Wills

A Will is a legal document whereby you explain what you want done with your “estate”. Your estate consists of any land, house, money, investments, personal items and other assets that you own. Note that a Will does not deal with assets you jointly own with another person, for example, a joint bank account or a house owned in joint tenancy.

In a Will, you name a person or company to be the “executor”. The executor gathers up the estate, pays your debts and taxes, and then divides what remains of your estate among the beneficiaries (the people named in your Will to receive a share of your estate). Choose an executor you trust and who will likely survive you. It may be a friend, relative, professional or a trust company. You can appoint more than one executor who can act together as co-executors, and you can also choose an alternate executor.

Why have a Will? The simple answer is that having a Will ensures that your estate is distributed according to your wishes as opposed to distribution pursuant to the Estate Administration Act. It also makes financial sense. A Will can minimize cost, both in terms of taxes and probate fees. If you die without a Will, it usually costs more. This means your loved ones may receive less.

A Will avoids the complications and inconvenience of dealing with an “intestate estate”. If you die without a Will, it is more complicated and time-consuming for the people who survive you to settle your estate. Most importantly, a Will ensures that your intentions are carried out. It ensures that the appropriate people receive the estate proceeds. This concern is particularly acute given the prevalence of blended families. A Will also allows you to appoint guardians for your infant children and express your wishes as to burial or cremation.

IF YOU ALREADY HAVE A WILL you should review it every few years to make sure that it is current or more often if your circumstances change. For example, your executor may have moved or may no longer be able to manage your estate or a beneficiary may have passed away.

Q: What happens if there is no Will?

The Estate Administration Act sets out details regarding the distribution of an estate when there is no Will. Generally, the spouse and surviving children, natural and adopted, share the estate. In the absence of a spouse or children, the estate goes to the grandchildren. In the absence of a spouse, children and grandchildren, the estate goes to the parents, or, in the absence of parents, to the next nearest relatives. An estate goes to the government only if no relatives are known or they cannot be found, and if all time limits set by the law have passed.

For example if you have a spouse and two children, the first $65,000 goes to the spouse and the remainder is divided three ways between the spouse and the two children. Note this situation would require the intervention of the Public Guardian and Trustee if the children are under the age of 19. This distribution regime for most couples would likely be contrary to their intentions.

Q: Is a handwritten Will valid?

Yes, but only if witnessed by two persons who are present both while the Will is being signed and while the Will is being witnessed. Unsigned Wills, videotaped Wills, audio tape recorded Wills and Wills that are not witnessed, witnessed by one person or improperly witnessed (a person who is a beneficiary under a Will or the spouse of a beneficiary may not witness the Will) are invalid in British Columbia. There are other ways that a Will can be invalid, as well. An invalid Will is exactly the same as no Will at all.

Q: Can I make changes to my Will by writing on it and initialing the changes? No, all changes must follow the procedures outlined above. It is highly recommended not to attempt to make changes to a Will in this manner.

Q: What happens if I get married? Marriage automatically revokes your Will unless the Will was made specifically “in contemplation of marriage”. If you leave something in your Will to your spouse or appoint your spouse as executor, and are subsequently divorced, the Will stands; however, the gift or appointment to your spouse will lapse and the Will is read as if the spouse predeceased the testator.

Q: Are Joint Assets, RRSPs and Insurance proceeds part of an estate?

No, joint assets (such as a joint bank account that two or more people own, or a house owned by two people as joint tenants) have a “right of survivorship”. This means that when one person dies, the other person or persons own the entire asset. So if you and another person own a house as joint tenants, that other person will become the sole owner of the house when you die. No probate fees will have to be paid by your estate regarding the house.

If you have named a beneficiary (other than your estate) in your RRSPs, RRIFs, or Insurance Policies, then these assets will also pass outside your Will. The named beneficiaries will get these funds directly, and no probate fees will be due.

Q: How much are Probate fees?

Your estate may have to pay “probate” filing fees. Probate filing fees are the fees that must be paid to the province when the will is probated (approved by the court.) These fees are roughly $14,000 on $1 million or 1.4% of the estate value.

Q: What are the Tax consequences of Death?

When a person dies, the law assumes that they sold their assets on the date they died, and there may be substantial capital gains on those assets. If you own assets that will attract capital gains tax on your death, you should speak to a lawyer or an accountant to see how you can minimize this tax.

Q: Can my Will be challenged?

Under the Wills Variation Act, a child (infant or adult) or the spouse of the deceased can apply to the Court to vary the deceased’s Will. A Will can be varied if it does not make adequate provision for the proper maintenance and support of the claimant. A claim must be filed within 6 months of the grant of probate of the Will. It is difficult but not impossible to validly disinherit a spouse or a child.

Q: Why would you create a Trust in a Will?

Many Wills create trusts. A trust is an arrangement whereby a person, group of people or an institution, called the “trustee,” is given “custody” of property for a period of time. The trustee is obligated to manage the property in accordance with the terms of the trust. A trust is created for many purposes including:

• Keeping control over gifts to minors;
• Delaying distribution of estate property;
• Providing for a beneficiary who is not capable of handling money;
• Providing a life interest for beneficiaries;
• Leaving money to a charity for a specific charitable purpose.