Preparing a Will and Estate Planning

This script explains wills. They are a key part of personal planning. Other parts of personal planning involve powers of attorney, enduring powers of attorney, and representation agreements. Script 180 covers these topics.

For information on what happens if a person becomes mentally incapable and has not done any personal planning, see script 426 on committeeship. For more information on wills, see scripts 177 to 179.

What is a will?

A will is a document that says what you want done with your property when you die. Examples of property that wills deal with include real estate, money, investments, and personal and household belongings that you own. You can change your will at any time. A will has no legal effect until you die.

Why should you make a will?

Every adult who owns assets or has a spouse or young children should have a will. But surprisingly, many people don’t. The few hours that you spend with a lawyer planning your estate could save your spouse, children, and other beneficiaries much time, effort, and money. If you don’t have a will, you lose control over who gets how much of your estate and when. You also give up the right to appoint a guardian for any young children you have. And the costs to administer your estate will be much higher.

A will doesn’t deal with some types of property

A will generally doesn’t cover property that you don’t own exclusively. For example, a joint bank account or a house owned in joint tenancy has a “right of survivorship.” That means that they automatically become the exclusive property of the joint survivor when you die. Also, a will does not apply to property like life insurance, RRSPs, RRIFs and TFSAs if you have already named a beneficiary for them.

A will is only one part of estate planning

You can transfer property to beneficiaries outside of a will, without taxes and other costs. This is called estate planning, explained later in this script.

The executor

You have to appoint an executor in a will. They have to:

• safeguard the estate (for example, change the house insurance if the house is unoccupied or keep any vehicle insured)
• gather up your assets
• pay your debts (including taxes)
• divide what remains of your estate among the people named in your will to receive a share of your estate—they are called beneficiaries

How should you choose an executor?

Choose someone you trust and who will likely be alive when you die. They may be a trusted family member or friend. Often, people appoint their spouse, but if you are both old, an adult child or children may be better. It helps if they are well organized, good at keeping records, and good communicators. Most importantly, they must be willing to be an executor.

If you have a second or blended family with stepchildren, you should see a lawyer to ensure that the wishes of both you and your spouse are followed. Your will does not have to be the same as your spouse’s, but it is important to consider all aspects of your family situation.

You can appoint more than one executor and they can act together as co-executors. You should also appoint an alternate executor if the first executor cannot act. If you have a complex estate or investments or need someone to take over the operation of a company, you should name a professional executor who may be a lawyer, accountant or other professional. Trust companies can also be executor if the estate is big enough. Professionals and trust companies charge for their services.

If you have minor children, appoint a guardian in your will

If you’re a parent or guardian of a minor child (under 19 years old), the Family Law Act lets you appoint someone to be the child’s guardian in your will.

It’s important to name a guardian if you’re a single parent. For separated parents, it’s best to agree on the choice of a guardian if one or both of you die. If that’s not possible, it’s important to consider your parenting responsibilities (through a court order or separation agreement) and ensure that you include them as part of appointing a guardian in your will.

Although your choice of guardian is important, the court doesn’t have to follow your wishes and may appoint a different guardian if it would be in the child’s best interests. And the court will consider the wishes of any child 12 or older. So you should check with an older child about their wishes before deciding on who to name as guardian in your will.

The guardian’s job is to look after your minor children, and they may in turn appoint a replacement guardian. But the guardian generally doesn’t have any rights to look after a minor child’s property – the guardian can only receive and hold a minor child’s property or money if it’s worth less than $10,000. So you should appoint a trustee to manage a minor child’s inheritance. The executor can be the same person as the trustee.

What if you don’t make a will?

If you don’t have a will, your net estate is distributed to your next of kin under the Wills, Estates and Succession Act (WESA). Script 177 “What Happens When You Die without a Will?” has more on this.

It’s important to make a will properly

You should have your will professionally prepared, as a will is a binding legal document. To make an effective will requires a good understanding of property ownership rules and the law about wills. There are rules and formalities that must be followed, no matter how simple the will. Otherwise, the will may not be valid. Also, the words used must be chosen carefully so the will is clear and unambiguous. If the formalities are ignored or the terms of the will are unclear, there will be extra legal costs for your estate to get court orders to fix the problems, and that may not be entirely possible.

