No, Canada does not have Estate and Gift Taxes. Instead, we have provincial and territorial probate fees or estate administration taxes that are triggered when probate applications are filed. The fees or taxes vary across the country with Ontario being one of the highest at the rate of 1.5% on estate values over $50,000 with no upper limit.

When a person dies, they are deemed to have disposed of all of their assets on death and this can trigger capital gains which are then included in income (at the applicable rate) on the final tax return and the graduated rates (federal and provincial applied) to the overall taxable income.

Persons who are citizens or domiciliary of another country may still be subject to the Estate and Gift Tax rules of those countries in addition to Canada’s tax and probate rules. For example, the United States taxes based on citizenship rather than residency. The United Kingdom has a system that recognizes domicile as a basis for taxation, but this is currently under review.

You should have powers of attorney for property or personal care (or their equivalent) in each jurisdiction where you have assets and regularly spend time. While jurisdictions within Canada, and outside, may generally recognize Ontario powers of attorney for example there are still differences in the law. This can result in delays and extra costs.

With respect to health and related personal care decisions, time can be of the essence adding to the complication of legal differences.

It can be well worth your time and money to have multiple powers of attorney giving you and your substitute decision makers additional peace of mind.

In common law jurisdictions such as Ontario, and parts of Canada other than Quebec, trusts are a relationship with respect to property that arose out of an area of law called equity. Trusts are not separate legal persons like a corporation although they are taxable.

A key feature of trusts is that the assets settled into the trust become separated into legal and beneficial ownership. The trustee(s) hold legal title which allows them to manage the assets and the persons with vested beneficial interests are the beneficiaries. Others may also benefit from some trust structures without having vested rights or interests. An example are objects of a powers of appointment, who are often also listed in trust deeds as beneficiaries because they benefit, but they are not true beneficiaries.

Trusts for the benefit of persons are created when the legal requirements are met:

• Certainty of intention (of the settlor)
• Certainty of subject matter (property to be held in trust)
• Certainty of objects (beneficiaries of the trust)
• Constitution (property to be held in trust is delivered to the trustees as the law requires for the particular type of asset)

Purpose trusts are a special form of trust permitted in some jurisdictions, at least on a limited basis, such as Ontario and Alberta. For these, instead of certainty of objects, there must be a clear purpose although the class of persons who will ultimately benefit from the trust carrying out its purposes is still important. Charities formed by way of a trust are an example of a form of purpose trust and there are special rules for charitable trusts.

Trusts can be created verbally unless the law requires otherwise, such as trusts for interests in real property. In this case, the trust must be documented in writing. The proper form of documentation for a trust is to use a deed as a transfer of property is involved: legal title to the trustees and beneficial interests to the beneficiaries. People can enter into agreements with respect to the transfer of property, but the agreements themselves do not transfer property. Instead, another mechanism is needed, and deeds are that method and may need to be registered to complete the transfer process.

The first distinction to make is between common law trusts that can arise in jurisdictions outside of Quebec, which is a civil law jurisdiction and has a different set of laws with respect to trusts.

The two main categories of common law trusts are express trusts and implied trusts. Express trusts are those that are created intentionally while implied trusts arise be operation of law and are remedial in nature.

Express trusts can be further divided into inter vivos trusts and testamentary trusts. Inter vivos trusts are those created during the settlor’s lifetime and testamentary trusts are those that arise on or as a consequence of death. Testamentary trusts are often recorded in Wills but can also arise from an inter vivos trust and be documented in its deed.

Common forms of inter vivos trusts are family trusts, alter ego and joint partner trusts as well as spousal trusts. There can also be inter vivos trusts for specific purposes such as holding a vacation property

There can also be testamentary family and spousal trusts as well as those designed to hold specific assets.