Author Archives: ggslaw987

Should I incorporate?

Why Incorporate – a lawyer can discuss the benefits with you

My father was a grocer and he was always a sole proprietor. He did very well and it worked for him. He never bothered to consider the benefits of incorporating. Even when he bought a grocery store for my brother and revenues doubled, there was never any discussion around our home on whether we should incorporate.

Times have changed and I now believe that my father should have considered incorporating for a variety of reasons, like:

  • The lifetime capital gains exemption on sale of an active business (up to $800,000 per individual shareholder);
  • Protecting personal assets from creditors and personal injury claims;
  • Getting the benefit of a lower corporate tax rate, income splitting, dividends, and retained earnings;
  • Estate & Succession planning – ie. a trust to own holdco – holdco to own the realty and opco.

Easy to say, however, there are many things to consider on whether or not to incorporate. For example, if you own a rental property that is considered “passive income” and therefore incorporating does not entitle you to a lifetime capital gains exemption. Only “ongoing concerns” are entitled, like retail or sales business, manufacturing – something that involves doing something to earn money rather than sitting back and waiting for it to collect in your bank. Of course, I am using a simplistic analogy. However, if you had at least 5 employees in a rental property business, then all of a sudden, it is no longer considered “passive income” and you would be qualified for a lifetime capital gains exemption in the event of sale of shares of the corporation.

Karmel Sakran, Corporate and Commercial Lawyer »

You shouldn’t worry about being an Executor because…

Executor of an Estate lawyer handles all the legal work

Do not worry about being an Executor of an Estate. You, as an Executor, do all the leg work while the lawyer does all the legal work and is your sherpa, guiding you on the things you should be doing, like filing taxes and going to the bank and opening an Estate Account.

Some people don’t want to be Executors because it sounds like too much work or too scary. It will involve work but the most important thing to consider is that an Executor can ultimately be liable if the Estate Assets are purposely or negligently mishandled.

This is a rare occurrence because most Executors want to do the right thing and most Estates are straightforward. Even when complexities arise and mistakes are made, as long as the Executor has acted in good faith, courts are loath to hold them personally liable for any loss.

Karmel Sakran, Wills and Estates, Executors, Lawyer »

Burlington, Hamilton, Milton, Mississauga, Guelph

Shhhh! – here’s how to get money back from your bank when paying off your mortgage:

Mortgages: Selling or Refinancing your home tips from a Real Estate Lawyer

When you sell your home or refinance, a bank will send a payout statement to the lawyer handling your matter that sets out the total amount owing to be paid to remove the mortgage off title to your home. Of course, a buyer or new lender will require you to remove the mortgage registration off title. Almost all lenders add interest, pre-payment penalties, fees and disbursements to the principal amount owing on your mortgage.

One line item on your payout statement will be an “administrative fee” – usually $250 to $350. First-tier lenders, like BMO, RBC TD Canada Trust, Scotiabank, CIBC will refund this amount to you. Here’s how. “After” the refinancing or payout occurs, you go into your local branch and speak to someone in authority that you know, like the bank manager. If you have a good rapport and good history with your bank, then they may very well refund the funds back into your account. Don’t try this “before” the payout occurs because the bank wants to make sure that you have paid all that they have demanded first before refunding any amount to you. The administrative fee is included by “head office” of the bank because they are required to do so. They don’t know you. Only your local branch knows you and they have the discretion to refund the amount to you.

This can also, in some limited cases work for any pre-payment penalty charged to you. In some instances, and this is typically when your relationship with the bank is substantial, the local branch may refund some or waive your entire pre-payment penalty. Of course, if you are financing with your bank, speak to them upfront about waiving or refunding the pre-payment penalty. Again, head office will include the pre-payment penalty and after refinancing, your local branch will then honour their commitment to refund the amount to you.

In my experience, second-tier lenders, like MCAP, Streetcapital, FCT, will not consider such requests.

Sellling, Buying or refinancing your home through a mortgage?

Speak with Karmel Sakran, Real Estate Lawyer »

Burlington, Hamilton, Milton, Mississauga, Guelph