That is for good reason because your will dictates how your property will be distributed upon your death.

However, what if you lose the capacity to deal with your property during your lifetime or become temporarily disabled or hospitalized?

Your will cannot give anyone the power to deal with your property until you pass away, so what if you need a trusted person to deal with your personal or financial affairs during your lifetime?

As such, it is important to plan for a variety of scenarios when evaluating your estate planning documents, not just your death.

The enduring power of attorney document has grown increasingly popular in recent times and will now typically accompany any will that you may draft with a lawyer.

This document permits you to appoint someone to manage your personal and financial affairs while you are still alive.

The powers under the power of attorney will generally come into effect upon your execution of the document, unless you provide otherwise. For this reason, it is important to appoint a trusted friend or member of your family.

There is also the ability to divide your powers of attorney into two distinct roles, which may be occupied by different people or the same person.

You may appoint a personal power of attorney and a property power of attorney.

A personal power of attorney will make decisions regarding your day-to-day standard of living and care. This may include where you live, what type of nursing care you receive and your meals and clothing.

A property power of attorney will have the power to deal with your property in a way that they determine is most beneficial. This may include dealing with investment accounts, real estate or any businesses you may own or operate.

No matter how you organize your powers of attorney, they can prove invaluable should you ever lose the ability to make such decisions for yourself.

The number one reason to get yourself and your loved ones enduring power of attorney documents is to circumvent the path you must follow should you lose capacity without a power of attorney document in place.

The remainder of this article will explore the onerous process of attaining an adult guardianship or co-decision-making order, which is the only way to obtain the power to make decisions on behalf of a loved one who may have lost the capacity to do so.

To become a personal or property guardian/co-decision-maker, you must make an application to the Court of King’s Bench of Saskatchewan. To apply to become a personal guardian/co-decision-maker, your application must contain:

• The application form.
• An affidavit in support of the application.
• Two affidavits regarding the capacity of the adult.
• A draft order appointing a decision maker.

When applying to become a property guardian/co-decision-maker, your application must contain:

• The application form.
• An affidavit in support of the application.
• Two affidavits regarding the capacity of the adult.
• A statement of inventory of all of the assets and debts of the adult.
• Bond.
• A draft order appointing a decision maker.

The bond may be waived for a longtime spouse applicant with the consent of all of the children of the adult, but generally it requires the applicant to pay 20 per cent of the value of the adult’s property into the court and grant a personal bond for the remainder. It may also require surety from another individual or institution, signalling they will financially back up the applicant if needed.

These documents will also have to be served upon a number of people, including the adult, the adult’s nearest relatives, anyone in a position of trust with the adult and the Public Guardian and Trustee.

Once proof of service on all parties has been filed along with the application, the court will review and make a determination on the application.

As you can imagine, this process can be expensive and drawn out and create tension between family members of the adult who has lost capacity.

In the time required to compile, file and serve these forms, there may be personal or property decisions that are time sensitive and cannot be made, which may negatively impact the adult who has lost capacity.

A well-drafted power of attorney document allows for the circumvention of these applications and allows for the appointed attorney to deal with the property and/or personal decisions of the adult immediately, without undue delay.

Blake Barnes was a summer student with Stevenson Hood Thornton Beaubier LLP in Saskatoon. Contact our firm at office@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal advice.

Many already understand the importance of having a succession and estate plan in place, particularly to ensure there are no negative or unintended tax results when you pass away.

However, there’s another step that’s just as important and often overlooked: making sure your children or beneficiaries know what that plan actually is.

A well-crafted plan on paper is only half the job. If your family doesn’t understand your intentions or your plan is poorly implemented, confusion and disputes can arise after you’re gone, sometimes undoing years of careful planning.

When a farmer passes away without clear communication, even the best legal documents and tax plan can’t prevent hurt feelings or misunderstandings.

Consider the following:

• If your children don’t know your wishes or rationale, incorrect assumptions can arise and plans can be questioned.
• When dealing with grief, your children are less likely to process new information rationally, and the potential for misunderstandings leading to conflict is amplified.
• Passing a farm to the next generation has a sizable dollar value tied to it. As the stakes increase, the likelihood of disputes also rises.

