Wednesday, August 29, 2007 is a Canadian collaborative legal research resource with links to and information on books, articles, websites and blogs on law by subject matter. It is very comprehensive. I am pleased and flattered that my blog is included in the links under "general wills and estates resources."

Tuesday, August 21, 2007

Don't Fall Prey to a Nigerian Scam

It's scary how email scams can suck-in people who know better.

A recent Supreme Court of British Columbia decision illustrates how the Nigerian Scam works. The case is The Toronto Dominion Bank v. Merenick, 2007 BCSC 1261.

Mr. Merenick was a financial consultant. He was just starting out. A "Dr. Chris Martins," and later a "Dr. Ahmad Rehman" began emailing him. They asked for his help in moving $8.3 million from a research grant to Canada. They promised him a commission. Mr. Merenick was skeptical. He suspected a scam. He told them so. They persisted. He refused to send them money to cover alleged taxes to move the money. They persisted.

Eventually, he agreed to accept a cheque from an "investor" for over $82,000 U.S., which he deposited into his bank account at the Toronto Dominion bank. They told him to wire the funds to another account to cover bank charges to move the $8.3 million. He did so.

The cheque was a counterfeit. The Bank was unable to recover the funds Mr. Merenick wired from his account. He resigned his position as a financial consultant and declared bankruptcy.

The Toronto-Dominion Bank applied to court for an order that Mr. Merenick would have to repay the bank despite his bankruptcy. The Bank argued that he had obtained funds from the Bank "by false pretences or fraudulent misrepresentation." If so, the bankruptcy would not release Mr. Merenick from his obligation to repay the Bank.

Madam Justice Holmes found that Mr. Merenick had not acted untruthfully or fraudulently with the Bank. Accordingly, on discharge from bankruptcy, Mr. Merenick will be released from the debt to the bank.

Still, he paid a heavy price.

Please, when you get one of these emails, just delete it.

Tuesday, August 14, 2007

Rule of Law's Second Anniversary

I missed it.

Yesterday, was the second anniversary of my blog. In the last year my readership has increased, and I get many more inquiries directly from my blog. But, my perspective has not changed much, if at all, since I wrote my first anniversary post.

One of the things I enjoy most is writing comments about court cases. I now understand why law schools use the case law method to teach students. There is no better way of understanding law than in the context of actual cases, involving real people with real disputes. I like the fact that in my blog, I can link to the cases. My readers can read my perspective, but can also read the reasons for judgment in a case themselves. No doubt, their perspectives will differ from mine.

I also think that people who take the time to read the cases will get a sense of how good our judiciary in British Columbia is. In my experience, our judges are patient, consider all sides carefully, and are extremely bright. I find this is just as true in those cases where I disagree with the result as when I agree. I don't think that the commercial media in British Columbia always do a good job of giving people a sense of the high quality of work that our judges do. I hope my blog gives people a more in depth understanding of law and the courts in British Columbia.

I will try to remember my third anniversary.

Sunday, August 12, 2007

Central Okanagan Land Trust

The Central Okanagan Parks and Wildlife Trust changed its name to the Central Okanagan Land Trust in June, 2007.

The Central Okanagan Land Trust is dedicated to preserving, conserving and fostering nature or wildlife sanctuaries, parks or reserves in the Central Okanagan of British Columbia. The Central Okanagan Land Trust is a registered charity with Canada Revenue Agency.

The Central Okanagan Land Trust accepts cash gifts, which it uses to promote conservation, and gifts of land for preservation. The Central Okanagan Land Trust may also accept conservation covenants on land in the Central Okanagan. A conservation covenant restricts the use of the land. The authority for a conservation covenant is in section 219 of the Land Title Act, RSBC 1996, c. 250. By placing a conservation covenant on your land, you as an owner may continue to own your property, but restrict what future owners may do on the land. The purpose of any restrictions is to prevent future owners from interfering with the natural habitat on part or all of the land.

The Central Okanagan Land Trust may also issue tax receipts for gifts of land certified by the Federal Minister of the Environment (or by certain designated agencies) as ecologically sensitive property. The gifts may include conservation covenants.

The address for the Central Okanagan Land Trust is 217-1889 Springfield RoadKelowna, B.C.; V1Y 5V5.

Friday, August 10, 2007

Chowdhury v. Argenti

Mr. Peter Argenti was a longshoreman, from a socially conservative background. He had been married, and had three daughters. He also was in a same-sex relationship with Mr. Reza Chowdhury for fourteen years. He kept his relationship secret from his friends.

Before he died, Mr. Argenti transferred his house into a joint tenancy with one of his daughters, Tina Argenti. By his will, he also left everything to her.

After Mr. Argenti's death on September 23, 2003, Mr. Chowdhury made a Wills Variation Act claim to vary Mr. Argenti's will. (He also made claims to an interest in the house, but I am going to confine my discussion to the Wills Variation Act claim.)

In British Columbia, the Wills Variation Act allows a spouse or child to apply to court to vary a will if adequate provision has not been made for the spouse or child.