Your will can be changed after you die

If your will doesn’t properly provide for your spouse or children, they can sue under WESA to have your will varied or changed by the BC Supreme Court. A spouse includes both a married spouse and a person you have lived in a marriage-like relationship with for 2 years before your death.

Courts and WESA are clear that people have both a legal and moral obligation to provide for a spouse or child in a will. If you’re thinking of disinheriting a spouse or child (even a self-sufficient, adult child), or leaving them less than they might reasonably expect, or, in the case of a child, less than their siblings, see a lawyer before finalizing your will. The courts may change what your will gives to your beneficiaries.

If you have a disabled adult child, and do not leave enough for them, the Court may order that they receive more from the estate.

Your estate may have to pay probate fees

Probate is a process to prove a will is legally valid. An executor must apply to BC Supreme Court to confirm that a will is legally valid. The word “probate” means “proof”. The Court will prove that the will is valid. The following probate filing fees must be paid to the court registry. If the estate is worth:

• less than $25,000 – no fee
• over $25,000 – basic fee of $208
• between $25,000 and $50,000 – basic fee of $208 plus $6 per $1,000 ( $358 for the first $50,000)
• over $50,000 – $358 plus $14 per $1,000 of estate value over $50,000

These fees can change. Details are in the Probate Fee Act and the Supreme Court Civil Rules.

Probate fees are usually just a small part of the total cost of the process. There can be legal fees, fees to transfer assets from one name to another, and other costs.

The Probate Registry of the Supreme Court decides the estate value based on documents filed by the executor. Probate fees can often be avoided or reduced by estate planning outside of a will, and a lawyer can help with that planning.

Taxes may also have to be paid

When a person dies, the law assumes that they sold all their assets on the date immediately before their death. If the assets increased in value since they were bought, a capital gains tax will have to be paid for the same year as the person’s death. There are some exceptions, such as gifts to spouses and principal residences, but if you own assets that will be subject to capital gains tax on your death, you should speak to a lawyer or an accountant to see how to deal with this tax. For example, a recreational property in your name alone will normally be subject to capital gains tax.

What are some aspects of estate planning?

With estate planning, you may be able to reduce probate fees and taxes that your estate would otherwise pay. Consider, for example, the following:

• Joint assets: the owners of joint assets, such as a joint bank account that two or more people own, or a house owned by two or more people as joint tenants, have a “right of survivorship”. This means that when one person dies, the other joint owners own the asset. So if you and another person own a house as joint tenants, the surviving joint owner will get the house when you die. The house passes outside your will. No probate fees have to be paid by your estate for the house, and if the house is your principal residence, no tax will be paid by your estate.

But in several recent cases, courts have ruled that a jointly-owned asset had to be returned to the estate. If your joint asset is not with your spouse or a minor child but instead with an adult child or other adult, then that joint holder may actually own the asset in trust for you. This can be avoided by clear documentation showing that, when they become a joint owner with you, you intend to give the property to them after you die. For example, if you add an adult son to your bank account as a joint holder and you want the account to belong to him when you die, you should sign a deed of gift. Otherwise, the law may assume that your son holds the bank account in trust for your estate and the money will be paid out under your will. It is very common for an older person to have a joint account with one of their children on the understanding that the account is being held in trust for all the children, when the parent dies.

• RRSPs, RRIFs and TFSAs: Registered Retirement Savings Plans (RRSP), Registered Retirement Income Funds (RRIF) and Tax Free Savings Accounts (TFSA) all let you name a beneficiary to get the proceeds when you die. If you name a beneficiary and they survive you by at least 5 days, the proceeds go outside your will to them. For example, an RRSP beneficiary will get the money in the RRSP directly from the company holding the RRSP, and not from the estate.

• Life Insurance policies: life insurance policies let you name a beneficiary to receive money at your death. Again, this money passes outside your will and does not go through the estate; this means that the life insurance funds are not used to pay off the debts of the estate.