Talking about your plan isn’t always easy, but it offers significant advantages:

• Your family knows what to expect, reducing surprises and resentment.
• Sorting through concerns now, while you’re alive, is far easier than leaving unanswered questions behind. You can explain your reasoning, address misconceptions and ensure everyone understands your goals.
• Transparency can preserve relationships and help prevent conflicts after you are gone.
• It provides peace of mind for you and your children. You’ll know your wishes are understood, and your family won’t be left guessing why things were done this way.

When having this conversation with your children, you don’t need to share every technical detail, but you should communicate the big picture.

A few key recommendations are:

• Explain your goals. Is the priority keeping the farm intact? What is your wish for how the farm is dealt with in the future? What is your intention with respect to non-farming children? Share your reasoning, especially why “fair” doesn’t always mean “equal.”
• Outline the basic details. Who will inherit the land, farming asset, or corporation shares? Is there a shareholder agreement to address siblings being co-owners? What are your wishes for how they deal with that property? What is the role (if any) of your children’s spouses? Will there be any specific cash gifts to non-farming children, to the exclusion of the farming children?
• Invite questions and let your family express concerns now, rather than after you’re gone. It is much easier to work through concerns while alive and in a calm setting, than when you are gone and emotions are running high.
• The focus of the meeting should be informing, not negotiating. But after the meeting, you should reflect on any feedback received. Discussions with your children may flag that you made incorrect assumptions about their own plans. If this happens, you may need to revisit your estate plan to make sure it still meets your goals.

If your plan involves a complex structure, such as multiple corporations and trusts that work together to accomplish a specific tax and estate plan, consider obtaining the assistance of your estate planning advisers to host a family meeting. This approach offers two key benefits:

• It can add clarity and avoid miscommunication. An objective third party can help explain technical details and reinforce your intentions, allowing you to focus on your goals and managing relationships.
• It introduces your advisory team to your children. This should make the transition smoother when you’re gone, reducing stress during a difficult time. It also helps ensure better implementation of your technical planning.

Succession planning isn’t just about legal documents and tax strategies, it’s about people. Your family deserves clarity, and you deserve peace of mind knowing your wishes will be respected. A conversation today can prevent confusion, disputes and broken relationships tomorrow.

If you’ve already created a plan, take the next step and talk about it. It may be the most important part of securing your farm’s future and family harmony once you are gone.

Greg Kirzinger is a tax lawyer and a partner with Stevenson Hood Thornton Beaubier LLP in Saskatoon and works in the areas of farm and business planning, succession planning, tax law and real estate. He can be contacted at gkirzinger@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice.

Found in the Income Tax Act, these rules allow certain capital property to be passed down to the next generation without triggering immediate tax consequences.

While the concept can seem straightforward, it involves specific conditions that are often complex and easily overlooked, particularly for those with blended families.

But before diving into those complexities, it’s important to understand the basics.

Under the act, capital property such as farmland transferred between related persons is generally deemed to occur at fair market value, regardless of the actual price paid.

A similar rule also applies upon death, with all capital property being deemed disposed of at fair market value. These rules aim to realize and tax any capital gains accrued on the property at the time of transfer or death.

The intergenerational rollover is an exception to these general rules.

It allows individuals to transfer farmland or shares in a family farm corporation to the next generation without triggering capital gains tax, either during lifetime or upon death.

However, there’s a catch: to qualify, the farm property must satisfy specific and complex conditions.

While a full review of these requirements is beyond the scope of this article, we will focus on one critical element of the rules: the definition of “child” under the act.

To qualify for the farm rollover, the farm property must be transferred to a “child” of the taxpayer.

The act defines “child” quite broadly to include not only a child or grandchild, but also a step-child and a child’s spouse or common law partner, such as the taxpayer’s daughter-in-law.

So what’s the issue? That lies in how the Canada Revenue Agency has narrowly interpreted this definition in the context of blended families.

Over the years, CRA has taken the position that the death of a biological parent severs the legal “parent-child” relationship between the surviving step-parent and step-child.

