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Assessment >> Formal Assessment

Assessment: Risk Management and Estate Planning Web - Academic Partners Unit 8 Post-Assessment
(C117V13U8L0A25Q15)
Date Submitted: 07/02/2014 09:05:00 PM
Total Correct Answers: 15
Total Incorrect Answers: 0

Your Mark (total correct percentage): 100%

1 Joan and Gary are married and they live in a province with a deferred community of property
regime. Under this regime, what statement is true?

Correct
The correct answer:Joan and Gary's community property is subject to division upon divorce.
Your answer:Joan and Gary's community property is subject to division upon divorce.
Solution:

Under a deferred community of property regime, spouses are free to own and manage their own property during
marriage. If the marriage is terminated, provincial legislation usually specifies how the community property will be
divided between the spouses or, in the case of death, between the surviving spouse and the deceased's estate. So,
the division of community property is deferred until the marriage breaks down.

Joan and Gary are married and live in a province with a deferred community of property regime. So, Joan and
Gary's community property is subject to division upon divorce.

2 Jason and Mary are getting divorced, and they must decide to what property each is entitled. In a
generic sense, which of the following best describes the term "community property"?

Correct
The correct answer:property that is associated with their marriage and that is subject to division upon marriage
breakdown.
Your answer:property that is associated with their marriage and that is subject to division upon marriage
breakdown.
Solution:

In a generic sense, community property is the property that is associated with the marriage and that is subject to
division upon marriage breakdown. It could be property acquired by either person or property acquired together.
The provincial matrimonial property legislation specifies what property is subject to division and what is not.

So, community property refers to property that is associated with the marriage and that is subject to division upon
marriage breakdown.

3 When Larissa's husband, Fabio, passed away, he left his estate to his girlfriend. Larissa filed for an
equalization payment under her province's matrimonial property legislation. Fabio's net family
property was $200,000, while Larissa's was $60,000. Larissa is entitled to an equalization payment
in the amount of:

Correct
The correct answer:$70,000.
Your answer:$70,000.
Solution:

Larissa is entitled to an equalization payment of $70,000.

Many provinces allow applications for the division of community property upon death of a spouse. This might be
done if the deceased tried to exclude his surviving spouse from his will.

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In most cases, the equalization payment is one-half the difference between the net family property of each spouse.
The judge has the authority to proclaim an unequal division only if he or she feels that an equal division would be
unfair or unconscionable.

Fabio tried to exclude Larissa from his will, but she is entitled to apply for an equalization payment from his estate.
So, Larissa is entitled to an equalization payment of $70,000, calculated as ((Fabio's net family property - Larissa's
net family property) ÷ 2) or (($200,000 - $60,000) ÷ 2).

4 Nancy was devastated when she found that her husband, Rick had left almost everything to charity
in his will. While Nancy admired his charitable intentions, she felt cheated because she had helped
him build up much of his wealth. Nancy and Rick lived in a province where the matrimonial property
legislation is triggered by the death of a spouse. Which of the following statements is FALSE?

Correct
The correct answer:If Nancy applies for division of community property, she will probably receive an equalization
payment in addition to anything that Rick left to her in his will.
Your answer:If Nancy applies for division of community property, she will probably receive an equalization
payment in addition to anything that Rick left to her in his will.
Solution:

(Concepts) Many provinces allow applications for the division of community property upon death of a spouse. An
order for the division of assets usually takes precedence over other testamentary dispositions. Therefore, the
person making the application should be aware that the division of assets may mean that other people named as
beneficiaries in the will may not receive any or all of their bequests. In some provinces, if the surviving spouse
decides to make an application for the division of property after his or her spouse's death, then he or she forfeits
any entitlement under the will (i.e., he or she cannot have it both ways).

(Choice C is false.) So, if Nancy applies for the division of community property, she will receive an equalization
payment, but will probably forfeit anything that Rick left to her in his will.

5 After Lisa and Chris married, Lisa moved into the home that Chris owned prior to their marriage. Six
years later, Lisa and Chris divorced, and Lisa applied for a division of community property. They live
in a province that includes the matrimonial home as a family asset and does not exempt business
assets from division. Which of the following assets are not included in the property subject to
division?

