Family Law and Financial Planning Flashcards
Child support/enforcement
usually 20 (1 child) or 32% (2 children). support is based on income and province of payor. can garnish fed gov pension, cpp, oas, tax refund, ei
Property division (common law)
no automatic entitlement. can apply in ontario under dependent relief (also applies for intestacy)
Family home access
each person has access regardless of if domestic contract states otherwise
Testamentary wishes in contract vs a will
domestic contract can be use to override a will. contract cannot be changed. cohabitation agreement voided after marriage (marriage contract is a prenup)
constructive trust
one spouse contributes to a business in an indirect fashion
Unjust enrichment
matrimonial property used to enrich someone outside of the relationship. ei, pay premiums for insurance policy with irrevocable beneficiary set as extra-marital partner. court has overridden this in the past.
pr exemption example
Manny and Delilah bought a house together in 1998 for $100,000. Then, in 2004, they bought a cottage for $300,000. In 2012, their cottage is worth $600,000 and their house is worth $500,000. They have decided to sell the cottage and use the principal residence exemption.
They would elect the cottage as their principal residence for the years 2004 to 2011 inclusive. Because of the “+1” in the formula, they don’t need to include the 2012 tax year. This would wipe out all capital gains associated with the disposition of the cottage.
As a result, they would only be able to use the principal residence exemption with respect to their house for the years 1998 to 2003 and then from 2012 on again. So, if they sold their house in 2015 for $600,000, they could apply the formula as follows (using 1998 to 2003 and 2012 to 2015 as the exempt period): cap gain *
pr exemption non resident
doesnt get to use the +1.
Canadians with us connections test
two years prior (1/6 of days counted
year prior 1/3 of days
current year minimum of 30 days, each day counted. if 183 or greater, substantial presence test is met. closer connection test used to demonstrate a closer connection to canada (must have less than 183 days in current year)
FBAR/FATCA/PFIC
FBAR - report if they have more than 10k of us assets aggregate at any point in year
FATCA - aggregate accounts in excess of 50k
PFIC - etf, mutual fund, reit, investment pools, etc.) retirement accounts part of tax treaty not included. required if account funds over 25k
Tax Shelter definition
must be registered with cra in advance. tax benefits outweigh the amount invested in first 4 years.
Commuted value, maximum transfer, maximum tax deferred transfer
1)mathematical value based on pv calculation
2)max value pension will allowed to be transferred (can be lower than commuted value in low rate environment)
3)max that can be transferred into lira. any additional amount can be placed in rrsp, if there’s room.
Factors affecting commuted values
return projections and discount rates. indexed pension will have a lower discount rate (high pv).
inflation and indexing - will project based on 10 and 30 year bond yields (different rates used over first 10 years)
life expectancy/marital status - think about how you compare to the averages of pension plan. much younger spouse and long life expectancy make the pension annuity look more attractive
CV vs Pension considerations
mortality assumption, investment decisions, estate value and survivors benefits, non pension benefits, solvency of plan, stability and timing of income, tax considerations (income splitting)