This means the step-child will no longer qualify as a “child” for rollover purposes after the biological parent’s death, a restriction that does not apply to biological children.

Unfortunately, Canadian courts have largely upheld this interpretation, effectively stripping blended families of a key tax planning tool from which biological families continue to benefit.

To put this in perspective, let’s consider an example.

Husband A and his wife have two children together. After Husband “A” dies, the wife marries Husband B, a farmer.

Over time, Husband B assumes a parental role in the lives of his wife’s children. Later in life, Husband B wishes to transfer his farm property to his step-children.

While this may seem like a straightforward succession plan, the tax consequences can be surprisingly different depending on the specific circumstances.

Assuming all other conditions for the farm rollover are satisfied and his wife is alive at the time of the transfer, Husband B may transfer his farming property to his step-children without triggering capital gains tax, either during his lifetime or upon his death.

This is because the act permits the rollover when property is transferred to a “child,” and the definition of “child” explicitly includes step-children, at least while the biological parent is alive.

However, a very different tax result occurs if Husband B transfers farm property to his step-children once his wife (the biological parent) dies.

In this case, if the wife dies before the transfer occurs, the step-children are no longer recognized as Husband B’s children for the rollover rules. As a result, the transfer would be a taxable disposition, which could potentially trigger significant capital gains tax.

This interpretation of the act creates a troubling inconsistency.

The same transfer — of the same property to the same individuals — can either qualify for tax deferral or result in a significant tax liability, depending solely on whether a biological parent is alive.

The outcome hinges not on the nature of the relationship between the step-parent and step-children but on the survival of a third party. You can see how this interpretation can easily disrupt well-intentioned succession plans.

So, what does this mean for blended farm families?

Fortunately, there may be other planning options available for blended families to explore, depending on the family’s unique dynamics, financial situation and long-term goals. Early planning and issue identification is essential.

Often times, consulting with a professional tax and succession team in advance can help families find a workable solution. However, understanding these rules, and their potential impact, will always be a key component to a successful farm succession.

Britney Wangler is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at bwangler@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice.

Whether you plan to transfer the ownership of the farm and its assets upon your passing or your retirement, it is important to know that favorable tax rules exist that can help keep farms intact and in the family.

Two helpful tax planning tools for farmers are:

• The capital gains exemption.
• The intergenerational rollover.

The intergenerational rollover allows an individual to transfer certain types of property to the next generation on a tax deferred basis and is the focus of this article.

Generally speaking, personally held farm property such as farmland and certain other types of depreciable property (qualifying farm property) can be transferred to your child, grandchild or great-grandchild on a tax-deferred basis, so long as the qualifying farm property being transferred satisfies the following requirements:

The property must have been used principally in a farming business carried on in Canada. The principally used requirement generally translates to whether the particular property was used in the business of farming more than it was not, or more than 50 per cent of the time. For example, if you actively farmed a quarter section of farmland for nine years but subsequently rented that farmland for 10 years, it would no longer qualify for the intergenerational rollover. It is important to note, however, that there is an ability in certain circumstances to rely on the active farming use of a property by family members who previously owned the property.

The property transferor, their spouse, child or parent must have been actively engaged on a regular and continuous basis in the farming business in which the asset is used. This is commonly known to mean that they were engaged in the day-to-day work and/or management of the farming business with regular frequency and would be a determining factor as to the success of the business.

If your farm operates as a corporation or partnership, you may still be able to qualify for the intergenerational rollover with respect to a transfer of your shares or partnership interest provided certain requirements are satisfied, which include, among other things, the following:

All or substantially all (meaning 90 per cent) of the fair market value of the assets owned by the corporation or partnership are used principally (meaning 50 per cent) in the farming business. Each property owned by the corporation or partnership must be analyzed and the fair market value determined on a property-by-property basis in making this determination. A common pitfall causing this requirement to not be met can occur when inactive cash or investments build up in your farming corporation. This often happens when a farming corporation is no longer reinvesting its earnings with a goal to expand its operations. The good news is there are tax planning methods to extract excess cash and investments from your farming corporation in a tax efficient manner, but they are beyond the scope of this article.

