FAQ
Please find some frequently asked questions on the following topics below:
Why should I have a Will?
A Will provides specific instructions on what to do with your Estate (which consists of all of your possessions, property, etc.,) after your death. By having a signed Will you can ensure that:
1. The people who you want to leave specific things to will get them;
2. The people that you want to administer your Estate will be properly designated to do so;
3. That your relatives will not be left with costly issues to deal with after your death;
4. The people that you have designated as the guardians of your children will have the right to care for and be appointed legal guardians.
What if I die without a Will?
When a person dies without a Will in Ontario, that person is said to have died Intestate and that person’s Estate is distributed according to the Ontario statute, called the Succession Law Reform Act. According to that statute, when you die without a Will, your Estate will be distributed to your closest living family members in accordance with the Rules for Distribution contained in the statute. The fact that a person dies without a Will does not necessarily mean that the Government gets all of your Estate, however, that is a possibility depending on your situation when you die.
What is a power of Attorney?
A Power of Attorney is a legal document which, when properly prepared and signed, authorizes another person to act on your behalf. There are two types of Powers of Attorney:
1. A Power of Attorney for Property in which you give another person, who is referred to as your attorney, the necessary power and authority to make decisions concerning your property and other financial matters, which could include selling or mortgaging your home, dealing with your bank accounts and with financial matters such as investments and dealing with any Government departments, such as the Canada Revenue Agency with respect to income taxes.
2. A Power of Attorney for Personal Care is the document by which you give another person the power and authority to make decisions relating to medical and personal care decisions in the event that you are unable to make these decisions for yourself. Personal Care includes clothing, nutrition, shelter, and long term care.
What would happen if I became unable to make decisions or incapacitated and do not have a Power of Attorney?
If this were to occur, the Office of the Public Guardian and Trustee of Ontario could, in some circumstances, be appointed and become the attorney for your property and financial matters. Subsequently, a member of your family or someone else would have to apply to the Office of the Public Guardian and Trustee of Ontario or in other situations to the Superior Court to be appointed as the guardian of your property to act on your behalf.
By having your own Power of Attorney for Property you have made the decision about who will act on your behalf. Without one, it will be the Government of Ontario or a court that will choose that attorney for you.
Can I cancel a Power of Attorney after I have signed it and appointed someone to be my attorney?
Yes. A Power of Attorney that you have previously given can be cancelled or revoked, provided you are mentally capable of revoking it. In order to cancel or revoke a Power of Attorney you will have to sign an actual Revocation and ensure that it is delivered to the attorney that you had previously appointed.
What is Probate?
In Ontario, Probate (which is now referred to as a Certificate of Appointment of Estate Trustee With a Will) is the proof to banks, financial institutions, your investment advisors and the Government that your Will has been certified by the court and that your Executor (also referred to as an Estate Trustee) is authorized to represent your Estate.
Is there a fee for obtaining Probate?
Yes, there is fee payable to the Province of Ontario based on the fair market value of all the property that you own at the time of your death subject to the following exclusions:
1. Assets registered in joint names and which on the death of the first person automatically passed to the survivor by right of survivorship are not included in probate.
2. Real estate that is located outside of the Province of Ontario.
3. Life insurance, RRSP’s, RRIF’s for which a named beneficiary has been designated.
How is the probate fee calculated?
In Ontario on the first $50,000 of Estate value, the probate fee is 0.5% and on the balance of the Estate, the probate fee is calculated 1.50%. By way of example, on an Estate valued at $150,000.00, the probate fee is $1,750.00.
Do I need a lawyer when I either buy or sell real estate?
Yes. Ontario’s Land Registry Offices and Land Registration System have been automated requiring that all lawyers practicing Real Estate be authorized to access the electronic registration system so that real property can be transferred from one person to another.
What is a lawyer’s role when I am either buying or selling real estate?
On a purchase, the lawyer will:
- Review the Agreement of Purchase and Sale with you to help you understand the contract, especially any purchases of new homes or condominiums from a builder where the agreements are more complex than on a resale home.
- Review a title search to ensure that there are no defects or encumbrances on the title.
- Prepare all the legal documents that will be required to complete the transaction including any mortgage documents.
- Communicate with the seller’s lawyer with respect to the transaction.
- Meet with you prior to closing to review and sign all documents and to receive closing funds that you will be providing.
- Receive mortgage closing funds and arrange to provide certified payments to the seller’s lawyer.
- Register all required legal documents including the Deed of Transfer and Mortgage so that keys can be released to you.
- Advise the Tax Department and all utility companies of the change in ownership to ensure accurate billing.