Correct
The correct answer:The Rolex that Chris bought with the proceeds of a death benefit from a life insurance policy
that he received upon the death of his father last year.
Your answer:The Rolex that Chris bought with the proceeds of a death benefit from a life insurance policy that he
received upon the death of his father last year.
Solution:

The Rolex that Chris bought with the proceeds of a death benefit from a life insurance policy that he received upon
the death of his father last year is not included in the property subject to division.

(Concepts) Most property owned by either party prior to the marriage is exempt from division. However, some
provinces include the matrimonial home as a family asset even if it was acquired by one spouse prior to marriage.
Some provinces also include business assets in their definition of community property. Generally, the proceeds of a
death benefit from a life insurance policy or property acquired with those proceeds are exempt from division, unless
the policy was payable jointly to both spouses.

(Choice C) Even though Chris owned the matrimonial home prior to marriage, they live in a province that includes
the matrimonial home as a family asset, so it is still subject to division. The father's life insurance policy was not
payable to both Chris and Lisa. So, the Rolex that Chris bought with the insurance death benefit proceeds is not
included in the property subject to division.

6 Spencer and Maria lived together in a conjugal relationship for 15 years before they separated.
During that time, Spencer built up a successful business. Maria helped out whenever she could, but
she also devoted a lot of her time to raising their three children and maintaining their household.
Maria wants to claim an interest in Spencer's business under the remedy of constructive trusts.
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Which of the following is not a factor that Maria has to prove to satisfy the conditions of a
constructive trust?

Correct
The correct answer:That Spencer intended to hold an interest in the business for her in trust.
Your answer:That Spencer intended to hold an interest in the business for her in trust.
Solution:

Maria does not need to prove that Spencer intended to hold an interest in the business for her in trust.

(Concepts) A constructive trust can be imposed against the titleholder without any evidence of the titleholder's
intention to hold the property in trust. There are four requirements that must be satisfied before a constructive
trust will be imposed against the titleholder in favour of the claimant:

the contributions of the claimant, either in money, money's worth or labour, must have enriched the legal
titleholder
the enrichment of the legal titleholder resulted from a corresponding deprivation to the claimant
there was no legal justification for this enrichment (for example, the claimant did not have contract or other
legal obligation which required him to make the contribution)
there was a causal connection between the claimant's contribution and the enrichment of the property
(either by acquisition or improvement) held by the titleholder.

(Choice C) So, Maria does not need to prove that Spencer intended to hold an interest in the business for her in
trust.

7 Penny and Frank have been living together in a conjugal relationship for 14 years. While Penny is
sure that their relationship is stable, she does wonder what will happen to everything they have
accumulated over the years if she and Frank separate. They currently own a house as joint tenants.
If they separate:

Correct
The correct answer:Frank and Penny can convert the joint tenancy to a tenancy-in-common, and Frank can then
bequeath his share of the house through his will.
Your answer:Frank and Penny can convert the joint tenancy to a tenancy-in-common, and Frank can then
bequeath his share of the house through his will.
Solution:

If they separate, Frank and Penny can convert the joint tenancy to a tenancy-in-common, and Frank can then
bequeath his share of the house through his will.

(Concepts) If the relationship between partners breaks down, they can convert the joint tenancy to a tenancy-in-
common, and each partner will retain ownership of his or her separate interest in the property. Once the ownership
has been converted to a tenancy-in-common, each tenant is free to sell or bequeath his share to another party.

(Choice C) Frank and Penny currently own a home together in joint tenancy. However, if they separate, Frank and
Penny can convert the joint tenancy to a tenancy-in-common, and Frank can then bequeath his share of the house
through his will.

8 After 20 years of marriage, Lauren and Dalen are getting divorced, and as part of the divorce
settlement, Lauren is entitled to share in Dalen's pension benefits. Dalen has been a member of the
pension plan for about 25 years. Which of the following statements is TRUE?

Correct
The correct answer:Depending on the province in which they live, Lauren may be able to have a lump-sum
payment transferred to her own locked-in retirement account (LIRA).
Your answer:Depending on the province in which they live, Lauren may be able to have a lump-sum payment
transferred to her own locked-in retirement account (LIRA).
Solution:

Depending on the province in which they live, Lauren may be able to have a lump-sum payment transferred to her
own locked-in retirement account.

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(Concepts) Pension benefits earned during marriage can be subject to division just like any other community
property under provincial family laws. However, the provincial Pension Benefit Acts regulate just how that divided
pension can be administered. Usually, the Pension Benefit Act specifies that the divided pension must still be used
to provide a retirement income. This usually means that the funds can be transferred to the spouse's locked-in
retirement account or into the pension plan of his or her own employer. Alternatively, he or she can leave the funds
in the pension plan and receive a pension upon reaching retirement age.