Similar to the rules that relate to a tax-deferred rollover of qualifying farm property, to qualify for the rollover of shares or partnership interests, the transferor, their spouse or child must be actively engaged on a regular and continuous basis in the farming business.

The intergenerational rollover provisions can be complex and onerous to remain in compliance with, but it is important to know how to keep your farm on-side of these rules.

The rules differ depending on the structure of your farm and the historical use of your farming assets, so always speak to a tax and legal adviser to ensure compliance.

Blake Barnes is a summer student and Garrett Leedahl is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. They can be contacted at gleedahl@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice.

These periods are strictly enforced. A claim that is even one day late may be struck, so it is important to know when your time will run out.

Limitation periods exist because historical claims are difficult to prove and evaluate. Evidence gets lost or destroyed. Witnesses pass away. Memories fade.

Generally speaking, a civil claim must be brought within two years of the date of discovery of the loss. Sounds simple, right? Not always.

Sometimes it is very difficult to determine exactly when the loss was discovered or ought to have been discovered. On what day would a reasonable person know that they have incurred a loss caused by an actionable wrong?

A person may have their suspicions but no solid evidence that something injurious has occurred, or they may not fully understand the implications of what has occurred in terms of the magnitude of the loss to them.

A potential plaintiff might also be unsure when a particular event occurred or when they obtained knowledge of key information.

A limitation period might also be suspended for a certain period of time, meaning that the clock would temporarily stop ticking.

For example, parties can agree to a suspension by entering into a “tolling agreement,” which allows parties some time to negotiate a resolution and avoid the pressure of losing their claim if they do not act now.

Sometimes a suspension is deemed to have occurred by operation of law.

For example, if a person lacks capacity, the limitation period could be deemed suspended during that period of incapacity. Following that person’s passing, their executor might still be able to pursue a claim in the deceased’s name even if it appears the limitation period may have expired several years ago.

Similarly, if a potential defendant conceals a loss or misleads a potential plaintiff as to the appropriateness of a proceeding, the time period could be suspended until the potential plaintiff actually realizes their loss.

A limitation period can be reset by certain actions.

If a debtor acknowledges an amount owing in writing or makes partial payment, this could restart the clock and give the potential plaintiff another two years. Sometimes the actionable wrong is ongoing and continuous, such that the time limit will not run out until two years after the last occurrence of the wrong.

The matter might be further complicated by existing legislation or a change in legislation. There are some very specific claims that only have a one-year limitation period, such as claims against municipalities.

Historically in Saskatchewan, limitation periods were quite variable depending on the type of civil claim a plaintiff claimed. Some had one year, some had two and some had six.

A change in that legislation simplified things in Saskatchewan so that most civil claims are now subject to a two-year limitation period. Nonetheless, there are still circumstances where an old limitation period could still apply to a present claim.

To make matters even more complex, there is something called the “ultimate limitation period,” which provides that if the loss occurred more than 15 years ago (regardless of when the loss was discovered), the claim cannot be brought. Moreover, there are exceptions that might apply, such that the claim has no limitation period at all, which include some assault claims and certain types of proceedings, such as a claim to realize collateral.

If all of this sounds confusing but you think the clock is ticking, it is advisable to not wait until the last minute and risk losing a legitimate claim. Contacting a lawyer early if you think you have a claim is advisable because solid claims start with well-drafted and carefully prepared pleadings.

These take time to create, and rushing to the courthouse to beat an expiry date often results in an initial battle as to whether a limitations period has been missed or not. It is best to be early so there is no question that the claim was brought within the applicable limitation period.

If you think you have a civil claim but are not sure how long you have to pursue it, the most likely and simple answer is two years. However, even if you think the time period might have already passed, there may be a reason why the claim can still be pursued.

Consulting with a civil litigator to determine when the loss was discovered and whether an exception applies could still result in a legitimate claim to pursue.

Faith Baron is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at fbaron@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.

This article sets out some of the legal considerations to tap into this growing demand.

First, you need to understand the local guidelines relating to small businesses and the specific product you are selling, which includes obtaining the necessary permits or licences. This will largely depend on the location of your business operations.

