC: A CIVIL LAW JURISDICTION (ALL STUDENTS) 1.6.1 Common Law and Civil Law Jurisdictions The common law system discussed above applies to all jurisdictions in Canada, except private law matters in Quebec. 1.6.2 Quebec: A Civil Law Jurisdiction Quebec has a legal system that is referred to as a civil law tradition. The Quebec civil law tradition has its roots in Roman law. It includes components of the Napoleonic Code from France, and has also incorporated elements of English common law. 1.6.2.1 Public Law Matters in Quebec The common law (see 1.5 The Common Law (All Students)) governs public law matters in Quebec. Public law includes criminal matters and criminal prosecutions. 1.6.2.2 Private Law Matters in Quebec The Civil Code of Québec (CCQ) governs private law matters. The CCQ sets out the rules that make up the private law. Additional statutes have been passed to supplement certain areas of the private law. Jurisdictions that have a system of private law based on a code of laws such as we find in Quebec are referred to as civil law jurisdictions. Many European countries, including France, the Netherlands, and Germany, have a civil law system. In Canada, Quebec is the only civil law jurisdiction. The remaining provinces and territories are considered common law jurisdictions. 1.6.3 Civil Law in the Common Law System The term “civil law” has a second meaning within a common law system. In common law jurisdictions the criminal law is distinguished from the civil law (all other laws). The “criminal law” is governed by the Criminal Code of Canada. The civil law deals with all other areas of the law and includes the laws related to estates, trusts, and substitute decision- makers. In this context, a reference to the private law in Quebec is similar to the civil law in common law jurisdictions. 1.6.4 The Role of the Courts in Quebec The role of the courts in Quebec is to apply the laws set out in the CCQ and other statutes. A key distinction from common law courts is that earlier cases or precedents, the hallmark of the common law tradition, do not have quite the same role in civil law systems. 1-11  Introduction to the Law of Estates and Trusts 1.6.5 The Books of the Civil Code of Quebec The current CCQ was introduced in 1994. Most significantly for this area of the law, the CCQ of 1994 introduced a legal concept with many similarities to the common law trust (see Book 4). The trust or “la fiducie” in French, has some unique characteristics, but the administration of the trust in Quebec has many similarities to the administration in common law jurisdictions.3 Quebec Only: The CCQ has ten books. They are listed (see Figure 1.3 Quebec Only: Books of the Civil Code of Quebec). While Books 3 and 4 will be the most relevant for Quebec students in this course, sections of other books will also apply. Some legal issues may also require students to refer to more than one book in the CCQ. For example, the rules governing a protection mandate are found in Book 5 but practitioners must also refer to Book 1 for relevant articles on capacity. Students must become familiar with the CCQ and the wording of the articles referenced throughout this course. While this course seeks to explain the law in plain language and put the law into context, the rules are found in the wording of the relevant articles. Figure 1.3: Quebec Only: Books of the Civil Code of Quebec Books of the Civil Code of Quebec Book 1: Persons (individual rights) (Includes patrimony, domicile, residence and capacity (minors and adults) Book 2: The Family (marriage, parentage, adoption) Book 3: Successions (wills, inheritance, estates) Book 4: Property (possession, land boundaries, right-of-way) (Includes trusts and administration of the property of others) Book 5: Obligations (contract law, civil liability, tort law, sales, leasing) Book 6: Hypothecs (mortgages and the sale of land) Book 7: Evidence (burden of proof, rules of evidence) Book 8: Prescription (statutes of limitations) Book 9: Publication of Rights (registration of property) Book 10: Private International Law (resolution of legal issues involving conflict of laws) 3 The nature of the Quebec trust will be examined further in Chapter 2, see 2.2.2 Quebec Only: What Is a Trust? 1-12  Introduction to the Law of Estates and Trusts 1.7 LAWS OF OTHER JURISDICTIONS (IN CANADA AND BEYOND) From time to time the law that applies to a particular situation will be affected by the laws of another jurisdiction. This can occur when there is a connection to another jurisdiction, within Canada or with another country. The connection may relate to some fact about the deceased, the person who created a trust, the fiduciary, or an incapable person. Alternatively the connection might relate to the location and nature of an asset such as real property. When laws of the jurisdictions involved differ, conflict of law rules are applied to determine which law governs for the issue in question. While it is beyond the scope of this course to review the law relating to these issues, it is important to be aware of the many circumstances when inter-jurisdictional matters may apply and should be escalated for further analysis. The circumstances that may become relevant are briefly reviewed in the sections that follow. Relevant rules are also discussed, as applicable, in the remaining chapters of this course and the advanced courses in the certificate program. 