Difference between revisions of "Preparing a Will and Estate Planning"

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Preparing a Will and Estate Planning (view source)

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For more information, refer to script [[What Happens When You Die Without a Will? (Script 177)|177]] on “What Happens When You Die without a Will?”
For more information, refer to script [[What Happens When You Die Without a Will? (Script 177)|177]] on “What Happens When You Die without a Will?”


It’s important to make a will properly
==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 taken from your estate to get court orders to fix the problems, which may or may not be entirely possible.
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 taken from your estate to get court orders to fix the problems, which may or may not be entirely possible.


Your will can be changed after you die
==Your will can be changed after you die==
If your will doesn’t properly provide for your spouse or children, they can make a claim to have your will varied or changed by the BC Supreme Court. Until March 31, 2014, this claim is made under the Wills Variation Act (also known as WESA). After March 31, 2014, the claim is made under WESA. A “spouse” under both statutes includes both a married spouse and a person with whom you have lived in a marriage-like relationship for two years before your death.
If your will doesn’t properly provide for your spouse or children, they can make a claim to have your will varied or changed by the BC Supreme Court. Until March 31, 2014, this claim is made under the Wills Variation Act (also known as WESA). After March 31, 2014, the claim is made under WESA. A “spouse” under both statutes includes both a married spouse and a person with whom you have lived in a marriage-like relationship for two years before your death.


Both a long history of British Columbian case law, along with the provisions of WESA are clear that there is 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 in your will than they might reasonably expect, or, in the case of a child, less than their other siblings, be sure to consult with a lawyer about the situation before finalizing your will. The courts may be able to alter your will, giving them more at the expense of your other beneficiaries. If you have a disabled adult child, and do not leave sufficient provision for him or her, the Court may order that this child receive more from the estate.
Both a long history of British Columbian case law, along with the provisions of WESA are clear that there is 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 in your will than they might reasonably expect, or, in the case of a child, less than their other siblings, be sure to consult with a lawyer about the situation before finalizing your will. The courts may be able to alter your will, giving them more at the expense of your other beneficiaries. If you have a disabled adult child, and do not leave sufficient provision for him or her, the Court may order that this child receive more from the estate.


Your estate may have to pay “probate” filing fees
==Your estate may have to pay “probate” filing fees==
Probate is the process by which the executor must apply to the 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. Probate filing fees are paid to the Court Registry. These fees are as follows:
Probate is the process by which the executor must apply to the 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. Probate filing fees are paid to the Court Registry. These fees are as follows:


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


These fees may change at any time. The 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.
These fees may change at any time. The 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.
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The Probate Registry of the Supreme Court determines 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 you may wish to see a lawyer to explore such planning.
The Probate Registry of the Supreme Court determines 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 you may wish to see a lawyer to explore such planning.


Taxes may also have to be paid
==Taxes may also have to be paid==
When a person dies, the law assumes that they sold all of their assets on the date immediately before their death. If the assets increased in value over time, 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 attract 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 attract capital gains tax.  
When a person dies, the law assumes that they sold all of their assets on the '''date immediately before their death'''. If the assets increased in value over time, 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 attract 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 attract capital gains tax.  


What are some aspects of estate planning?
==What are some aspects of estate planning?==
With estate planning, you may be able to reduce the amount of probate fees and taxes that your estate would otherwise pay. Consider, for example, the following:
With estate planning, you may be able to reduce the amount of 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 are entitled to 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 is an asset that passes outside your will. No probate fees will have to be paid by your estate regarding the house, and if the house is your principal residence, no tax will be paid by your estate.  
*'''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 are entitled to 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 is an asset that passes outside your will. No probate fees will have to be paid by your estate regarding the house, and if the house is your principal residence, no tax will be paid by your estate.  