Once the bureaucratic steps are out of the way, then the fun can start. You can begin by applying to join your local farmers market, participate in a community supported agriculture program near your location or even sell your products from the comfort of your own home.

Registering your business

The first step in selling your products is to register your business and obtain a business licence.

Determining if you need a business licence depends on which municipality you are located.

For example, in the City of Saskatoon, a business licence is mandatory for all businesses, whether you are selling from a storefront, farmers market or even your own home.

If you are selling from your own home, you may be able to apply for a home-based business licence, depending on your location, which allows you to sell your products online or directly from your property.

For businesses selling low risk food, such as fruit, vegetables, herbs or honey, you generally do not need additional licences or food handling certifications, so long as you are selling only within your own province.

It will be important for you to ensure that you do not need additional licences or permits, depending on the product you are selling.

Business structure and taxes

Whether you’re flying solo, teaming up with a partner or operating from a corporation, here’s a breakdown of the possible business structures, plus guidance with respect to GST and PST.

A sole proprietorship is the simplest form of business.

It is owned and operated by an individual person, without any legal distinction between the business and individual. All the income earned through a sole proprietorship is reported on your personal tax return and you would be personally liable for any debts or other legal obligations of the business.

This is a great option for people at the beginning of their business operations when the total revenue earned through the business is expected to be minimal.

A partnership is a business arrangement where two or more people agree to carry on a business together with the intention of making a profit.

Each partner contributes resources to the partnership and they each share in the profits and losses of the business.

Similar to a sole proprietorship, the partners each report their share of the business income on their personal tax returns and are personally liable for the debts and other legal obligations of the business.

A corporation is considered a separate legal entity, which means it owns the assets, earns the income and is responsible for the liabilities of the business.

One of the main benefits with operating your business through a corporation is that the owners are not personally liable for the corporation’s debts or other legal obligations.

In addition, there is possible tax advantages such as accessing the small business deduction, which reduces the corporate tax that is payable on the first $500,000 of active business income.

One of the disadvantages is the higher administrative costs with starting and maintaining the corporation, such as a separate corporate tax return (T2) and annual filing obligations with the applicable corporate registry.

You also may need to be registered for GST and PST in order to charge and remit these sales taxes on your taxable supply of goods.

However, exceptions may be available to you with respect to GST if your business is considered a small supplier.

While PST will be dependent on your location (for example, there is no PST in Alberta), it is important to mention that there may be no similar small supplier exception for PST in your location and you may need to become registered for PST regardless of the size of your business.

Ensure proper insurance coverage

When starting any business, you also need to ensure you have proper insurance. The type and amount will depend on a variety of factors, so it is best to check with your insurance provider to determine the best option for your business.

There are many different factors to consider when starting your small business, so please feel free to reach out for assistance if you find yourself in this situation.

Kade Kehoe is a lawyer and Tone Hagen is a legal summer student with Stevenson Hood Thornton Beaubier LLP in Saskatoon. Contact them at kkehoe@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal advice.

And just as each relationship is unique, the appropriate legal process when a relationship breaks down can also look different, depending on the needs, goals and level of conflict that may exist between the separating spouses.

In Saskatchewan, there are a variety of process options that people may use to navigate separation and divorce.

When considering how to approach separation, it is important to consider what process may be best suited to your particular needs and goals.

The purpose of this article is to provide further details of those process options:

‘Kitchen table agreements’

This is an informal process where spouses sit down together and decide on the terms of their separation. Often lawyers are not involved.

This type of agreement is cost-effective because it allows spouses to reach a settlement themselves.

However, these agreements can present risk if they are not properly documented and/or if there is a lack of disclosure and/or the agreement is fundamentally flawed as it relates to the applicable laws.

This is a good first step if parties generally know how they want to address issues arising from their separation. Once terms are agreed to, you may then have them formally documented to minimize the above-noted risks.

Negotiation

When spouses retain lawyers, going to court is rarely the first step. Rather, legal counsel (or other advisers or trusted persons) can help spouses try to reach a mutually acceptable solution through negotiation.