4 1.7.1 Domicile and Residence Domicile and residence are personal to the individual. The rules are concerned with where a person was born and lives, has lived, or intends to live. The rules can, among other matters, affect the law that governs the validity of a will, a deceased’s obligations to a spouse or dependents on death, or tax obligations. The residence of an executor, liquidator, or a trustee may also affect the tax jurisdiction of a trust. 1.7.1.1 Common Law Only: Domicile Laws relating to individual’s personal matters, including laws governing the succession of property on death, are usually decided on the basis of the laws of the place where the individual has his or her permanent home. For succession purposes it is recognized that an individual may reside in one place, perhaps temporarily, but have his or her permanent home in another place to which at some time in the future he or she contemplates returning on a permanent basis. The legal concept of “domicile” seeks to determine the person’s “permanent home”. There are three types of domicile. 1. The domicile of origin is determined at birth by the place of birth and will continue to be the domicile of an individual throughout his or her life unless one of the other domicile rules subsequently applies. 2. Domicile of choice is the place where an individual, after attaining the age of majority, takes up residence with the intention of remaining indefinitely. If a 4 The law governing conflicts of law are also referred to as Public International Law (PIL). As families become more and more mobile, within Canada and around the world, these “conflict” issues arise more and more often, both when a client is incapable, and on death. The PIL rules are complex. The information in this course offers an introduction in order to help identify potential administration issues. Legal and tax advice will often be required. 1-13  Introduction to the Law of Estates and Trusts person gives up his or her domicile of choice, the domicile reverts to the domicile of origin until or unless there is a new domicile of choice. 3. Domicile of dependency is conferred by operation of law upon those persons who, by reason of legal or mental disability, are unable to acquire a domicile of choice, including minors and certain mentally incapable persons. In some jurisdictions outside Canada domicile of birth or dependency may be determined by the domicile of the father, or that of the mother if born outside marriage. The laws governing domicile are subject to legislation. For example: Manitoba: The Domicile and Habitual Residence Act has replaced the common law rules respecting domicile, including the rule that the domicile of origin is revived upon the abandonment of a domicile of choice (section 3). The legislation sets out the rules for determining domicile and habitual residence. A person can only have one domicile at a time. Domicile is not the same as nationality. However, nationality may be relevant in determining one’s domicile. Domicile and residence are also not the same (see 1.7.1.2 Common Law Only: Residence). However, for many, the place of residence will be the place of one’s domicile unless the person has an intention to leave his or her place or residence in the future and return to live permanently in another jurisdiction. Example: Geoffrey moves to another country (Country B) to work and stay for many years (or even decades). However, if Geoffrey intends to return to where he was born (Country A) when he retires, Geoffrey’s domicile remains the domicile of origin or the place where he was born (Country A). The common law has developed additional rules to assist with determining one’s domicile. The rules are beyond the scope of this course. 1.7.1.2 Common Law Only: Residence “Residence” refers to the place where one normally lives (or “ordinarily resides”). However, one’s residence can be transient and, as a result, a person can have more than one residence. Many countries, including Canada, tax individuals based on residence. In these situations legislation often specifies the number of days that one must be resident in a jurisdiction to be taxed in that jurisdiction. In the absence of a tax treaty, a person could be subject to tax in two jurisdictions based on their residence.5 Case law may further define how to determine a person’s residence. Factors often include where one has a closest connection. For example, Canadian law looks at significant residential ties such as the location of one’s home, as well as where personal property, 5 CETA 3 addresses the issues of domicile and residency in more detail. 