2.0 OVERVIEW OF FINANCIAL CRITERIA

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1 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec PURPOSE When it is determined that the deceased is service eligible, the second criteria set out in Veterans Burial Regulations (Section 4) is financial eligibility. 2.0 OVERVIEW OF FINANCIAL CRITERIA 2.1 There are three ways financial qualification may be met: 1) Financial insufficiency indicated by next-of-kin or estate representative; 2) Abandonment-generally in the absence of next-of-kin; and 3) Favourable matter-of- right ruling by Veterans Affairs Canada. 2.2 For eligibility to be considered on the basis of insufficient funds there must be a financial assessment (means-test) at the time of death. The means-test considers factors such as marital status, assets/debts of the deceased person and surviving spouse (if applicable); number of dependents, as well as other circumstances that may affect finances. Legislation 2.3 In Canada, the estate settlement is governed by provincial legislation. If an estate is not yet determined by provincial jurisdiction, but an application is received, apply the laws of the province in which the deceased resided to determine available estate. Foreign Currency 2.4 If the deceased dies outside of Canada, convert any assets, debts and expenses into Canadian currency (use conversion rate at date of death). If burial takes place more than a month after death-currency conversion shall be based on the burial invoice date. 3.0 MARITAL STATUS AND DEPENDENT CHILD/CHILDREN The means-test differs when the deceased leaves a survivor (spouse, common-law partner, dependent child or an ex-spouse who is financially maintained) versus the deceased being single, widowed, divorced or separated without maintenance. 3.1 Determining Financial Eligibility Based on Martial Status a. Where deceased is without a survivor (single, widowed, divorced, separated without maintenance) estate is applied to funeral costs then the net assets are considered. b. Where there is a survivor, assets held by the deceased and spouse are considered EXCLUDING a primary residence, vehicle, monthly income received for month of death, less debts payable. A spousal exemption of $35, 279 is then offered with an additional exemption of $700 per dependent child (prior to 01 Oct 2016, the spousal exemption was $12,015). Survivor 3.2 When adjudicating an application, the term survivor indicates a surviving spouse or common-law partner of the deceased and may also indicate a surviving dependent child or dependent children of the deceased.

2 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec Common-Law Partner 3.3 A common-law partner indicates a person who is cohabitating in a conjugal relationship with the deceased at the time of death, having so cohabited for a period of at least one year, unless they were not cohabiting at the time of death for a period of at least 90 days because of a breakdown of their conjugal relationship. Separated With Financial Maintenance 3.4 If the deceased and survivor lived apart but the survivor was being maintained voluntarily or by court order, the spousal exemption and exemptions pertaining to residence, vehicle and regular cheques shall apply to calculate net value of the estate. Involuntary Separation 3.5 If the deceased and survivor were living apart at death due to one or both individuals living in a hospital or extended care facility, marital status within CSDN may be indicated as separated involuntarily. In these cases, indicate married on the LPF application. Dependent Child/Children 3.6 A dependent child is defined in subsection 2(1) of the War Veterans Allowance Act as: a. a child who has no spouse or common-law partner and is i. under the age of 18 years, ii. under the age of 25 years and making satisfactory progress in a course of instruction approved by the Minister, iii. under the age of 21 years and prevented by physical or mental incapacity from earning a livelihood, iv. the age of 21 and over and prevented by physical or mental incapacity from earning a livelihood, where the incapacity occurred before the child attained the age of 21 years, or after the age of 21 years and before the age of 25 years while in a course of instruction approved by the Minister, or b. a child referred to in subparagraph (a.i, ii., iii, or iv) who has a spouse or commonlaw partner and is financially dependent on a recipient. 3.7 Where there is no spouse but a dependent child or children, the exemption of $35,279 will apply for the oldest dependent child, with a further exemption of $700 per each additional dependent child. Common Tragedy 3.8 In a situation where an eligible person and spouse/common-law partner are involved in an accident or other circumstances in which both die (common tragedy), apply the spousal exemption.

