Estate Planning

Testamentary Dispositions and Political Contributions

By Hull and Hull LLP

It is commonly understood that Canadian political parties are subject to rigorous rules respecting contributions. Failure to appreciate these rules presents a potential pitfall for the estates practitioner. 

Under s.405(1) of the Canada Elections Act, "No individual shall make contributions that exceed: (a) $1,000 in total in any calendar year to a particular registered party [and] (b) registered associations, nomination contestants and candidates of a particular registered party; (c) $1,000 in total to a candidate for a particular election who is not the candidate of a registered party; and (d) $1,000 in total to the leadership contestants in a particular leadership contest."

Subsection 405(2) states that subsection (1) "does not apply to contributions that are made by way of an unconditional, non-discretionary testamentary disposition (emphasis added)."

Accordingly, if a client wishes to leave a gift (i.e. a contribution) to a political party in his or her Will, the parameters of the Act need to be considered by the will drafter to see that the contribution is accepted.  A specific legacy would seem the best bet.  Moreover, the Act appears to provide no latitude to allow acceptance of testamentary contributions made in settlement of litigation or potential litigation.  If a contribution to a political party is a term of settlement of an estate dispute where all concerned agree that such accorded with the intentions of the deceased (yet were never formalized), such contribution may not be accepted. 

David M. Smith

Full post as published by Toronto Estate Law Blog on May 13, 2010 (boomark / email).