1-14  Introduction to the Law of Estates and Trusts social ties (including memberships), economic ties such as bank accounts, driver’s licence, passport, and health insurance are located.6 1.7.1.3 Quebec Only: Domicile and Residence The CCQ governs domicile and residence for purposes of the civil law. Articles 75-83 govern the domicile of a person for purposes of exercising the person’s civil rights. There are some similarities to the common-law approach in distinguishing domicile and residence. Specifically:  A person’s domicile is at the place of his or her principal establishment (art. 75). A change of domicile is effected by actual residence in another place coupled with the intention of the person to make it the seat of his or her principal establishment and that the proof results from a declaration by the person and the circumstances (e.g. the facts) of the case (art. 76). Factors often include where one has a closest connection. For example, Canadian law looks at significant residential ties, such as the location of one’s home, as well as where personal property, social ties (including memberships), economic ties such as bank accounts, driver’s licence, passport, and health insurance are located.7  The residence of a person is the place where he or she ordinarily resides and if there is more than one residence, then the principal residence is considered in establishing the person’s domicile (art. 77). In addition to these basic definitions, these rules must be considered too.  If domicile cannot be determined, the person’s domicile is deemed to be the place of his or her residence. If he or she has no residence, it is the place where he or she lives and if that is unknown, it is the place of his or her last domicile. (art. 78).  An unemancipated minor is domiciled with his or her tutor (generally a parent) and if the parents do not live together, with the parent with whom the minor usually resides or as fixed by the court (art. 80).  An incapable adult under tutorship or curatorship is domiciled with his or her tutor or curator as applicable (art. 81). The CCQ also recognizes that spouses may have different domiciles (art. 82) and it is possible to elect in writing one’s domicile for certain acts (art. 83). 6 See “Determining Your Residency Status” on Canada Revenue Agency Website, accessed June 22, 2018, at http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html. 7 See “Determining Your Residency Status” on Canada Revenue Agency Website, accessed June 22, 2018, at http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html. 1-15  Introduction to the Law of Estates and Trusts 1.7.1.4 Foreign Domicile Laws for Tax Purposes Some foreign jurisdictions have also defined domicile for the purpose of implementing certain local tax laws. For example, legislation may define domicile in order to tax a person’s income and/or to impose an inheritance tax on the death of an individual, and/or gifts made during one’s lifetime. Jurisdictions with such laws include the United States and the United Kingdom, two jurisdictions with which many Canadians, in common law jurisdictions and Quebec, have connections. 1.7.2 Location of Assets (Immovables, Movables, and Location (Situs)) The location and nature of assets may also determine the documents and practical steps required to deal with the asset, including a transfer to the personal representative. The location of real property might also govern who is entitled to receive the property on death. The Latin term for location is situs. “Situs” is a term often used in common law jurisdictions. 1.7.2.1 Common Law Only: Immovables (or Interests in “Real Property”) “Immovable” property includes real property, anything permanently affixed to real property, or any interest in real property. Immovable property includes land, buildings, mining rights, leaseholds, and rights to receive rent or income from real property. 1.7.2.2 Quebec Only: Immovables Immovables are defined in articles 900-904 of the CCQ. Generally, immovables include land, and works of a permanent nature forming an integral part of the land such as a building. Articles 901-904 deal with items that might be movables that are incorporated into an immovable or permanently attached and those that have been temporarily detached. The details of these rules are beyond the scope of this course. 1.7.2.3 Common Law Only: Movables (Interests in “Personal Property”) “Movable” property includes any property that is portable. The legal definition of movable property includes all personal property, such as goods, chattels, and personalty. It also includes intangible property, such as negotiable instruments and securities. 1.7.2.4 Quebec Only: Movables Movables are defined in articles 905-907 of the CCQ. Generally, they are things that can be moved, but also include all other property that is not qualified by the law (art. 907). Property qualified by law that may be excluded includes the type of movables dealt with in articles 901-904. These include movables incorporated with an immovable, integral parts of an immovable that are temporarily detached but are intended to be put back, and movables that are permanently attached to an immovable. 1-16  Introduction to the Law of Estates and Trusts 1.7.2.5 Location (Situs) The “situs” of property is the location of property. Location may be relevant for legal purposes such as succession laws, taxation, and conflict of laws. The location of real or immovable property is generally the jurisdiction where the property is physically located. The location of movable property is often the location as defined for purposes of applying legal rules and tax laws to the property. It is often the location where the deceased resided at the time of death. 