The attached presentation was presented by lawyer and partner Joseph Cuenca and articled student Larissa Sleva to the Richmond Chamber of Commerce lunch and learn webinar.
The attached presentation was presented by lawyer and partner Joseph Cuenca and articled student Larissa Sleva to the Richmond Chamber of Commerce lunch and learn webinar.
Are you looking for a firm that appreciates a work life balance?
Cohen Buchan Edwards LLP is accepting applications from experienced litigation lawyers of 3 plus years. First hand experience with Family Law and civil litigation an asset.
CBE is located in Richmond, BC. established 40 years ago with many returning clients. CBE has an excellent support system of staff using modern software and technology to support our lawyers. Voted #1 law firm in Richmond, by the Richmond News readers.
What is CBE looking for:
What will CBE provide:
If you feel you can bring value to Cohen Buchan Edwards LLP and would like to be a part of this team, please send your resume along with a cover letter telling us why you would like to join CBE to hr@cbelaw.com .
Please note we will be unable to reply to all applicants. Only candidates on the short list will be contacted.
An executor takes care of your estate when you die, but who takes care of things if you are unable to make decisions for yourself while alive?
Signing a power of attorney gives someone you trust implicitly — like your spouse, sibling or child — signing authority over your financial and legal affairs. The person appointed, known as your attorney, can conduct banking on your behalf, buy and sell property, and even renew your mortgage.
It isn’t fun to think of situations where you might need someone to take control over your financial affairs — but it can help tremendously in a number of situations, from a debilitating accident, to a brain injury, to a diagnosis of dementia.
The most common form used by individuals is an enduring power of attorney, effective upon signing, which can be used whether or not you are incapacitated. Some people prefer to grant a springing power of attorney, which can only be used once you become incapable, although this requires proof of your incapacity, which may delay use of the power of attorney.
Both types of enduring power of attorney will allow your trusted appointee to protect your financial and legal interests when you can’t protect yourself. The alternative to an enduring power of attorney, getting a court-appointed guardian, can be both time consuming and expensive.
Granting someone power of attorney does not have to be a permanent decision. You can choose to revoke or change your power of attorney at any time.
Much like writing a will and appointing an executor, a power of attorney will ensure your interests are represented. Choosing your power of attorney is an important planning decision and requires careful thought and consideration. Talk to Cohen Buchan Edwards today and see how we can help you plan for the unexpected and protect your interests and assets.
When setting up a business, there are a variety of business structures that are available. So which is best for your needs? Below is a general overview of three basic business structures.
Sole-Proprietorship
In a Sole-Proprietorship a business has a single owner who is solely responsible for all the liabilities a company owes to third-parties (eg. financial institutions). This business structure is the simplest way of organizing your business as it only requires a business owner to
From a legal and tax standpoint, there is no distinction between the business and the individual who owns the business. As a result, there is single ownership of the assets and liabilities of the business and there are low administrative costs and few formalities associated with operating the business. The lower level of complexity of a sole-proprietorship allows business owners to use simple accounting software to track their revenue and expenses. Further, if a business owner chooses to retain an accountant for their accounting requirements, then there are likely to be lower fees associated with the work. The legal structure of a sole-proprietorship is such that no public reporting is necessary, and the sole proprietor only needs basic financial knowledge to run the company and satisfy banks, vendors, CRA etc.
From a tax standpoint, the sole proprietorship’s earnings before tax (EBT) form the taxable income of the sole proprietor. The sole proprietor’s income is taxed at the personal tax rates of the individual, hence this type of business structure is limited when it comes to deducting expenses and sheltering its income.
Finally, as mentioned, the liabilities of the sole proprietorship are also considered to be the liabilities of the individual owning the business. As a result, the business owner is fully responsible for all of the company’s dealings. This can lead to a situation where, if the business were to be sued, then the business and personal assets of the sole proprietor can be seized to settle claims.
Corporation
A Corporation is a separate legal entity that can own assets, incur debt, sue, be sued, enter into contracts, and hold property in its own name. A Corporation is formed when one or more individuals incorporate a business. It can be incorporated provincially or federally.
A Corporation is considered to have potential “immortality” in that it is an impersonal entity that can in theory exist forever. This means that despite certain changes in the Corporation’s composition (eg. An owner dying, shareholders changing etc.), the Corporation would not dissolve.