On a sale, the lawyer will:
- Review the Agreement of Purchase and Sale.
- Do a sub search of the property to determine what is registered against title and what encumbrances, if any, may have to be discharged.
- Communicate with the buyer’s lawyer directly with respect to all outstanding title matters.
- Obtain tax information and prepare a Statement of Adjustments.
- Obtain Mortgage Discharge Statements if any mortgages are to be paid out of the closing proceeds and discharged from title.
- Arrange to meet with the client to sign all sale documents.
- Arrange for the delivery of sale documents and keys to the buyer's lawyer and in return receive payment of the balance due on closing.
- Arrange to payout any outstanding mortgage.
- Provide the seller with net sale proceeds.
What is Land Transfer Tax?
Generally, when a person buys land or an interest in land in Ontario, that person must pay Ontario’s Land Transfer Tax. Land Transfer Tax is normally based on the amount paid for the land.
How is Land Transfer Tax calculated?
Land Transfer Tax is payable by the purchaser on the date that the property title is transferred and is based on the purchase price. Land Transfer Tax can be calculated as follows:
Where Purchase price is; Land Transfer Tax is:
$55,000.00 or less; 5% of the purchase price.
Over $55,000.00; 1.0% of the purchase price less $275.00.
Over $250,000.00; 1.5% of the purchase price less $1,525.00.
Over $400,000.00; 2.0% of the purchase price less $3,525.00.
What are the different ways in which I may carry on my business in Ontario?
The most common means of carrying on business are a sole proprietorship, partnership, and corporation. Another term often hear is a “joint venture”, which is described below.
What is a sole proprietorship?
If you carry on business for your own account without involving other individuals (except perhaps as employees) or as a corporation, you are carrying on business as a sole proprietorship. Many small businesses are organized in this way.
What are the benefits and drawbacks of being a sole proprietor?
A sole proprietorship is the simplest form of carrying on business and involves the fewest legal formalities required in operating a business, although some requirements, such a licences, may still be required. All of the profits of the business flow through directly to the owner. However, as the owner carries on business for his or her own account, he or she is fully liable for all of the debts of the business. In addition, as the profits of the business flow through directly to the owner, these profits are taxed in his or her own hands at the higher individual tax rates.
What is a partnership?
If you, together with one or more other individuals or corporations, carry on business in common with a view toward profit, then you are considered to be a partnership.
Are there different forms of partnership?
In Ontario there are two types: general partnership and limited partnership.
What is a general partnership?
In a general partnership, the most common form of partnership, each partner has unlimited liability for the debts and obligations of the partnership.
What is a limited partnership?
A limited partnership is made up of at least one general partner and an unlimited number of limited partners. It is not recognized at law until a declaration is filed under the Ontario Limited Partnership Act. The liability of the limited partner is limited to the amount of money or other property which that partner contributes to the business. The general partners, who manage the business, are liable to an unlimited extent for the debts and obligations of the business.
What are the benefits and drawbacks of a partnership?
The structure may be kept relatively simple, particularly with general partnerships. However, we would recommend entering into a partnership agreement in order to define each partner’s duties and responsibilities, which of course, would involve additional costs. Furthermore, as a partnership is not recognized as an entity distinct from an individual partner, the profits and losses of the business flow through to the individual partners on a proportionate basis, and partners must pay tax on any profits at their personal rates.
What is a corporation?
A corporation is a legal entity which is separate from its owners (its shareholders). A corporation may own property, carry on business, possess rights and incur liabilities all on its own account. The shareholders own their corporation through their ownership of shares.
What are the benefits and drawbacks of a corporation?
As the shareholders of the corporation are not personally responsible for its liabilities, this makes it very attractive for a business owner. In addition, since a corporation is a distinct legal entity, it continues in existence regardless of the death of a shareholder or a transfer of his or her shares. Finally, the corporation itself pays tax on its income at a lower rate than the individual tax rate. For all of these reasons, the corporation is the most commonly utilized structure for a business. However, as it is a separate entity, any losses incurred by the corporation cannot be set off against other personal sources of income of a shareholder. There are also the costs of incorporating and maintaining the corporation to consider. In most cases, the benefits of incorporating far outweigh the drawbacks.
What is a joint venture?
The phrase “joint venture” is a vague term which encompasses many different business arrangements, whereby two or more persons combine resources (be it goods, services, or capital) to conduct a commercial venture together. It has no recognized legal existence in and of itself. It is sometimes acquainted with a partnership or on other occasions refers to an association of two or more persons for a limited purpose where the parties expressly intend not to be considered partners.