1.8 LEGAL PROFESSIONALS Individuals who wish to appoint a fiduciary require legal advice. Fiduciaries may also require assistance to confirm their appointment and/or to deal with legal questions, disputes, or other matters related to the administration. In Canada, there are a number of terms for the legal professionals who may be involved. These are described briefly below. 1.8.1 Legal Professionals in Common Law Jurisdictions In Canada, lawyers (outside of Quebec) are also known as “barristers” and “solicitors”. The terms come from England where a barrister was one who went to court and a solicitor drafted contracts, wills, trusts, and other documents. The more common terminology is “lawyer”. In the United States, lawyers are called “attorneys”. 1.8.1.1 Notary Public (Common Law Jurisdictions) In the common law jurisdictions a professional identified as a “notary public” has a distinct set of roles and responsibilities. Note: A notary public is different from a “notary” in Quebec. (See 1.8.2 Legal Professionals in Quebec.) In the common law jurisdictions a notary public’s primary role is to administer oaths and affirmations, take affidavits and statutory declarations, and witness and authenticate documents. With the exception of British Columbia, a notary public does not give legal advice nor do they have any specific authority to draft documents or transfer or mortgage real property. A lawyer who is a current member of the law society of a common law jurisdiction is also permitted to act as a notary public. British Columbia (exception): A notary public in British Columbia is unique in the common law jurisdictions. Notaries in British Columbia are authorized to provide certain legal services. The governing legislation permits notaries to prepare, among other documents, wills, real estate transfers and related documents, powers of attorney, representation agreements, and advance directives.8 A notary public is not permitted to draft documents that include trusts. 8 Notaries Act, R.S.B.C. 1996, c. 334, s. 18. 1-17  Introduction to the Law of Estates and Trusts 1.8.2 Legal Professionals in Quebec In Quebec, the legal system recognizes two distinct legal professionals – lawyers (or advocates) and notaries. Both obtain law degrees, generally, a Bachelor of Civil Law. Lawyers complete the bar admission program and only lawyers may appear before the courts in contentious matters. Notaries also complete a Masters in Notarial Law after law school. Notaries are public officers taking part in the administration of justice and, as such, give legal advice to all parties in a transaction, draft legal documents, give the character of authenticity to documents, and keep formal records of transactions that can be relied upon in future. Notaries are also legal advisors who can deal with non-contentious court matters such as probate of wills and homologation of protection mandate. See “Review Questions” for this chapter in the Student Resources online. 1-18  Introduction to the Law of Estates and Trusts Figure 1.4: Courts In Canada By Jurisdiction9 Jurisdiction Courts Canada  Supreme Court of Canada  Supreme Court of Canada - Applications for Leave  Federal Court of Appeal  Federal Court of Canada  Tax Court of Canada British Columbia  Court of Appeal  Supreme Court of British Columbia  Provincial Court of British Columbia Alberta  Court of Appeal  Court of Queen's Bench  Provincial Court Saskatchewan  Court of Appeal for Saskatchewan  Court of Queen's Bench for Saskatchewan  Provincial Court of Saskatchewan Manitoba  Court of Appeal  Court of Queen's Bench of Manitoba  Provincial Court of Manitoba Ontario  Court of Appeal for Ontario  Superior Court of Justice  Divisional Court  Ontario Court of Justice Quebec  Court of Appeal  Superior Court  Court of Quebec New Brunswick  Court of Appeal of New Brunswick  Court of Queen's Bench of New Brunswick  Provincial Court Nova Scotia  Nova Scotia Court of Appeal  Supreme Court of Nova Scotia  Supreme Court of Nova Scotia (Family Division)  Provincial Court of Nova Scotia  Nova Scotia Probate Court  Nova Scotia Family Court Prince Edward Island  Prince Edward Island Court of Appeal  Supreme Court of Prince Edward Island 9 Source: CanLII database https://www.canlii.org/en/ca/ accessed June 22, 2018. See website for a full listing for each jurisdiction, including small claims courts, youth courts, and tribunals. 1-19  Introduction to the Law of Estates and Trusts Newfoundland and Labrador  Supreme Court of Newfoundland and Labrador, Court of Appeal  Supreme Court of Newfoundland and Labrador, Trial Division  Provincial Court of Newfoundland and Labrador  Court of Appeal Yukon  Supreme Court of Yukon  Territorial Court of Yukon Northwest Territories  Court of Appeal for the Northwest Territories  Supreme Court of the Northwest Territories  Territorial Court of the Northwest Territories Nunavut  Court of Appeal of Nunavut  Nunavut Court of Justice 1-20