A defining feature of a Corporation is the limited liability associated with it. Under all Canadian statutes providing for the incorporation of companies, the members who form the corporation and become its shareholders are only required to contribute towards the debts of the Corporation the amount that they have agreed to pay for their shares in the Corporation. Limited liability is a substantial advantage in that if the Corporation is sued, the owners’ personal assets cannot be seized to settle the claims. Further, the ownership percentage of the owners of a Corporation is dependent on how many shares the shareholders hold.
A strong advantage for Corporations within our current taxation scheme is that they have few limits on the expenses they can deduct for taxation purposes. Corporations pay tax on earnings before tax at established rates. Net income that is distributed to owners is then taxed again at their personal rates. Further, some Corporations receive preferential income tax treatment and Corporations often provide more flexibility in deferring taxes and in allowing the division of business income.
However, incorporating and maintaining a corporation can be a relatively costly endeavour. For example, a corporation is required to file its own income taxes as well as abide by its annual filing requirements. The initial cost of incorporation and organization required to maintain related documents can also be a hurdle to consider. Further, in the multiple owner structure of a Corporation the shared decision making can increase accountability, but can also lead to slower decision making.
General Partnership
A General Partnership is a business established by two or more owners. General Partnerships are fairly simple and inexpensive to form as there are few formal legal requirements. All the General Partnership needs is a:
Typically the owners (the “Partners”) work out a partnership agreement that outlines their respective powers, ownership share and capital contribution, profit distribution, and operating procedures for the business. By default, all Partners are able to share in the management of the company, in the absence of a partnership agreement that states otherwise.
A General Partnership includes joint ownership with some formalities and moderate administration expenses. The Partners of the Company essentially pool their funds to raise capital. A disadvantage of a General Partnership is that decision making can become cumbersome, as important decisions require voting among partners. However, the partnership agreement may provide that smaller, less important decisions may be made individually as long as the other Partners are informed.
Revenues, expenses and cash flow management are typically tracked internally with additional support from outside accountants. There are no public reporting requirements for General Partnerships, but general financial information would be required to run the company and satisfy banks, vendors, CRA etc.
From a taxation perspective, each Partner is taxed individually on his or her share of the partnership income. Hence, there is no need for a tax return from the General Partnership itself. In terms of disadvantages, there are greater limits to what expenses can be deducted and the taxable income of the individual Partners is subject to their personal tax rates.
Legally, each Partner is liable for all assets and liabilities of the General Partnership. As a result, if the company is sued, then each Partner’s personal assets can be seized to settle the claims.
* Much of this general information can be found on the Business Development Bank of Canada website
If you have questions about how to best structure your business, contact Cohen Buchan Edwards LLP at 604.273.6411 to speak to one of our lawyers.
Being the director of a corporation sounds like a cushy job, but not so fast. A director has a stringent set of rules to abide by.
The BC Business Corporations Act sets out all the duties that a director has. Particularly, a director must act honestly and in good faith with a view to the best interests of the corporation and exercise the care, diligence, and skill that a reasonably prudent individual would exercise in comparable circumstances.
Honesty
Directors must respect the trust and confidence they have been given in managing the assets of the corporation. Further, they must be truthful and open and are prohibited from realizing any secret profits or non-approved conflict of interest.
Good Faith and In the Best Interests of the Corporation
The duty of good faith can be generally referred to as the duty of loyalty or fiduciary duty. Whether a director has exercised this duty of good faith is determined on a case by case basis.
Diligence
The duty of diligence puts the onus on a director to make those inquiries that a person of ordinary care in that position or in managing his or her own affairs would make. Some examples of situations where these duties of directors come into play are as follows:
Skill
Directors must respect the trust and confidence they have been given in managing the assets of the corporation and must exercise the care, diligence, and skill that a reasonably prudent individual would exercise in comparable circumstances. Further, they must avoid using their position for their personal benefit and must avoid any conflicts of interest with the corporation. Finally, directors must maintain the confidentiality of any information they obtain by virtue of their position and they must serve the corporation selflessly, honestly and loyally.
Duties Are Owed to Corporation
The long standing principle has been that directors owe a fiduciary duty only to the Corporation and not anyone else. However, recent case law has carved out exceptions where directors may be held liable to other groups such as shareholders, creditors, employees, the government and the public, among other groups.
Conflicts of Interest
As mentioned previously, directors are to avoid conflicts of interest wherever possible. However, courts consider what a reasonable person, in considering a particular situation, would think gives rise to a real sensible possibility of conflict, not what one could imagine could arise out of a situation. Essentially, the courts are not willing to look at every possible situation which could arise out of a situation as a potential conflict.