3 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec ASSETS Assets of the deceased are included in the calculation of the "net assets of the succession" without regard to the designation of their bequest or inheritance in a will if one exists. In accordance with Veterans Burial Regulations the assets accounted for in the financial means-test are: 4.1 Cash-On Hand or in Bank Accounts a. At the time of death, indicate the amount of cash held in bank accounts or on hand. b. Bank accounts, held jointly between the deceased and anyone else (excluding spouse), shall not be considered an asset. Proof of joint account may be requested such as a void cheque or bank document listing name of account holders. c. List a Tax Free Savings Account (TFSA) as a bank account, not as an investment. Under provincial jurisdiction (in all provinces except Québec), a TFSA payable to a named beneficiary (excluding a spouse) shall not be considered an estate asset. 4.2 Investments-RRSP, RRIFs, GICs, Bonds, Securities, Etc a. Guaranteed Investment Certificates (GIC)-are not taxable, only interest earned is taxable so their redemption value would keep their capital value. To simplify, list the initial value of the GIC assuming it is redeemed before maturity-no interest paid. b. RRIF, RRSPs, Other Investments-at the time of death, the hypothetical market value must be considered after payment of tax and administrative penalties. As a general rule, a reduction of 50 percent would be appropriate. c. Spousal RRIFs/Pension-it is not the intent of the Program to force liquidation of retirement funds. If not cashable at death, count a month for RRIF/pension amount. d. Under provincial jurisdiction (in all provinces except Québec), a RRIF/RRSP payable to a named beneficiary (excluding a spouse) shall not be considered an estate asset. 4.3 Residence a. When there is a survivor, exclude value of one property (or percentage of multi-unit dwelling) owned by the deceased and his/her surviving spouse. b. When a Veteran has no survivor, indicate market value of primary residence when in the deceased s name only (excluding any taxes, realtor/legal/ other fees). c. When a property is jointly owned (other than with surviving spouse) it does not form part of the estate as ownership transfers to the co-owner. d. If property owned by the deceased is determined to have no market value (i.e. in serious state of disrepair or located in remote area), a nil value should be placed on the property. If the property is eventually sold, the amount may be recovered.

4 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec Additional Property, Real Estate, Land, Etc a. Count the market value (net proceeds after taxes/fees are paid) of any real estate (cottage, income/commercial property, land, buildings) owned by the deceased. b. For a farming property, one acre of land may be considered as part of the principal residence. If the land is jointly owned, it does not form part of the estate of the deceased as ownership transfers to the co-owner. 4.5 Vehicles a. When a Veteran has no survivor, include market value of any motor vehicles including recreational vehicles, trailers or boats, etc. The Canadian Automobile Dealers Association Red Book may be used as a guide. b. When there is a survivor, the value of one vehicle is not considered. When more than one vehicle is in estate, the applicant may choose what vehicle to declare. 4.6 Death Benefit The Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) death benefit is a 1 time, lump-sum benefit paid to an estate up to a maximum of $2,500 (to qualify, the deceased had to have made valid contributions to the plan). a. The benefit is taxable income and must be claimed on the deceased s final tax return. To account for any tax withheld, reduce the amount declared in assets by 20% (minimum income taxable). i.e. $ % (or $500) = $2000 declared. b. If the deceased did not contribute to CPP/QPP (i.e. did not work outside the home, disabled, self-employed) no death benefit is payable and no amount is recorded. c. If there is no estate, or executor does not apply, payment may be made in the following order of priority: 1) person or institution responsible for funeral expenses; 2) surviving spouse or common-law partner; or 3) next-of-kin of the deceased. 4.7 Insurance a. Count value of any life insurance policy payable to the estate or to a spouse. Under provincial jurisdiction, an insurance policy payable to a named beneficiary (excluding the deceased s spouse) shall not be considered an estate asset. b. Supplementary Death Benefit (SDB) is a form of reducing term life insurance, covering Canadian Forces members. After release, many members remain in the plan (some members may have opted out). If eligible, the SDB is counted as an asset. Public Trust Monies 4.8 Under subsection 31(1) of the Pension Act, any pension or allowance held in trust by the Department and due at time of death does not form part of the estate. The Department may, in its discretion, under the authority of subsection 31(2) of the Pension Act, direct payment to cover expenses of the deceased s last sickness, funeral, burial/cremation.