Negotiation sometimes happens through written correspondence or may occur through four-way meetings, where each spouse and their counsel meet together.

If terms can be agreed upon, then they can be reduced into a formal agreement signed by both parties.

Collaborative law

This process typically has both spouses retain legal counsel who are collaboratively trained.

It may also involve other professionals, such as financial advisers, accountants and/or mental health professionals.

At the outset of the process, both parties and their legal representatives sign a participation contract that states that if either party exits the collaborative process in favour of a court process, their collaborative lawyer can no longer represent that party in court.

Mediation

In this process a neutral third party (the mediator) facilitates discussion and helps the parties work toward a mutual agreement outcome.

In each of the above-noted processes, the parties are the decision makers. This means that any outcome must be by agreement. Should agreement be unable to be reached, then the parties may need to use a different process whereby a third party will impose a decision.

Those processes may include:

Arbitration

This is an out-of-court process in which a binding decision can be made on the parties by the arbitrator on any issue on which the parties cannot agree.

Arbitration can be an attractive option for family law matters because it offers privacy and more control over the process. Arbitration can also be combined with a mediation process, whereby the parties first try to resolve their issues by agreement, and if they cannot do so, then the arbitrator will make a decision.

Parenting co-ordination

This is a child-focused process in which parents meet with a parenting co-ordinator for help with interpreting or understanding their court order, arbitration award or separation agreement on parenting matters.

A parenting co-ordinator does not make major decisions regarding decision-making or the parenting regime but can make decisions regarding more minor parenting access issues and other matters incidental to parenting.

Binding pre-trial conference

A pre-trial conference is the last court-facilitated process to settle the matter before trial dates are set.

Typically, a pre-trial judge acts as a mediator and has no decision-making power. However, in a binding pre-trial conference, the parties agree that the judge will have decision-making power should they be unable to reach an agreement.

Court

If all other process options fail or are not suitable for the parties, then matters can be addressed through the family court. In Saskatchewan, family court is part of the Court of King’s Bench.

As of July 1, 2022, those who come to family court are required to attempt a family dispute resolution process by the close of pleadings before they may continue with any further court proceedings.

Mediation, arbitration, collaborative law and parenting co-ordination all constitute recognized family dispute resolution, as long as it is provided by a recognized service provider.

People can apply to the court for an exemption if there has been interpersonal violence, a parent has abducted a child from the other parent or there is some other urgency.

If you are unsure what process option may be best for you or suitable for your situation, an initial consultation with legal counsel can help better understand your options.

It may also be that the most suitable process option changes throughout the process as needs, goals and co-operation between spouses change.

This article is provided for general informational purposes only and does not constitute legal or other professional advice.

Do we have to probate?

In Saskatchewan, there are typically three reasons why probate is obtained:

• Because there is land that is owned solely by one person (Land Titles will require probate prior to transfer).

• Because the financial institution requires it (typically in connection with certain investment accounts and solely owned bank accounts).

• If you think the will is going to be challenged.

Probate is like a “gold seal” of approval by the court that the will is valid. In order to obtain probate, you need to file certain documents with the Saskatchewan Court of King’s Bench and also pay a probate fee ($7 on every $1,000 of assets subject to probate in Saskatchewan).

In Dan’s case, probate would need to be obtained to deal with any land (including farmland) that he owned personally in Saskatchewan where no one else was named on the title. If most of the assets are in Saskatchewan, it would make sense to apply for probate in Saskatchewan first. Once probate is obtained, the executor can begin the process of transferring the Saskatchewan assets into the estate.

The Alberta farmland

Much like Saskatchewan, Alberta also requires a grant of probate before land held in the name of one person can be transferred.

In order to avoid having to also file a full application for probate in Alberta, it may be possible to ask for a resealing order.

This allows the executor to take the grant of probate they already obtained in Saskatchewan and give it to the Alberta court for review. If the Alberta court approves, they will also issue an order that can be used to transfer the land in Alberta.

There will also be probate fees to pay in Alberta, but only on the assets in Alberta.

The condo in Palm Springs

In the United States, probate may be required by the federal and/or state governments.

