Posts Tagged ‘Family’

Lana Li
Tuesday, February 16th, 2016    Posted by Lana Li (posts)

As the baby boomer generation see their children move out of the house and settle into their careers and family, some are now re-examining their marriages or long term relationships and considering what they want to do, and with whom, during their retirement years.  According to Statistics Canada (Marital Status Overview: 2011), there were a greater number of divorced and separated couples over the age of 65 in 2011 than in 2006.  A Times article in October 2014 provides that 1 in 4 divorces in the United States are experienced by those over the age of 50 and 1 in 10 divorces are experienced by those over the age of 65.  Given the aging population, it will not be surprising that these statistics are on the rise.

The social and financial impact of “grey” divorces, a phrase coined to refer to the demographic trend of rising divorce rates for older (grey-haired) couples in long term relationships, can be significant.  While the mortgage on the family home may well be paid off by then, the cost of maintaining two households, even if by modest standards, will likely be higher than for one household, coupled with reduced income in retirement years.  One party may require additional homemaker support, assisted living, or a care facility if there are significant health issues, including dementia or Alzheimer’s.  For some couples, there will be less time to rebuild assets given that one or both may be nearing the end of his or her working life.  The cost of health care coverage may be significant if one party loses coverage upon separation or divorce, previously available through the other spouse’s benefits plan.  Pension splitting will need to be considered.  Family businesses may need to be split up and tax considerations will need to be considered.  If there are prior marriages or relationships, competing interests of all of the children or prior spouses may need to be considered.  Life insurance and beneficiary designations must be re-examined.

From the courts’ perspective, it is unlikely that a court will “force” one party to work beyond his or her age of retirement, especially if there are health issues, but it will examine closely one party’s decision to retire early and the reasons for it. Where a party continues to work after the age of 65, a court may consider that he or she will not retire, absent any health or other reasons for not working and the court may require that party to pay, or continue to pay, spousal support based on that expected working income.  A court will only allow “double dipping” (paying spousal support to a spouse from that part of pension income that has already been equalized) in limited circumstances.[1]  Where one spouse’s needs due to dementia can be determined with some mathematical certainty, spousal support can be ordered and such spousal support can be binding upon the payor’s estate.[2]  In some circumstances, spousal support will be refused if the payor requires all of his or her income to pay for care facility costs, the marriage was short, and the division of assets would adequately compensate the other spouse.[3]   Thus, even if there is need of the other spouse, there might not be sufficient income available to pay after the payor’s needs are taken into account.

At the end of the day, those baby boomers who are facing divorce or dissolution of their relationship should obtain legal and financial advice to assist them in navigating these challenging issues.


[1] Boston v Boston, 2001 SCC 43

[2] S.(E.R.) v S(H.C.), 1998 CanLII 4619

[3] W.C.L. v A.J.L, 2003 BCSC 971

 

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Posted by Lana Li (posts) | Filed under Litigation and ADR | ....
Jennifer MacGregor-Greer
Friday, December 14th, 2012    Posted by Jennifer MacGregor-Greer (posts)
Jennifer MacGregor-Greer
Jennifer MacGregor-Greer is a senior associate with a broad corporate, securities and business transactions practice.

Many entrepreneurs perceive securities laws to apply only to large publicly-listed entities.  However, securities laws apply to every business, and business owners should include securities compliance in their corporate oversight regimes.  For an entity with a limited number of stakeholders, this is not an expensive or particularly onerous endeavour.

Securities law in Canada is regulated provincially.  While many Canadian jurisdictions have harmonized their securities regimes in recent years, there are certain differences across Canada.  The laws that apply to each business (called an “issuer” under securities law, as an issuer of securities) and investor depend primarily on the jurisdiction in which that issuer or investor resides.  While securities laws differ across Canada, we note that there are greater differences for businesses located in the United States, or for those planning to distribute securities to any investors resident in the United States.  This article is based on securities laws applicable in British Columbia.