5 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec Regular Cheques a. When there is no survivor, count the value of all regular cheques payable for the month of death. Do not indicate income that is withheld or must be returned. b. Service Canada deposits OAS/CPP cheques in the last 3 business days of each month. If death occurs at month s end (generally after the 26/27 th until the 1st) do not enter an amount as no other deposits will be made into the account. Other Assets 4.10 Other assets that must pass through the estate before being distributed are entered as other assets (i.e. receivables of an exceptional nature, dividends, etc) Prepaid Funeral, Burial or Grave Marking a. When funeral and burial expenses are prepaid prior to death by the deceased or spouse, the "prepayment" is declared under assets. (Note: if funeral/burial was prepaid by someone else other than the Veteran or spouse, do not add as asset). b. Any funeral/burial costs paid after death occurs are debt, regardless of whether they have been paid prior to an application being presented for consideration. c. Count only prepaid expenses for the deceased. Declare the prepaid amount for the Veteran for any items shared with a family member (i.e. side by side plot = half). Spousal Assets 4.12 The net worth of a surviving spouse must be considered during the application process: a. List assets held by spouse such as money on hand or in accounts, investments, life insurance payable to spouse and other property excluding family residence. b. Any joint holdings that a spouse may possess with another living person are considered (list 50% of value). If the spouse or joint partner disagrees with this apportioning, ask for a detailed breakdown to determine exact figure. c. Where the deceased had joint assets with spouse and another person, consider fifty percent of portion owned by the spouse. If spouse or other person disagrees, ask for a detailed breakdown to determine exact figure. d. When determining the net worth of the surviving spouse of a deceased, a selfdeclaration from the spouse of assets and liabilities will be accepted. Joint Assets 4.13 Any holdings, including bank accounts, held jointly between the deceased and anyone else (other than a spouse), shall not be considered to be assets of the estate. Verifying Assets 4.14 Proof of assets should be verified if the value indicated appears inordinately low.

6 Sub-section: FINANCIAL ELIGIBILITY (CRITERIA TWO) 12 Dec DEBTS AND LIABILITIES Debts and liabilities held in the deceased s name (and when applicable, held jointly with spouse) are included in the "net assets of the succession." Debt and liabilities declared are used for financial qualification only and are not reimbursable. Outstanding Bills, Lines of Credit, Taxes and Loans/Other Debt or Liabilities 5.1 Declare outstanding bills/liabilities held by the deceased (not insured) or spouse. Amounts for loans, credit cards, taxes, utilities and other legitimate debt (provable obligation incurred by the deceased and/or spouse) owed at the time of death. Mortgages 5.2 If not insured for deceased, an outstanding mortgage (including a reverse mortgage) on any property owned by the deceased (and/or spouse) may be used. Note: mortgage insurance is only approved for those between 18 to 65 years of age. Co-signing of a Loan 5.3 Co-signing of a loan/financial obligation for a person other than a spouse is not accepted as a debt unless the obligation to re-pay the loan has already been implemented. Legal Fees 5.4 Probate of a will, legal fees or documentation to settle estate, documentation and notary/estate executor fees for affidavits may be counted as liabilities. Last Illness Expenses 5.5 Any unpaid last illness expenses at time of death in excess of $75 dollars plus taxes shall be treated as an estate liability if they are not insured services under a private or provincial health care system within a three months period preceding death. This could include: ambulance charges, prescriptions, medical gases, special diet items, and other unpaid expenses associated with illness. Funeral and Burial Expenses 5.6 Funeral and death related expenses are not listed under the "total uninsured liabilities and debt" as these are listed under a different area (Line E) of the application. Verifying Debts and Liabilities 5.7 It is reasonable to accept debts as declared by an applicant within reason. Proof of debts may be requested if the value indicated is very high. 6.0 TAX RETURNS AND LAST POST FUND REIMBURSEMENT The Last Post Fund does not issue T4A(P) tax slips to declare reimbursement of funeral and burial expenses for final tax return; as it is a reimbursement of funeral expenses, not income.