Wills & Estates
This area of law deals with two facts that are often considered the only two certainties of life: Death and Taxes!
It is imperative that every adult have a Will. If you do not have a legally enforceable Will and die while residing in British Columbia, the Estate Administration Act of B.C. determines the manner in which your estate will be distributed. This Act stipulates that your spouse will receive the first $65,000 plus the use of the family home for life; thereafter your spouse and your children split the balance of your estate in prescribed proportions. Generally this is not the manner that most individuals wish to have their estate divided. In preparing your Will it is important to attempt to cover as many scenarios as possible. In making your Will you should appoint an executor who is the person responsible for carrying out the terms of the Will. In most cases you should appoint an alternate executor, who can act in case the first named executor dies before you or is, for other reasons, unable to act or continue to act as your executor, alternatively you may appoint two or more individuals or the survivor of them to act as executors. Once an executor and an alternate is selected, you must determine who is to receive your estate. The most common situation is for a husband and wife to appoint each other their executor and leave everything to each other, provided that if they die in a mutual disaster or one has already died, their estate is to be divided among their children. If the children are under 19 or the testator wishes the children to be older before receiving their share of the estate, then a trust is created until the children reach the designated age. There are however many variations to the manner in which a Will is prepared and it is important that the Will reflect your intentions and not merely fit some pre-designed formula.
In order to make a Will a person must be competent to do so. Generally this means that he must be aware of the assets that make up his estate and the persons who may expect to benefit from the estate, such as close relatives, friends, etc. Generally lawyers are aware of the competency requirements and are careful to note the relevant factors when making a Will for a person whose competency, due to age or disability, may be questioned.
An important factor to be considered in British Columbia when making a Will for a client who has children from two or more relationships, or wishes to leave a greater proportion of his estate to one child, or does not wish to leave a significant portion of his estate to his spouse, is the Wills Variation Act of B.C. This act provides that if a judge is of the view that the Testator did not make adequate provision for a spouse or child, the judge can vary the Will to make such provision for the child or spouse as the Court deems appropriate. As in most court proceedings an action under the Wills Variation Act involves considerable expense and it will also delay the distribution of the estate. Thus if there is a possibility that a spouse or child may make application under the Wills Variation Act it is important that the Will be prepared carefully to attempt to avoid such an application. Generally lawyers practising in the Wills/estates area have the expertise required to assist the Testator in reducing the likelihood that a Wills Variation application will be made.
The second certainty of life, i.e. Taxes is another matter to be taken into consideration when making a Will. When a person dies in British Columbia, he is deemed to have disposed of his property immediately on his death and any income tax that arises from this “deemed disposition” becomes payable within six months of death. In addition to income tax, the provincial government imposes a Probate Fee of approximately 1.4% of the value of the estate. There are many ways to minimize and/or delay these taxes, however it is important the appropriate planning take place prior to death, the sooner, the better! Many individuals have accumulated assets that may be subject to capital gains tax on their death and steps should be taken to ensure that their estate will not be required to sell property merely to pay the taxes that Will arise. A lawyer, often in combination with the client’s accountant, can often significantly reduce the amount of tax that the client’s estate will pay.
Powers of Attorney
At present an individual (the “Donor”) with property in British Columbia can, by preparing a Power of Attorney, appoint another individual who is known as an “attorney” to do whatever the Donor can legally do in his place. Most often this involves signing documents for the Donor, such as cheques, property transfers, etc. The Donor may appoint more than one individual to act as an Attorney and he can specify whether both Attorneys must sign documents or whether either one may sign in his place. Most importantly the Power of Attorney document can stipulate that the powers granted Will continue despite any subsequent mental infirmity that the Donor may suffer. The Power of Attorney may also be a “springing” power of attorney wherein it only takes effect when two doctors certify that the donor is no longer competent to manage his or her affairs. If you have any questions regarding wills, estates or powers of attorney, please feel free to contact us.