(Choice B is true.) Dalen has been a member of the pension plan for 25 years, but Dalen and Lauren have only
been married for 20 years. Only the pension credits earned during their marriage of 20 years are subject to
division, not the entire 25 years of Dalen's employment. Lauren will not get her payment in cash, but she may be
able to transfer it into a locked-in retirement account. So, depending on the province in which they live, Lauren may
be able to have a lump-sum payment transferred to her own locked-in retirement account.

9 Scott and Allison were married for 8 years before they separated. They were separated for 3 years
but had not yet obtained a divorce when Scott died. Which of the following statements regarding
the division of Scott's CPP credits is TRUE?

Correct
The correct answer:Allison must apply for a division of Scott's CPP credits within three years of his death.
Your answer:Allison must apply for a division of Scott's CPP credits within three years of his death.
Solution:

(Concepts) The mandatory division of unadjusted pensionable earnings will take place upon the Minister's approval
of an application made by a spouse if the spouses have been living separate and apart for a period of one year of
more. If they have been living separate and apart for a period of one year or more and one of the spouses dies, the
surviving spouse must make the application for division within three years of death.

(Choice D is true.) Allison and Scott were separated for three years prior to Scott's death. So, Allison must apply for
a division of Scott's CPP credits within three years of his death.

10 Eileen and Mark were married for three years before they separated. During their marriage, they
each worked and had the following pensionable earnings:

Eileen Mark
Year 1 $13,000 $24,000
Year 2 $13,500 $24,000
Year 3 $16,000 $26,000

What will Eileen's unadjusted pension credits be after division for Year 1, Year 2, and Year 3,
respectively?

Correct
The correct answer:$18,500, $18,750, and $21,000.
Your answer:$18,500, $18,750, and $21,000.
Solution:

Eileen's unadjusted pension credits after division will be $18,500, $18,750, and $21,000.

(Concepts) In order to fairly divide the pension credits upon relationship breakdown, the CPP administrators add up
the unadjusted pensionable earnings of both former spouses for each year of the entire period of cohabitation, and
split the annual totals equally between the former spouses.

(Choice A) So, Eileen's credits for Year 1 will be $18,500, calculated as ((Eileen's pensionable earnings for year 1 +
Mark's pensionable earnings for year 1) ÷ 2) or (($13,000 + $24,000) ÷ 2), for Year 2 will be $18,750, calculated
as ((Eileen's pensionable earnings for year 2 + Mark's pensionable earnings for year 2) ÷ 2) or (($13,500 +
$24,000) ÷ 2), for Year 3 will be $21,000, calculated as ((Eileen's pensionable earnings for year 3 + Mark's
pensionable earnings for year 3) ÷ 2) or (($16,000 + $26,000) ÷ 2).

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11 Taylor and Kathy live in a province that does not allow them to waive their rights to equal division
of CPP credits. Kathy did not work while she and Taylor were married because she opted to stay
home to take care of the children. They have just been granted a divorce after 10 years of marriage.
She signed a separation agreement waiving her rights to share in his CPP credits. Which of the
following statements is TRUE?

Correct
The correct answer:Kathy is entitled to one-half of the CPP credits that Taylor earned during their marriage.
Your answer:Kathy is entitled to one-half of the CPP credits that Taylor earned during their marriage.
Solution:

Kathy is entitled to one-half of the CPP credits that Taylor earned during their marriage.

(Concepts) A mandatory division of pension credits takes place upon divorce or annulment, or when married
couples have separated for more than one year. The pension credits earned by both spouses during their marriage
(plus prior period of cohabitation, if applicable) are divided equally between the spouses. A few provinces allow
spouses to waive their right to share CPP credits in a domestic contract.

(Choice A is true.) Taylor and Kathy live in a province that does not allow them to waive their rights to equal
division of CPP credits. Because Kathy does not have any CPP credits for the period of their marriage, the total
subject to equal division is equal to Taylor's credits, and Kathy is thus entitled to one-half of them. So, Kathy is
entitled to one-half of the CPP credits that Taylor earned during their marriage.