Under securities law, every issuance of a “security” requires (a) the publication of a prospectus by the issuer, and (b) registration of any person who is in the business of trading the security.  A “security” can be a wide variety of instruments or things, ranging from shares, units and options, to debt instruments and investment contracts – in effect, anything that would result in a person having an interest in the business of the issuer.  The prospectus and registration requirements are meant to protect investors from the risks associated with investment.  However, most small businesses are able to rely upon exemptions from these requirements for much of their corporate lifespan.  For the most part, these exemptions are found in National Instrument 45-106 of the Canadian Securities Administrators, “Prospectus and Registration Exemptions”.

The exemption that most businesses use in their initial stages of growth is called the Private Issuer Exemption.  Issuers that have distributed securities to fewer than 50 persons (not including employees and former employees) and that have not distributed securities of any class to members of the public are generally able to rely upon the Private Issuer Exemption.  Provided that an issuer complies with the detailed provisions of this exemption, including only distributing securities to certain categories of investors, it could use this exemption for a number of years.  In some cases, we have seen closely-held entities use this exemption for their entire corporate existence.  The categories of investors to whom issuers are able to distribute securities under this exemption include directors, officers and employees of the issuer, accredited investors (see the description below), immediate family members of directors and officers of the issuer, close personal friends and close business associates of directors and officers of the issuer, and existing security holders of the issuer.

Issuers who can no longer rely upon the Private Issuer Exemption, whether because they have distributed securities to more than 50 persons or because they wish to distribute securities to persons that are outside the designated categories of investors permitted under the Private Issuer Exemption, may be able to distribute securities in reliance on certain other prospectus and registration exemptions.  The most commonly used exemptions for small businesses are the Accredited Investor Exemption, the Minimum Amount Investment Exemption, the Family, Friends and Business Associates Exemption and the Offering Memorandum Exemption.

The Accredited Investor Exemption focuses on the attributes of the investor rather than the issuer itself.  In effect, the prospectus and registration requirements are considered not to apply to investors who have the financial means to absorb the loss of their entire investment, and the knowledge and experience to assess the risks associated with the investment.  While there are many classes of “accredited investors”, the most commonly used are (a) the class based on net worth, under which the investor, either alone or with their spouse, has net assets of at least $5,000,000, and (b) the class based on net income, under which the investor has a net income before taxes that exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year.

The Minimum Amount Investment Exemption focuses on the amount of the investor’s financial investment.  Currently, this exemption applies to investors who invest at least $150,000 in securities of the issuer.  Use of this exemption, similar to the Accredited Investor exemption, assumes that a person who has the financial wherewithal to invest at least $150,000 has the financial means to absorb a loss, and the knowledge and experience to assess the risks associated with the investment, and therefore does not require the protection associated with a prospectus.

The Family, Friends and Business Associates Exemption is meant to apply where close personal friends and close business associates of directors and officers of the issuer make an investment, and therefore focusses on the relationship between the investor and the director or officer.  The investor must be able to demonstrate that they have a sufficiently close relationship with the director or officer to be able to properly evaluate the director’s or officer’s capabilities and trustworthiness.  The relationship in each case must be direct.

The Offering Memorandum Exemption gives an issuer access to a very broad range of prospective investors.  However, it does involve producing an offering memorandum in respect of the offered securities, which involves a substantial output of resources.  We do not recommend using this exemption unless an issuer has already exhausted their access to other exemptions and wishes to offer to the public, without becoming a publicly listed issuer.

We caution issuers and investors that most of these exemptions involve making certain filings with the local securities commission.  As well, their use requires a careful review of the issuer’s particular situation and the class of prospective investors who wish to invest.  Each exemption carries with it various requirements that are not addressed in this article, so if you are anticipating issuing securities we recommend speaking with one of our lawyers so we can provide you with appropriate advice.

The prospectus and registration requirements also apply on each occasion that a security is resold, again with certain exceptions.  We recognize that for most small businesses, investors plan to hold their investment for a lengthy period of time.  If this is not the case, investors need to be aware that their ability to transfer securities will depend on factors such as when the securities were first issued, under what exemptions they were issued, and the jurisdictions in which the transferor and transferee reside.

Securities law is complex, and in recent years securities regulators have been placing greater emphasis on compliance, even for those entities that are not publicly listed.  We recommend obtaining legal advice early as to the requirements that will apply to your business.

Please contact Jennifer MacGregor-Greer or Carol Alter Kerfoot for specific advice relating to the distribution of securities by your business.

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