One of the issues in Chowdhury v. Argenti, 2007 BCSC 1207, was whether Mr. Chowdhury was Mr. Argenti's spouse as defined in the Wills Variation Act. For the purpose of the Act, a spouse includes someone who “is living and cohabiting with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, and has lived and cohabited in that relationship for a period of at least 2 years.”

Madam Justice Allan found that Mr. Chowdhury was not Mr. Argenti's spouse at the time of Mr. Argenti's death. Although they had lived together for about three years from 1993 to 1996, they did not live together thereafter. She found that even if they had lived in a marriage-like relationship when they lived together, they were not in a marriage-like relationship at the time of Mr. Argenti's death. Accordingly, Mr. Chowdhury could not succeed in his claim to vary Mr. Argenti's will.

In reaching her decision, Madam Justice Allan considered the evidence that Mr. Argenti's relationship with Mr. Chowdhury was not open. There was not a general recognition among friends and family in the community that they were a couple. She attached little weight to this evidence, noting the difficulties same-sex couples may have in being accepted. She wrote at paragraph 61,

I was not directed to any Canadian case considering a plaintiff’s claim to be a spouse in a same-sex relationship. While the Canadian government has recognized the right of same-sex couples to marry and – whether they are married or common-law - to enjoy the benefits and rights accorded to opposite-sex couples, not all of society approves of, or recognizes, same-sex relationships. In some communities, openly gay people may be subjected to prejudice and vilification. There are obvious reasons, unique to same-sex couples, for keeping a close, loving marriage-like relationship a secret from their employers, family and friends. In my view, the “recognized in the community as a couple” requirement that opposite-sex couples enjoy common-law status should not be imposed on all same-sex couples.

The Court’s reasons indicate that two people may for the purpose of the Wills Variation Act live in a same-sex marriage-like relationship, even if they are not open with others about their relationship. In this case, Mr. Chowdhury was unable to establish that he lived in a marriage-like relationship with Mr. Argenti at the time of Mr. Argenti’s death

Saturday, August 04, 2007

Life Insurance Trusts for Your Spouse and Children

I like preparing life insurance declarations for couples with young children.

I have written before about some of the advantages of having a lawyer prepare an insurance declaration that sets out trusts for minor or young adult beneficiaries, instead of relying on the insurance company designation forms. On the insurance company forms, you can name one or more primary beneficiaries, and alternates, but the forms don't provide for more sophisticated planning. For example, it would be difficult to defer the age at which a child gets full control of the life insurance proceeds to an age later than the age of majority. Do you want your child to have control over hundreds of thousands of dollars at eighteen or nineteen?

It is probably most common for couples to name each other as the beneficiaries, and then provide for the children as alternates (in case the other parent has died first). But, in some cases I have suggested to my clients that they consider something a little different.

Lets use an example. Supposing a husband owns a five hundred thousand dollar term life insurance policy on his own life. (It is important that he is the owner of the policy.) If he designates his wife as the beneficiary, on his death she will receive the proceeds tax free. She will likely need to invest the proceeds to provide some income for her to support herself and any minor children.

When she earns income on the investments she will pay tax on the income. The rate of tax will depend on how much other income she makes. This is because Canadian tax law provides for higher rates of taxation at higher incomes. (You can see the different rates for 2007 courtesy of KPMG here.) This means that if she works outside of the home, she may have to pay a relatively high rate of tax on the income earned from the life insurance.

One alternative is for the husband to sign a declaration in which he appoints his wife as a trustee to hold the proceeds of the life insurance in a trust for the benefit of herself and their children. As trustee she has the responsibility of managing the proceeds on his death. The terms of the trust can allow her to decide to make payments to herself or to one or more of her children. She still has control.

If the husband owned the life insurance policy on his own life, and made the declaration creating a trust arising on his death, the trust will qualify as a testamentary trust as defined in section 108(1) of the Income Tax Act, Canada. Please note that the trust must arise on the husband's death. The trust will be treated as a separate tax payer, taxed at graduated tax rates.

The wife as the trustee can choose to have the income taxed in the trust. If in our example, the insurance proceeds earn income of $25,000 in a year, the rate federal and provincial income tax in British Columbia would be about 21% (it will be different in other provinces.) On the other hand, if she earned the same $25,000 investment income in addition to $50,000 employment income, the rate of tax on that $25,000 would probably be at least 31 %. By having the income taxed in a trust, she saves about $2,500. She can get similar savings every year.

Because her children are also beneficiaries of the life insurance trust, she could pay the income to them, and have the children declare the income on their taxes. If they are students without much other income, they may be able to shelter the income under their personal tax credits. The effect may be in some cases that the income can be earned tax free.

The insurance declaration can also provide that any funds remaining in the trust on the wife's death can go to the children, or into trusts for them. There should also be a trust for the children if the wife dies before the husband.

In our example, the wife might have her own life insurance policy on her life. She can create similar trusts for her husband and children.

I caution that as with all estate planning techniques, there are occasions when this type of trust will not be appropriate, but I think it suites many couples with young children well.