12 Mark had a whole life insurance policy with a face value of $200,000 and a cash surrender value of
$82,000 when he died. The policy was payable to the Creature Comfort Humane Society. In his will,
Mark left almost everything he owned to a variety of other obscure charities. His wife, Melinda,
applied for a division of community property. Assuming the court grants an equal division of
community assets, how much will Melinda be entitled to receive from Mark's estate as a direct
result of Mark's insurance policy?

Correct
The correct answer:$41,000.
Your answer:$41,000.
Solution:

Melinda will be entitled to receive $41,000 from Mark's estate as a direct result of Mark's insurance policy.

(Concepts) If a spouse applies for division of community property, and the court grants an equal division of
community assets, this makes the spouse eligible for 50% of the property in question. If the property in question is
a life insurance policy whose beneficiary is not the surviving spouse, then the surviving spouse is not entitled to the
proceeds of the insurance policy, but rather a share in the cash surrender value of that policy at the time
immediately preceding the life insured's death.

(Choice C) Mark's whole life policy had a CSV of $82,000 when he died, and he named the Creature Comfort
Humane Society as the beneficiary of that policy. While Melinda is not entitled to the proceeds of the insurance
policy, she is entitled to share in the cash surrender value of that policy at the time immediately preceding Mark's
death. So, with respect to the insurance policy, the insurance company will pay the full $200,000 to the Creature
Comfort Humane Society, but Mark's estate must give Melinda $41,000, calculated as (50% x $82,000).

13 Elaine is getting married and she and her fiancée are contemplating the need for a marriage
contract. Among the following, which BEST describes a situation where you would recommend the
use of a domestic contract?

Correct
The correct answer:All of the above.
Your answer:All of the above.
Solution:

All of the provinces allow couples to use domestic contracts to opt out of certain aspects of provincial property
legislation. When one or both of the spouses enters a second (or third) marriage, they are more likely to have
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property that they may want kept separate for estate purposes. When one party is entering the marriage with
children from a previous relationship, the couple may wish to outline specific support arrangements in the even
there is a breakdown of the marriage. Furthermore, the couple may use a domestic contract to exclude the business
assets from the calculation of net family property.

So, you would recommend the use of a domestic contract in all of the above scenarios.

14 Katherine and Keith were living common law when they drew up their domestic contract. The
contract specifically stated that, if their relationship should terminate, Katherine would get sole
custody of their two children and Keith would not pay support. They subsequently married without
changing the domestic contract. Which of the following statements is FALSE?

Correct
The correct answer:Because they both agreed to the domestic contract, Keith cannot apply for custody of the
children and Katherine cannot apply for support from Keith.
Your answer:Because they both agreed to the domestic contract, Keith cannot apply for custody of the children
and Katherine cannot apply for support from Keith.
Solution:

Even though they both agreed to the domestic contract, Keith can still apply for custody of the children and
Katherine can still apply for support from Keith.

(Concepts) All of the provinces recognize one or more forms of domestic contracts, provided that the contract is in
writing, signed by both parties and witnessed. The cohabitation agreement will automatically become a marriage
contract upon marriage unless it specifically includes a provision to the contrary. A marriage contract may not deal
with the issue of child custody. A domestic contract that deals with support obligations may not be binding if a
judge finds that it would result in undue hardship for one of the parties.

(Choice C is false.) Katherine and Keith's domestic contract cannot deal with the issue of child custody, and it can
be found to not be binding if a judge finds that it would result in undue hardship for one of the parties. So, even
though they both agreed to the domestic contract, Keith can still apply for custody of the children and Katherine
can still apply for support from Keith.

15 Nivea and Francis are same-sex, common-law partners. They live in a province that does not
recognize same-sex, common-law partners as having the same rights and obligations as spouses.
They want to enter into a contract that specifies their rights and obligations during their period of
cohabitation, and upon the breakdown of that relationship if that should happen. Nivea and Francis
should execute a:

Correct
The correct answer:contract under private law.
Your answer:contract under private law.
Solution:

Nivea and Francis should execute a contract under private law.

(Concepts) A province that does not recognize same-sex, common-law partners as having the same rights and
obligations as spouses will not recognize a cohabitation agreement. However, same-sex, common-law partners are
free to enter into legally binding and enforceable contracts under private or common law.

(Choice C) Nivea and Francis are same-sex, common-law partners and they live in a province that does not
recognize same-sex, common-law partners as having the same rights and obligations as spouses. So, Nivea and
Francis should execute a contract under private law.

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