There will typically be a requirement to obtain some sort of court order to complete a transfer of title held by one person. It is usually possible to “piggy back” on the court orders obtained in Canada.

In addition, depending on the value of the property in the U.S., Dan’s estate may have a tax filing obligation in that country.

Dan’s executor should be in contact with:

• Either a cross-border accountant or a tax accountant in the U.S.

• A lawyer in the state of California.

How to simplify executor’s duties

Dan should be ensuring that his estate planning documents are up to date and that he knows where his original documents are stored:

• Does Dan have a power of attorney? This document is intended for use when Dan is alive and grants power over his person, such as where he lives and what he wears, and over his property, such as his bank accounts and business. Dan may want this document to be in effect right away, or he may choose to have it only come into effect in the event of his incapacity. This is a really important document because absent a power of attorney (and where there is a loss of capacity), the only option for obtaining the power is to request a guardianship order from the court.

• Does Dan have a will? It should name an executor and an alternate executor. It should also set out who he wishes to benefit from his estate.

It would also be helpful if Dan took some time to make a few lists. For example:

• A list of current assets and bank account information. In particular, tracking information for farmland as to dates of original purchase (or transfer), costs and current fair market value. For the Palm Springs condo, it would be helpful if Dan had information on the original purchase price and a contact person in Palm Springs, such as the escrow agent.

• A “stream of consciousness” about his business. It would be helpful for Dan to leave some notes for the executor about anticipated sale prices, key contacts and his hopes for the business moving forward.

• A list of advisers. Dan can provide a list of all the professional advisers he works with and how to reach them.

• Information about Dan’s digital footprint. Dan should consider how he wants to store password information, and he should also make a list of any email accounts, or online accounts he has and how to access them.

Amanda Doucette is a lawyer and partner with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at adoucette@shtb-law.com. She is also the creator of The Tax Chick Blog and The Tax Chick Podcast. For more information, visit www.thetaxchick.ca. The information in this article is not legal advice. We encourage you to consult with your legal adviser for advice specific to you.

The tax policy with respect to the LCGE and farmland seeks to ensure that a person benefitting from the LCGE is a full-time farmer, and not someone who simply decides to buy land as a side-gig, call themselves a farmer, and then get tax benefits as a result. The Income Tax Act refers to this as the requirement to be “actively engaged on a regular and continuous basis” in farming activities.

Consider Mark’s situation below where he wrongly assumed that land used in his “hobby farm” qualifies for the LCGE.

Mark has never been a farmer, but was gifted two parcels of land from his mentor, Justin. Mark grew a small crop on the land and then custom-farmed the land. Mark also has a cushy, well-paying job outside of farming, and a sizeable investment portfolio from his time as board chair of a public company. Unless Mark’s annual gross revenue from farming has exceeded his income from his day-job plus any other non-farming activities during any 24-month period (the “revenue test”), then the land will not qualify for the LCGE. This test is essentially an objective measure of whether you were actively farming, and it is presumed that if your off-farm income almost always exceeds your revenue from farming, then you must not be actively farming. Mark recently had to sell all of his assets into a trust, and had thought that he could use the LCGE on the sale of his farmland. However, Mark does not plan or consult with his advisors very well and got a big surprise when he realized he had to pay tax because he did not satisfy the revenue test.

Mark has a neighbour, Pierre, who grew up on a farm and, like Mark, has two parcels of land which he farms. Pierre is also very busy in politics and earns a very good income doing so. Pierre loves farming and works hard at it, but because of the size of his farm, his gross revenue from farming will never exceed his income from other sources. Pierre, unlike Mark, is an excellent planner and consulted with his advisors to plan for the future.

Peirre learned that the revenue test does not apply if the land was farmed for at least 24 months by a corporation or partnership (regardless of profitability) in which he was actively involved. Peirre could set up a farming corporation and farm his land through it as a business. Alternatively, Pierre and his wife could form a partnership and report the farming revenue as partnership income. If this corporation or partnership farms the land which Pierre owns for a period of at least 24 months, then the revenue test will not be required to use the LCGE on a future sale, regardless of whether or not Pierre continues farming into the future.