Further, directors have an obligation to disclose to shareholders any profits or gains realized from a contract or transaction with the corporation if it is material to the corporation. The Business Corporations Act has codified this requirement, by setting out a general test which requires assessing whether
If answers to both parts of the test, are a “yes” then a director should disclose the interest to the shareholders of the corporation.
From a practical perspective, an assessment of whether a director is in a conflict of interest, whether they have addressed the conflict of interest, and whether they have made sufficient disclosure to interested parties is a fact based exercise. Directors would be prudent to remain as transparent as possible when dealing with any potential conflicts of interest.
For inquiries on this topic, please contact one of the lawyers from our Business Law Group at 604.273.6411.
An Enduring Power of Attorney is a document prepared in accordance with the Power of Attorney Act, that a capable adult (the “Adult”) (at least 19 years old) uses to appoint another person, called an Attorney, to make financial and legal decisions for them. Essentially, an Enduring Power of Attorney remains in effect (or endures) if the adult becomes incapable of managing his or her affairs (Power of Attorney Act s. 30). Those considering creating Enduring Power of Attorneys should be particularly cognizant of the age requirement for an Attorney being able to act for a capable Adult. Specifically, if an Enduring Power of Attorney names as Attorney an individual who is not an adult (at least 19 years of age), that individual may not act until becoming an adult (Power of Attorney Act s. 18).
In order to distinguish an Enduring Power of Attorney from a general Power of Attorney, s. 14 of the Power of Attorney Act states that an Adult who makes an Enduring Power of Attorney must state the following in the Enduring Power of Attorney:
The key distinction between a general Power of Attorney and an Enduring Power of Attorney is that an Enduring Power of Attorney, unlike a general Power of Attorney does not cease to be in effect if the Adult becomes incapable of managing his or her affairs. However, there are enumerated grounds through which the authority of an Attorney under an Enduring Power of Attorney is suspended or ends. S. 29 of the Power of Attorney Act provides that the authority of an Attorney under an Enduring Power of Attorney is suspended or ends:
The Land Title and Survey Authority of British Columbia (the “Land Title Office”) often deals with Enduring Power of Attorneys, when an Attorney wishes to deal with the real property of the authorizing Adult. However, the Land Title Office often finds issues with Enduring Power of Attorney documents and accompanying applications which cause them to reject registrations of Enduring Power of Attorneys to deal with the real property of the authorizing Adult. In essence, if the Enduring Power of Attorney does not meet the requirements of the Land Title Office, it will be ineffective for purposes related to real property. For example, defective Enduring Power of Attorneys cannot be used to sell, purchase, mortgage or otherwise deal with real property.
Some of the common mistakes the Land Title Office sees in Enduring Power of Attorneys are as follows*:
These mistakes will result in the Enduring Power of Attorney being rejected for registration at the Land Title Office, and thus useless for land purposes.
For inquiries on this topic, please contact one of the lawyers from our Real Estate Group at 604.273.6411.
*ltsa.ca/practice-information/common-errors-leading-defects
Accidents are never pleasant, but having a car accident outside of British Columbia can add a layer of complexity. Your ICBC policy is valid in other provinces and in the United States. However, your policy may provide a limited scope of that coverage. This is especially the case if you need to pursue an “at fault” driver when the accident happens away from home. It’s helpful to understanding ICBC’s role when the accident occurs outside of your home province.
ACCIDENTS IN BC
When an accident occurs in BC, ICBC is on one hand your insurer, which is contractually bound to offer coverage for certain treatment expenses and related income loss, as part of your policy. In this role, ICBC is also required to pay for damages that may be assessed against you, arising from mistakes that you make on the road.
At the same time, ICBC is also the insurer for the other party in the accident, and in that role ultimately responsible for paying damages to you in a “tort” claim, if the other party is found liable for damages that you suffer. Compensation is paid in to you by ICBC in its capacity as the other party’s insurer.
The distinction is often muddled, as the same ICBC adjuster will often concurrently deal with you on benefits under your policy (commonly termed “no fault” or “Part VII” benefits), as well as discuss compensation being offered to you, in ICBC’s other role as the other side’s insurer.
ACCIDENTS OUT-OF-PROVINCE
When an accident occurs in another province or abroad, ICBC’s role is confined to that of your insurer only. If you are involved in an accident while traveling, your claim would be governed by the laws of that jurisdiction.
An accident in Bellingham for example, will usually be bound by the laws of Washington state, and the defence of any action brought would be handled by the US insurer for the American driver. Any Court proceedings will also likely take place in Washington state. A myriad of issues can arise given the differences in laws and limitation periods dealing with claims in a foreign jurisdiction, and you should move quickly to ensure that someone is there to assist you in navigating through the complexities of a claim being brought out-of-province.