• Trusts: depending on the size of your estate, you may want to set up a trust, to protect your estate against a wills variation claim.

• Charitable gifts: you can reduce the income tax owing from the sale of your assets on your death by making charitable gifts in your will.

You should hire a lawyer to help you

An experienced lawyer will know the rules that apply to wills and can help with estate planning to save money for your beneficiaries, giving you the peace of mind of knowing that your will is properly drafted and valid, and that your estate will be paid out as you wish.

How much does a will cost?

It depends on how complex your situation is. Most lawyers charge a fee that reflects the time, skill and responsibility involved. Discuss the fees with your lawyer when you call to arrange a meeting.

You can minimize the legal fees by being well prepared

It helps if you have the following information ready before you meet with your lawyer:

• A list of everyone in your immediate family with their full names and contact information, their relationship to you, and the ages of all your children, including stepchildren.
• The names and addresses of any other people or organizations you want to give gifts to.
• A list of all your assets and their values, including your home, car, investments, and any personal items of significant monetary value.
• A description of how you own these assets (for example, alone or with someone else).
• A document that shows whose name is on the title of any real estate you own.
• Details of any insurance policies you own, and, specifically, who the beneficiary of the policy is.
• Details of any pensions, RRSPs, RRIFs and TFSAs, and who the beneficiaries are.
• Information on the structure of any business you operate (for example, a company or partnership).
• Any separation agreements or court orders requiring you to make support payments or dealing with guardianship of any minor children.
• The name, address, and occupation of your choice for your executor and guardian.

Update your estate plan

A well-drafted will plans for various possibilities (since it’s impossible to predict the future). Things such as what happens if an adult child or grandchild dies before you. But you should still consider changing your will whenever your financial or personal circumstances change, or if beneficiaries die or reach the age of majority.

For example, if you made a will when your children were young and named your parents as guardian and executor, you’ll no longer need the guardian clause when your children are adults. And you may want your children or a sibling to be executor instead. It’s good to review your will every three to five years to ensure that it still reflects your current wishes.

Review your will after any change in your marital status

If you married before March 31, 2014, when WESA came into effect, your will made before marriage was automatically revoked, unless the will said it was made in contemplation of your marriage. After March 31, 2014, a marriage does not revoke a will. It is now more important than ever to ensure that you make a will to include everyone that you want to share in your estate.

If you divorced before March 31, 2014, the portions of your will that appoint your ex-spouse as an executor and make a gift to them are not valid. Any divorce after March 31, 2014 will mean that the appointment or gift won’t be valid if:

• you’ve lived separate and apart for at least two years before your death (and one or both of you intended to live separately and apart permanently).
• before you die, an event occurs that causes an interest in family property to arise (under the Family Law Act).
• in the case of a marriage-like relationship, one or both of you end the relationship before you die.

Filing a wills notice

You can file a wills notice with the Vital Statistics Agency. A wills notice says who made the will and where it is kept. This is a voluntary registration and has a small filing fee. The Vital Statistics Agency doesn’t take a copy of your will. You or your lawyer fill out an information form listing where your will is kept. After a person dies, a search of the Wills Registry is required for the court probate process to ensure the court has the last will.

Where should you keep your will?

Keep the original will with your lawyer or in a safety deposit box at your bank so that you have a permanent, safe and fireproof location. Your executor will need your original will (not a copy) to give to the Probate Registry. You should let your executor know where you keep your will and other important documents, so they know where to get it.

What is LEAVE A LEGACY™?

LEAVE A LEGACY™ is a public awareness program of the Canadian Association of Gift Planners. Its objective is to promote, through the media and educational sessions for the public, the importance of preparing a will. It also raises awareness about leaving a gift for charity in the will.

More information

• The Nidus Personal Planning Resource Centre & Registry has detailed information on all aspects of personal planning including fact sheets, forms, and videos.
• Scripts 177 to 180 and 426

[updated April 2017]

The above was last reviewed for accuracy by Hugh McLellan and edited by John Blois.

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