Proactive planning may have also allowed Mark to use his LCGE, however, he chose not to get advice or appropriately plan for the future.

There are setup and annual compliance costs in relation to setting up a farming corporation or partnership. That said, the effort and cost of putting in place a structure to gain access to the LCGE will generally be outweighed by the tax savings an appropriate structure can provide.

The lesson to learn from Mark and Pierre is that it’s important to keep an ongoing dialogue with your advisory team about your near and long-term plans for your farming operation, however big or small. While the future cannot always be predicted, having a plan in place now to set a foundation for your long-term goals can put you in the best position possible to achieve the tax result you are hoping for on the transition or sale of your farm.

This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice. 

I suggested that many employees do not receive the amount of pay in lieu of notice (sometimes called “severance”) they are entitled to when their employment is terminated without cause.

Generally speaking, a reasonable notice period is the amount of time it will take for an employee to find similar employment elsewhere. As one might expect, that time period is different depending on the circumstances of the individual employee, but it is usually longer than the minimum notice requirements set out in the Saskatchewan Employment Act.

There are some circumstances where an employer is not required to pay any severance, including where there is cause for termination.

Terminations for cause are quite rare, however, and this is because the misconduct must be relatively serious to support a “just cause” firing.

For example, theft, fraud or violence in the workplace may be grounds for immediate termination for cause. Less serious misconduct, such as repeated tardiness or poor performance, can be considered cause for termination, but the behaviour generally needs to be well supported with clear records, warnings, opportunities to improve and repeated failures to do so. Employers rightly are not required to pay severance where there is cause for termination.

Resignation is also a circumstance where the employer is not required to pay any severance. When an employee resigns from their employment, they are required to provide their employer with two weeks’ notice of their last day.

There are some exceptions to this rule, such as where the employee’s health or safety is in danger and no notice is required, or where the relationship is governed by an agreement that requires a lengthier notice period.

When an employer receives a resignation from an employee, they may opt to pay out the notice period rather than having that employee continue to work until their stipulated last day, but no other pay in lieu of notice is required when an employee voluntarily resigns.

However, what happens when an employee resigns in circumstances where they felt they were forced or pressured to resign? Does that employee receive nothing? Not necessarily.

There is a principle of employment law called “constructive dismissal” that applies to involuntary resignations. Essentially, the law does not allow employers to pressure an employee to resign by making unwanted changes to their employment.

A constructive dismissal occurs when an employer makes unilateral and material changes to the employment agreement that negatively affects the employee. Often the imposed change is related to lower compensation but other changes, such as a demotion, a change in location without notice, a shift in regular work hours or a significant change to duties and responsibilities can also be characterized as material changes that could give rise to a constructive dismissal claim. A hostile or toxic work environment leading to resignation might also be considered a constructive dismissal.

When an employee experiences unwanted and material changes to their employment situation, resignation is sometimes their only option. To successfully claim that a constructive dismissal has occurred, however, an employee is required to act relatively promptly. This is because if they wait too long, they will be taken to have acquiesced to the change that occurred.

If an employee successfully claims constructive dismissal, the remedy is that the employer will be ordered to pay the employee what they would have been entitled to had they been terminated without cause. That is, the employee will receive pay in lieu of reasonable notice of termination. In some circumstances, this can be a substantial sum.

Constructive dismissal claims are not always easy to prove and the facts of each situation vary.

Sometimes it is very clear that a constructive dismissal has occurred, such as where there is a demotion and a significant pay cut.

Other times, however, it is not so clear, such as where an employer made a change in an attempt to accommodate an employee who was experiencing difficulties or in response to a workplace dynamic that required action or because the employee agreed to the change.

Like many areas of law, the outcome is not always easy to predict. This is why it is important for both employee and employer to keep good records and seek legal counsel promptly.

If you are an employee and you are feeling pressured to resign your employment, you should seek legal counsel to be sure you understand your rights.

Similarly, if you are an employer and you are facing a claim of constructive dismissal, an employment lawyer can help you understand the nuances of the law and how to navigate the legal system if a formal claim is made.

Faith Baron is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at fbaron@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.