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Firearms – To Gift or Not to Gift

Summary: Things to consider when a testator/testatrix wants to gift a firearm.

 

In today’s society, individuals want to gift all sorts of personal property to beneficiaries,   including firearms.

So, when talking to clients that wish to gift firearms some things to consider are: Has the testator/testatrix spoke to the beneficiary about receiving the firearm?  Does the beneficiary want the firearm?  Should the firearm be gifted prior to death?

If the beneficiary would like to receive the firearm consideration needs to be given as to whether the beneficiary holds a firearms licence.

There are three types of firearms licences for individuals in Canada:

  • Possession and Acquisition Licence: allows the licence holder to possess and acquire firearms and ammunition.
  • Possession Only Licence: allows the licence holder to possess, but not acquire, firearms, and to both possess and acquire ammunition.
  • Minor’s Licence: available to individuals under the age of 18. It allows the licence holder to use non-restricted firearms for the purposes of target practice, competition, hunting, or instruction in the use of a firearm.

It is a criminal offence punishable by up to 5 years in prison for an individual to possess a firearm without a licence.

In Canada, a firearm may only be transferred to one of the following:

  • An adult (18 or older) with a Possession and Acquisition Licence that is valid for the class of firearm being transferred.
  • A business, museum, Legion or other organization with a valid Firearms Business Licence; or
  • A public service agency – for example, a police force, a police academy or a department or agency of any level of Canadian government (federal, provincial, territorial or municipal).

Transfers can be made online, by telephone or by paper application.  A registration must also be completed in order to reflect the transfer.

A Gun Amnesty Program is in effect until May 16, 2013 to protect non-compliant owners of non-restricted firearms from criminal liability while they take steps to comply with the licensing and registration requirements of the Firearms Act.  The amnesty however will not apply to a beneficiary who has never obtained a firearms licence.

So, what happens if a beneficiary does not want to get a licence and wants to dispose of the unwanted firearm?  They can: turn the firearm in to authorities for destruction, have the firearm deactivated, sell or give the firearm to someone that has an appropriate licence or to a firearms dealer, give the firearm to a gun club or firearms instructor for use in firearms training if the individual has an appropriate licence or, if the firearm has historical significance it could be given to a museum.

Lesson Learned:  A testator/testatrix should speak to a beneficiary before leaving a gift of a firearm because it is not a simple gift as was probably intended.

Until next time,

Jasmine

RESPs – Wrinkles and Warts

Summary: RESPs – How to deal with an RESP on a subscriber’s death

As we know, a Registered Education Savings Plan (“RESP”) can be a good vehicle to help parents set aside funds for their children’s post-secondary education in Canada, mainly because a parent can contribute up to a maximum of $50,000.00 for each child that is named as a beneficiary in a RESP and because of the Canada Education Savings Grant and other government incentives creating a source of tax deferred income. The key to remember though is that RESP’s are not a trust at law.
But what happens to the funds on the death of the subscriber? It depends on the terms of the contractual agreement and on the terms of the subscriber’s Will.
Unlike an RRSP or a TFSA, the proceeds of an RESP do not flow outside of the subscriber’s estate into the hands of a designated beneficiary. The RESP is an asset of the subscriber, not the beneficiary.
So when talking to clients with RESP’s here are some things to consider:
Does the client want the RESP to continue after death? Does the client want the contributions to be returned to the estate and fall into the residue? Are the contributions to be withdrawn and distributed to the intended beneficiaries (or the right to withdraw transferred to named beneficiaries)? Are the contributions to be withdrawn and used to fund an education trust created for named beneficiaries?
If the client wants to continue the RESP for the benefit of the beneficiaries after death then consideration (in the Will) must be given to naming a successor subscriber; naming beneficiaries; how the funds should be invested and management of the plan and limits (if any on withdrawals of contributions by the subscriber) and how the RESP will be funded.
And remember, a subscriber can withdraw contributions from the RESP and receive accumulated income payments, which can be rolled over into their own RESP.
Lesson Learned: RESP’s are important assets held by clients but this does not mean that most understand how they work on death: warts and all.

Until next time,

Jasmine

Inappropriate Guardian Compensation and Breach of Fiduciary Duty

Inappropriate Guardian Compensation and Breach of Fiduciary Duty

Nadia Osmulski needed a guardian. Her son Joe stepped in as court appointed guardian for property and personal care. Although Joe managed to ensure Nadia was taken care of, he made many decisions which were considered a breach of his fiduciary duty as guardian. While analyzing Joe’s conduct the court in Osmulski Estate v Osmulski Estate (2014 ONSC 6370) took the opportunity to examine the various principles of guardianship: