Protection and Transmission of Estates and Assets


We have extensive knowledge of the expectations and needs of wealthy persons and families, and can therefore offer you a personalized approach with customized services. We also have family offices among our clients – having a team devoted to serving them – and we can offer legal services that meet their needs or that complement the services traditionally offered by family offices including tax strategy, trusts, estates, wills, powers of attorney, mandates, philanthropy, governance and investment funds.

Hence, our team of professionals can offer you all the services you need at a single location, while providing you with advice and accompanying you at all stages. Furthermore, some of our professionals routinely act as directors of private companies and as trustees of inter vivos personal trusts or testamentary trusts.

With our multidisciplinary and integrated approach, we can therefore meet all your needs:

Family, Personal and Estate Law

Lavery has a team of experienced lawyers specialized in family, personal and estate law. Their practice covers all matters related to these fields, including marriage contracts, divorce, separation of common law spouses, child custody, child support, regimes of protective supervision, powers of attorney, mandates in anticipation of incapacity and estate litigation.


We also specialize in the area of trust law, whether it is for a trust will, an asset protection trust, a trust for the benefit of a spouse or a “Henson” trust.


We offer a full range of services in tax law that include developing and implementing beneficial tax structures and strategies, representing clients in court, and negotiating settlements with the tax authorities. Our team of tax lawyers find ingenious ways to optimize our clients’ investments while reducing their tax expenses. We can therefore propose tax structures to put in place (in the short-term or long-term depending on the needs) to ensure that all obligations are met with respect to income tax, payroll deduction and tax compliance.


Organisations are subject to many provincial and federal laws regarding governance, and they must implement adequate measures to ensure that they comply with such laws. Failure to act may entail serious consequences for their activities and the liability of their directors and officers, and may tarnish their reputation as well as the reputation of their representatives. Beyond the legislative requirements, certain best practices regarding the governance of family offices are advisable depending on the particular circumstances of each estate. Our lawyers can recommend appropriate structures, help in implementing adequate measures and offer guidance in the resolution of crises and the investigation process of competent authorities.

Investment Funds

We have a particular expertise with respect to investment fund structures and the agreements that govern them as well as the rights of investors, and we can therefore provide advice in all stages of the life of any type of investment fund, whether the fund is a private equity or venture capital fund, hedge fund, mutual fund, or any other type of fund.

NPOs | Philanthropy

Non-profit organizations (NPOs) are a very important sector for Lavery, and we understand the regulatory framework that govern their operation. We advise a large number of NPOs such as private family foundations, charities, hospitals, health and social services organizations, professional associations and orders, community organizations, sports leagues, educational institutions, religious organizations and environmental groups.

Aeronautical Financing

We have extensive know-how of the financing of aircrafts and aircraft equipment which we put at the disposal of our clients who are buyers, borrowers or lessees. We also have in-depth knowledge of this market, and given that we have had the opportunity to work with a variety of major players in the industry – including financial institutions, lessors, airlines, aviation equipment manufacturers and aeronautical service operators – our clients can benefit from our business network.

Debt Financing and Real Estate Financing

We can meet your needs by putting at your service our team, experienced in all the particular and regulated aspects of the field of debt financing. Our team will be able to guide you through each of the crucial steps in implementing and negotiating this type of transaction. We are called upon to represent both lenders and borrowers of all types. Our expertise has been acquired in many types of financing, including real estate financing. In this regard, we regularly represent buyers and vendors, lessors and lessees, as well as lenders and borrowers, and our team’s expertise extends to commercial, industrial and multi-residential properties.

  1. COVID-19: Anticipating Capital Gains, Wealth, Gift and Inheritance Taxes

    The deficits being generated by the emergency measures that the federal and provincial governments have implemented since March 2020 are a reminder of the magnitude of our governments’ pre-crisis deficits. This situation will inevitably lead to a greater tax burden for businesses and individuals at some point. Despite the unprecedented nature of these circumstances and the difficult financial situations that organizations find themselves in, steps can be taken now to mitigate repercussions. For several years, there has been increasing speculation about the capital gains inclusion rate being increased. Rumours also abound about the potential creation of an inheritance tax, which would undoubtedly be accompanied by a gift tax and a wealth tax. In this context, it is becoming ever more plausible that the federal government will finally increase the capital gains inclusion rate and tax the value of inheritances and gifts as early as the next budget, which has been postponed because of the ongoing crisis. An annual wealth tax on high net worth individuals could likewise be in the pipeline. As is now customary, the measures would apply as of midnight the night before the budget is tabled, closing the door to most tax planning strategies to reduce the impact of such measures. In the face of this situation, several steps can be taken as of now as, for instance: Crystallization of unrealized capital gains using a business corporation, partnership or trust; Gifts of money or property to family members or trusts; Termination of Canadian tax residency in favour of a lower-tax jurisdiction. The majority of tax planning strategies aiming to reduce or postpone the impact of such measures can be reversed should the anticipated measures not be adopted. In the event that governments do not increase the tax burden straightaway or opt for other, difficult-to-predict measures, well-planned transactions, such as realizing an accumulated gain on certain assets, making a direct gift, or making a gift through a trust, will ensure that additional taxes need not be paid. If you would like more information, our taxation team is available to help you.

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  2. Artificial Intelligence and the 2017 Canadian Budget: is your business ready?

    The March 22, 2017 Budget of the Government of Canada, through its “Innovation and Skills Plan” ( mentions that Canadian academic and research leadership in artificial intelligence will be translated into a more innovative economy and increased economic growth. The 2017 Budget proposes to provide renewed and enhanced funding of $35 million over five years, beginning in 2017–2018 to the Canadian Institute for Advanced Research (CIFAR) which connects Canadian researchers with collaborative research networks led by eminent Canadian and international researchers on topics including artificial intelligence and deep learning. These measures are in addition to a number of interesting tax measures that support the artificial intelligence sector at both the federal and provincial levels. In Canada and in Québec, the Scientific Research and Experimental Development (SR&ED) Program provides a twofold benefit: SR&ED expenses are deductible from income for tax purposes and a SR&ED investment tax credit (ITC) for SR&ED is available to reduce income tax. In some cases, the remaining ITC can be refunded. In Québec, a refundable tax credit is also available for the development of e-business, where a corporation mainly operates in the field of computer system design or that of software edition and its activities are carried out in an establishment located in Québec. This 2017 Budget aims to improve the competitive and strategic advantage of Canada in the field of artificial intelligence, and, therefore, that of Montréal, a city already enjoying an international reputation in this field. It recognises that artificial intelligence, despite the debates over ethical issues that currently stir up passions within the international community, could help generate strong economic growth, by improving the way in which we produce goods, deliver services and tackle all kinds of social challenges. The Budget also adds that artificial intelligence “opens up possibilities across many sectors, from agriculture to financial services, creating opportunities for companies of all sizes, whether technology start-ups or Canada’s largest financial institutions”. This influence of Canada on the international scene cannot be achieved without government supporting research programs and our universities contributing their expertise. This Budget is therefore a step in the right direction to ensure that all the activities related to artificial intelligence, from R&D to marketing, as well as design and distributions, remain here in Canada. The 2017 budget provides $125 million to launch a Pan-Canadian Artificial Intelligence Strategy for research and talent to promote collaboration between Canada’s main centres of expertise and reinforce Canada’s position as a leading destination for companies seeking to invest in artificial intelligence and innovation. Lavery Legal Lab on Artificial Intelligence (L3AI) We anticipate that within a few years, all companies, businesses and organizations, in every sector and industry, will use some form of artificial intelligence in their day-to-day operations to improve productivity or efficiency, ensure better quality control, conquer new markets and customers, implement new marketing strategies, as well as improve processes, automation and marketing or the profitability of operations. For this reason, Lavery created the Lavery Legal Lab on Artificial Intelligence (L3AI) to analyze and monitor recent and anticipated developments in artificial intelligence from a legal perspective. Our Lab is interested in all projects pertaining to artificial intelligence (AI) and their legal peculiarities, particularly the various branches and applications of artificial intelligence which will rapidly appear in companies and industries. The development of artificial intelligence, through a broad spectrum of branches and applications, will also have an impact on many legal sectors and practices, from intellectual property to protection of personal information, including corporate and business integrity and all fields of business law. In our following publications, the members of our Lavery Legal Lab on Artificial Intelligence (L3AI) will more specifically analyze certain applications of artificial intelligence in various sectors and industries.

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  3. Using a trust in the context of family law: are you really safe?

    Although a trust is a valuable financial, tax and estate planning tool, does it allow one to “shelter” some assets from the public order rules which apply in the context of family law? What is a trust? A trust is a legal disposition which allows a person to transfer the ownership of one or more of his or her assets to a trust for the trust to administer such assets for the benefit of one or more beneficiaries. The transferred assets therefore constitute an autonomous and distinct patrimony from that of the transferor. Although there are many types of trusts, the trust created for the purpose of protecting assets against future creditors is called an asset protection trust. However, the transfer of some assets forming part of the family patrimony or the partnership of acquests into a trust during the marriage or civil union does not automatically remove them from the application of the rules found in Civil Code of Québec. The mandatory effects of marriage or civil union… you won’t escape! As for the assets transferred to a corporation, those transferred into a trust are no longer part of the personal patrimony of the transferor. When the right to partition of the family patrimony is acquired, for example, on the occasion of a divorce, can a spouse still claim his or her right to half of the net value of the family residence, the ownership of which has been transferred to the trust? What happens to an asset which, had it not been for the transfer to a trust, would have been included in the family patrimony or the partnership of acquests? Family law provides many binding effects of marriage, such as the setting up, as an effect of marriage, of a family patrimony composed of some assets belonging to either of the spouses, namely, the family residences or the rights which confer use of them, the movable property with which they are furnished or decorated and the motor vehicles used for family travel. Even if, in practice, a trust may be used as a tool to mask the reality of the assets and circumvent the family law rules, the courts may rely on some legal mechanisms to prevent this attempt to avoid the rules designed to protect vulnerable spouses from being successful. The courts may lift the fiduciary veil, that is, consider that the patrimony of the trust is not separate from that of the transferor of the assets. This results in bringing back into the patrimony of the transferor spouse assets which would have otherwise been included in the family patrimony or the partnership of acquests had it not been for them being transferred to the trust. This procedure would then allow the partition of such assets between the spouses. The courts will give a great deal of importance to the way in which the assets transferred to the trust have been used during the marriage, the way in which the parties acted, both when the trust was created and during its existence and to the agreements entered into between them. Lessons to be learned? It must be remembered that it is the nature of the evidence which will allow the court to determine whether the spouse has created the trust for the purpose of escaping the mandatory effects of the marriage or civil union. When creating a trust, it would be desirable to ask for a tax memorandum explaining the context and the purpose sought by creating the trust, for example, an estate freeze. The preamble of the trust deed also becomes a precious tool for analyzing the intent of the parties at the time the trust was created. Although a trust may be an interesting mechanism, particularly for protecting assets, it must be noted that it must be used in compliance with family law public order rules.

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  4. Quarterly legal newsletter intended for accounting, management, and finance professionals, Number 25

    CONTENTSInter Vivos discretionary trusts are still relevantA matter of trusts : review of the most frequent pitfallsINTER VIVOS DISCRETIONARY TRUSTS ARE STILL RELEVANTEmmanuel Sala and Luc Pariseau Although the 2014 federal Budget Plan restricted some family tax planning measures involving inter vivos trusts, such trusts remain relevant. Beyond goals such as protecting assets, minimizing the taxes payable upon death, or purification for purposes of the eligibility of shares for the $800,000 capital gains deduction, the relevance of the trust for the purpose of splitting income and capital gains with minor children may still be a critical factor in the cost-benefit analysis of the implementation of such a structure. This article discusses the income-splitting techniques to avoid, as well as those which, when correctly structured and documented, comply with federal and Quebec provincial tax legislation. In short, the purpose of an income-splitting structure is to allocate income or capital gains to a minor child and thus benefit from his progressive tax rates and personal tax credits. SPLITTING TECHNIQUES WITH MINOR CHILDREN SEVERELY SANCTIONED BY TAX LEGISLATION Business or rental income allocated to a minor child in certain circumstances The business or rental income of a trust which is allocated to a minor child is subject to a special tax calculated at the highest marginal rate (“Minor Child Special Tax”) when a person “related” to the minor child either (i) is actively involved in the income generating activity, or (ii) holds an interest in the partnership from which the trust indirectly derives such income. Taxable dividends from certain private corporations Taxable dividends from shares of Canadian and foreign corporations which are not listed on a “designated stock exchange” (except for mutual fund corporations) (“Private Corporation”) allocated by a trust to a minor child are also subject to the Minor Child Special Tax. Taxable capital gain realized on certain sales of shares of Private Corporations A minor child to whom a trust allocates a taxable capital gain from the sale of shares of a Private Corporation to a person with whom the minor child is not dealing at arm’s length is deemed to receive this amount twice as a taxable dividend other than an “eligible dividend”. The deemed taxable dividend will be subject to the Minor Child Special Tax. SPLITTING TECHNIQUES WITH MINOR CHILDREN ALLOWED BY TAX LEGISLATION Currently, dividends received by a trust from corporations listed on a “designated stock exchange” and allocated to minor children are not subject to the Minor Child Special Tax. A tax election must be made for the dividends so that their status is not changed when they are allocated to the minor beneficiaries, and a written resolution must be validly prepared and signed by the trustees in this respect. Capital gains realized by a trust on the sale of property to a person with whom the minor child is dealing at arm’s length, whether such property consists of shares in a Private Corporation, a Corporation listed on an exchange, or an immovable, may be allocated to him without triggering the Minor Child Special Tax. When the property on which the capital gain is realized consists of “qualified small business corporation shares”, the $800,000 capital gains deduction of the minor child may be available. FINANCING OF THE TRUST IN THE CONTEXT OF SPLITTING WITH MINOR CHILDREN The success of a splitting structure mainly depends on the ability of the trust to finance its investments. A loan made directly by a parent, or indirectly through a management corporation, is a solution that is both simple and efficient from a tax perspective. The measures intended to deter income splitting, particularly some allocation rules and the Minor Child Special Tax, do not apply to income derived from a loan made to the trust at an interest rate equal to or higher than the prescribed interest rate in force at the time the loan is made, if and only if the interest is paid before January 31 of each year. In addition, the allocation rule commonly referred to as “75(2)”, which re-allocates the income from property to the person from whom the said property was received, should not apply to such an arrangement. At the present time, since the prescribed rate is at an all-time low, i.e. 1%, and the terms of such loans are not limited in time, splitting income with minor children through a loan to a trust should translate into significant savings, subject to the performance level obtained on the investments made by the trust. A TRAP TO AVOID It is important to keep in mind that, when income is allocated to minor children through a trust, it is the children who must benefit from the amounts so allocated. Thus, so that the children can be considered the true beneficiaries of the income allocated by the trust, the income must be entirely available to them for their own benefit. With this in mind, the tax authorities will consider the following circumstances when reviewing these amounts: (i) the manner in which the amounts are received, (ii) the person with effective control over such amounts, (iii) the obligations and restrictions on the manner of disposition thereof, and (iv) the use made of them by the minor children, or the persons actually benefiting therefrom. The risk to taxpayers of income or capital gains splitting with minor children is that the tax authorities may take the position that the children acted as accommodating parties, whether as agents or as a front, for the parents. The success of a splitting operation therefore depends on adequate documentation proving that the amounts which are allocated to the minor child, and thereafter reimbursed to the parents, represent the repayment of expenses paid by the parents for the child’s benefit. The use of a trust for purposes of investment and income splitting with minor children poses quite a few challenges, but remains a fundamentally worthwhile tax-savings tool in the appropriate circumstances. The implementation of such a structure should be fine-tuned by your tax expert. A MATTER OF TRUSTS: REVIEW OF THE MOST FREQUENT PITFALLSCarolyne Corbeil and Emmanuel Sala For this special edition Ratio on trusts, we propose a review of the most frequent pitfalls in tax planning schemes involving discretionary family trusts. THE SETTLOR IS ALSO THE BENEFICIARY OF THE TRUST: LOSS OF TAX-DEFERRED ROLLOUT One still all too frequently sees cases in which the settlor of the trust, i.e. the person who made an irrevocable gift in favour of the trust for the purpose of constituting an autonomous and separate trust patrimony, is also designated as a beneficiary of that trust. This mistake generally occurs when several classes of persons are named as beneficiaries and the link between the settlor and the taxpayer wishing to implement the trust is not clearly identified. For instance, the trust deed may designate the father and mother of the taxpayer and the father and mother of the taxpayer’s spouse as beneficiaries while the taxpayer’s father-in-law acts as the settlor. Such circumstances result in the application of subsection 75(2) of the Income Tax Act (“ITA”), with the result that the trust property cannot be distributed without triggering tax consequences to the beneficiaries of the trust other than the settlor (hereinafter “Rollout”). TRANSFER OF PROPERTY TO A CORPORATION OF WHICH THE TRUST IS A SHAREHOLDER: DEEMED INTEREST A freeze transaction must generally be carried out when one is planning to insert a trust within an existing corporate structure. A freeze consists of exchanging all the participating shares issued by the corporation (generally, the common shares) for preferred shares redeemable at a value equal to the fair market value of the corporation immediately prior to the freeze transaction (“Preferred Shares”). The trust may then subscribe to participating shares of the corporation for a nominal consideration. From a legal point of view, a given taxpayer will then have “transferred” participating shares to the corporation for a consideration consisting of preferred shares (hereinafter, the “Transferred Shares”). When a trust is established in favour of the spouse and/or minor children of the person initiating the freeze to allow him to split his income, and no clause in the trust deed restricts the allocation of income to the spouse and the minor children, the attribution rule in subsection 74.4(2) ITA may apply, unless the corporation qualifies as a “small business corporation”1. Generally, this attribution rule results in the taxing of a specifi ed amount of interest, calculated at the prescribed rate on the value of the Transferred Shares, in the hands of the person initiating the freeze. This interest attributed to the person initiating the freeze may however be reduced by the amount of a taxable dividend which is declared and paid by the corporation in respect of the Preferred Shares. Unless one is certain that the corporation will at all times remain a “small business corporation”, we recommended that one provide for the payment of a taxable dividend on the Preferred Shares calculated at the prescribed rate in order to avoid the occurrence of this attribution rule. INTEREST-FREE LOAN TO THE TRUST: LOSS OF THE ROLLOUT AND ATTRIBUTION RULES On frequently seen situations in which a person, who is both a trustee and beneficiary of a family trust established for the benefit of his family (hereinafter “Trustee/Beneficiary”), transfers funds to the trust for the purpose of enabling it to acquire shares or other property, or pay certain expenses. However, it is important to remember that the trust possesses a patrimony which is separate and autonomous from that of the Trustee/ Beneficiary, and that there should generally be no transfer of funds between the latter and the trust. Unless such a transfer constitutes an actual loan within the meaning of the applicable law (a bona fide loan), the attribution rule in subsection 75(2) ITA will apply and all the income or capital gains derived therefrom will be re-attributed directly back to the Trustee/Beneficiary. As a result, the splitting sought with the spouse and/or minor children of the Trustee/Beneficiary will not be achieved. Furthermore, if subsection 75(2) ITA applies, the trust will lose the Rollout in favour of the minor children (i.e. the beneficiaries other than the Trustee/ Beneficiary and his spouse). In addition, where it is reasonable to consider that the income earned by the trust from the funds thus loaned is thereafter allocated and paid to the minor children and/or the spouse of the Trustee/Beneficiary, these loans should be at the prescribed interest rate, failing which certain attribution rules will generally apply, causing the income earned by the trust from the funds loaned and allocated to the minor children and/or the spouse of the Trustee/Beneficiary to be attributed to the Trustee/Beneficiary. VOTING SHARES OF A CORPORATION HELD BY THE TRUST: RISK OF ACQUISITION OF CONTROL FOR PURPOSES OF THE ITA. When the shares of a corporation with a majority of the voting rights, that is, shares providing for the election of a majority of directors of the corporation, are held by a trust, the case law has held that it is the trustees who control the shares of the corporation, and they hold de jure control thereof. In such circumstances, the position of the tax authorities is generally that there is an acquisition of control of the corporation for purposes of the ITA when one of the trustees is replaced, unless none of them is dealing at arm’s length with the others. An acquisition of control at a given time may have adverse tax consequences for the corporation, particularly in respect of the use of its losses realized prior to that time, the imposition of a year-end immediately prior to that time, and the application of certain restrictions respecting expenses and investment tax credits for scientific research and experimental development. Accordingly, it is generally preferable for trusts to only hold participating, non-voting shares. FAILURE TO DOCUMENT TRANSACTIONS INVOLVING THE TRUST: DIFFICULT AUDIT WITH TAX AUTHORITIES Similarly to corporations, it is imperative for trusts to document the transactions they conduct during the year and maintain their trust “book”. This practice allows for subsequent follow-ups to be done to substantiate the transactions and distributions of the trust (e.g., prove that a bona fide loan was entered into and repaid) and ensure their tax treatment is accurate. In the event of an audit, an up-to-date trust book will serve as an important tool for defending the tax treatment of the trust’s operations. _________________________________________1 Generally, to be considered a “small business corporation”, all or substantially all of the value of the assets of the corporation must be attributable to assets that are used principally in an active business carried on primarily in Canada: section 248(1) ITA, “small business "corporation”.

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