Further, laws in many US states often mandate a much lower minimum “third party coverage” threshold (the amount of coverage available to the other side’s insurer to satisfy your claim), which means that additional steps must be taken early on, to ensure your rights are fully protected.
Specific thought also must be given to the Underinsured Motorist Protection (“UMP”) provisions of your ICBC Basic Autoplan policy, which offers you protection in the event that that at-fault driver does not have sufficient coverage. While this is a contractual benefit, specific steps must be taken to secure the protection of this coverage in the event that there is a shortfall. A lawyer should be able to assist in making the determination whether you will likely need to turn to UMP. For added protection, ICBC also offers optional “Extension UMP” coverage, which can be purchased to offer further protection.
In cases which the accidents occurred elsewhere but involving only BC drivers (who would all be insured by ICBC), the parties can agree to have the matter dealt with in BC. In those instances, the parties can agree to attorn or agree to the jurisdiction of the BC courts so as to simplify the process, though foreign laws may still apply.
Bottom line: before you drive outside of BC, it’s a good idea to contact your insurance broker to obtain the right coverage. If you do get in an accident while away from home, consider hiring a lawyer to help you navigate the aftermath.
If you have any questions regarding ICBC related matters, please contact Monica Dosanjh at monicadosanjh@cbelaw.com or 604.273.6411.
There are many kinds of pension plans. Most are subject to division upon marriage breakdown. Marriage includes a common-law relationship of two years or longer.
Federal Government plans include the Old Age Pension Plan (OAP), Canada Pension Plan (CPP).
There may be foreign pension plans, military pensions and disability pension plans. These are not discussed here.
There are federally regulated plans and provincially regulated plans. They are all quite complex and each plan requires precise and specific language to effect a division.
The most common pension plans are employment pension plans and we will spend most of our time discussing these plans.
OAP
OAP is not divisible. It is payable to most Canadians at age 65.
CPP
CPP is divided according to the Canada Pension Plan upon application by either spouse. An equal division of CPP credits earned during a relationship is mandatory unless both parties elect not to divide the pension, for example if both parties have made maximum contributions during the relationship.
Employment Pensions
Employment pensions are often the largest or second largest family asset after the family home. The portion of the pension earned during cohabitation is a family asset and your spouse is entitled to one half of that portion. The Family Law Act has specific provisions for division of pensions on marriage breakdown. Different rules apply if the pension has already commenced.
The two most common employment pensions are defined contribution plans and a defined benefit plans.
A defined contribution plan is very similar to an RRSP. It is worth what it says it is worth (in pre-tax dollars) and it can generally be easily divided.
A defined benefit plan is a much more complicated investment. It generally pays out based on your best (usually last ) five years of income and so the amount paid into the plan bears little resemblance to what the plan is actually worth. It is often worth 3 to 5 times more than the contributions made.
The Family Law Act has detailed provisions for how a defined benefit plan should be divided. Defined benefit plans are usually divided “at source”. This means the pension plan is required to create a plan in the name of the spouse who becomes a “limited member”. The credits accumulated during cohabitation are then divided equally. The limited member then has the same elections to make as the prime member upon retirement. The pension may be received on the earliest date that the prime member could retire.
In the alternative and generally only if both parties agree, the plan member can buy out the interest of a spouse. This way, the plan member can keep the pension intact and the spouse can be compensated with other assets if there are sufficient assets to do so. This requires hiring an actuary to value the plan. An actuary is a highly trained and accredited specialist. There are a number of assumptions that must to be made to come up with a range of value for the plan.
Written Agreements
Once spouses have agreed on how to divide their pension or pensions, the agreement must be put in writing and be signed. The drafting of a marriage agreement, cohabitation agreement or separation agreement is complex and must be tailored to the individual plan. If the drafting is insufficient, the pension plan will ignore a request for division.
Spouses can predetermine what will be done with pensions in a cohabitation agreement or marriage agreement (they amount to the same thing). The agreement would specify what happens with child and spousal support, land, investments, the pension and any other assets that may exist.
Pensions are valuable assets, much more valuable than most people realize. Be sure to incorporate this asset into your thinking.
Garth Edwards is a partner with Cohen Buchan Edwards and has practised family law for 33 years. Garth may be contacted at garthedwards@cbelaw.com or 604.273.6411.
The division of family property in British Columbia changed in 2013 with the enactment of the Family Law Act.
The scheme of our new act is that all property that an individual brings into a marriage (which includes a common-law marriage of at least two years) is “excluded property”. The increase in value of all assets during cohabitation including excluded assets is shared equally unless a court orders an unequal division of family assets under section 95 of the Family Law Act. An unequal division is extremely rare and is only done where a court decides that it would be “significantly unfair” to divide assets equally.
The value of the excluded property when it was brought into the relationship would normally be paid back to the individual who brought it into the relationship “off the top” at its original value upon breakdown of the relationship. In theory, if you sold a home for $100,000 10 or 15 or 40 years ago and invested that as a down payment in a new family home then you would receive $100,000 upon division of assets today.
Excluded property would include assets that either spouse had when they began cohabitation or assets that they brought in during the relationship by way of inheritance or windfall. It may include a home, an investment, an RRSP or contribution to a pension.
The scheme is not as easy as it might sound. You have to prove that you brought in the asset and trace it to an existing asset. Proving that an asset existed 15 or 20 or 40 years ago can be very difficult as documents may no longer exist. For example, obtaining bank documents or RRSP statements may be impossible unless someone has retained the paperwork. Valuing the asset 15 or 20 or 40 years ago can be just as difficult. For example, you may be required to obtain a historical appraisal of real estate. Tracing the asset means that you have to show that it was used to acquire an asset such as a home or an investment, or paid down a debt on an asset such as the mortgage on a home. You have to show that that asset still exists in some form today.
If the excluded asset was used to pay down credit cards or go on a holiday it is lost. You cannot seek compensation for your contribution unless it still exists.
Determining potentially excluded assets is one of our biggest headaches in family law today. The law is changing almost daily as a result of how judges are interpreting the Family Law Act. If an excluded asset was put in the name of the contributors spouse alone, the exclusion may be lost. If an excluded asset is put into joint names it may or may not be lost depending on how the courts rule in the future.
It is safest to retain assets that you bring into a relationship in your name alone in order to ensure that the exclusion is not lost. This is difficult to do in any relationship and may be totally impractical. To clarify what you as spouses want you should have this discussion now and create a marriage agreement or a cohabitation agreement while you are still on good terms. This is good practice and good planning just as doing your will and saving for your retirement is.
Garth Edwards is a partner with Cohen Buchan Edwards and has practised family law for 33 years. Garth may be contacted at garthedwards@cbelaw.com or 604.273.6411.
Not all legal disputes need to be resolved in court. Most family law cases settle using out-of-court alternatives. These out-court-alternatives, or alternative dispute resolution methods, include mediation, arbitration, and the collaborative process. It is not always possible to avoid court, but alternative dispute resolution methods are far more beneficial to resolve legal problems that come up when a relationship ends, especially if children are involved.
TYPES OF ALTERNATIVE DISPUTE RESOLUTION METHODS
Mediation is a type of negotiation that is assisted by a neutral, third party called a mediator. Although a mediator does not have decision-making power, he or she can assist the parties with identifying the issues between them, and help negotiate and reach a resolution. Parties can attend the mediation alone, or with a lawyer.
Parties who cannot agree on some or all of the issues in their family law dispute can attend arbitration. Often, each of the parties will bring their own lawyer to the arbitration. An arbitrator is an independent third party who acts like a judge. He or she will listen to both parties, and then make a decision that is legally binding and enforceable in court.
In the collaborative process, the parties and their lawyers work together, and utilize other professionals, such as divorce coaches, to create solutions that work for both parties. The collaborative process requires the parties to agree not to go to court, to have open and honest communication, and to work as a team to resolve their dispute.
BENEFITS OF USING ALTERNATIVE DISPUTE RESOLUTION METHODS
When parties mediate or engage in the collaborative process, they are in control. They are directly involved in the process, and work together to come up with creative solutions to resolve their disputes.
The cost of litigation is high and unnecessarily drains family resources, particularly because the process takes a lot of time. Alternative dispute resolution is often cheaper, and less time-consuming and stressful than going to court.
As alternative dispute resolution occurs outside of the court, it avoids publicity of personal information. The only people in attendance are the parties, their lawyers, and/or the mediator or arbitrator. Negotiations are private, and cannot be introduced as evidence if the parties proceed to court.
Since alternative dispute resolution methods encourage team work, it encourages the parties to maintain a mutual respect and helps maintain relationships in the future. When children are involved, it encourages positive co-parenting.
If you have questions about alternative dispute resolution, or are looking for a mediator or collaborative process lawyer contact Cohen Buchan Edwards LLP at 604.273.6411 and speak with one of our family lawyers.