However, note that several recent court rulings have seen a jointly-owned asset 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 in fact own the asset in trust for you. This can be avoided by clear documentation showing your intent to give the property to the surviving joint owner at the time he or she becomes a joint owner with you. 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, it may be presumed that your son holds the bank account in trust for your estate and the money will be paid out according to the terms of your will. It is very common for an older person to have an account in joint ownership with one of their children on the understanding that the account is being held in trust for all the children, when the parent dies.
:However, note that several recent court rulings have seen a jointly-owned asset 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 in fact own the asset in trust for you. This can be avoided by clear documentation showing your intent to give the property to the surviving joint owner at the time he or she becomes a joint owner with you. 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, it may be presumed that your son holds the bank account in trust for your estate and the money will be paid out according to the terms of your will. It is very common for an older person to have an account in joint ownership 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: A Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) and Tax Free Savings Account (TFSA) all allow you to designate a beneficiary to get the proceeds when you die. If you name a beneficiary and he or she survives you by at least five days, the proceeds pass outside your will to that beneficiary. For example, an RRSP beneficiary will get the money in the RRSP directly from the company holding the RRSP, and not from the estate.
*RRSPs, RRIFs and TFSAs: A Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) and Tax Free Savings Account (TFSA) all allow you to designate a beneficiary to get the proceeds when you die. If you name a beneficiary and he or she survives you by at least five days, the proceeds pass outside your will to that beneficiary. 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 allow you to designate a beneficiary to receive money at your death. Again, this money passes outside your wil and does not pass as part of 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 establish a trust, which can protect your estate against a wills variation claim.
*Charitable Gifts: You can reduce the income tax liability arising on the deemed disposition of your assets on your death by making charitable gifts in your will.


• Life Insurance Policies: Life insurance policies allow you to designate a beneficiary to receive money at your death. Again, this money passes outside your wil and does not pass as part of the estate; this means that the life insurance funds are not used to pay off the debts of the estate.
==You should hire a lawyer to help you==
 
• Trusts: Depending on the size of your estate, you may want to establish a trust, which can protect your estate against a wills variation claim.
 
• Charitable Gifts: You can reduce the income tax liability arising on the deemed disposition 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 about the rules that apply to wills and can help with estate planning so as 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 according to your wishes.
An experienced lawyer will know about the rules that apply to wills and can help with estate planning so as 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 according to your wishes.


How much does a will cost?
==How much does a will cost?==
The cost 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.
The cost 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  
==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:
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.
* 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 to whom you want to give gifts.  
*The names and addresses of any other people or organizations to whom you want to give gifts.  
• A list of all of your assets and their values, including your home, car, investments and any personal items of significant monetary value.  
*A list of all of 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, whether you own it alone or together with someone else).
*A description of how you own these assets (for example, whether you own it alone or together with someone else).
• A document that shows whose name is on the title of any real estate you own.
*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 insurance policies you own, and, specifically, who the beneficiary of the policy is.
• Details of any pensions, RRSPs, RRIFs and TFSAs, and who the the beneficiary of these is.
*Details of any pensions, RRSPs, RRIFs and TFSAs, and who the the beneficiary of these is.
• Information about the structure of any business you operate (for example, a company or partnership).
*Information about 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.
*Any separation agreements or court orders requiring you to make support payments or dealing with guardianship of any minor children.
• Your choice for your executor(s) and guardian.
*Your choice for your executor(s) and guardian.


It’s important to update your estate plan
==It’s important to update your estate plan==
A well-drafted will anticipates different scenarios and plans for these, such as what happens if an adult child or grandchild dies before you. However, you should still consider changing your will whenever your financial or personal circumstances change, or if beneficiaries die or reach the age of majority.  
A well-drafted will anticipates different scenarios and plans for these, such as what happens if an adult child or grandchild dies before you. However, 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 a good practice to review your will every three to five years to ensure that it still reflects your current wishes.  
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 a good practice to review your will every three to five years to ensure that it still reflects your current wishes.  


Make sure to review your will after any change in your marital status
==Make sure to review your will after any change in your marital status==
If you married before March 31, 2014, when WESA came into effect, your will prior to marriage was automatically revoked, unless the will says that it was made in contemplation of your marriage. After March 31, 2014, a marriage will not revoke a will. It is now more important than ever to ensure that you make a will so that you made provision for everyone that you want to share in your estate.
If you married before March 31, 2014, when WESA came into effect, your will prior to marriage was automatically revoked, unless the will says that it was made in contemplation of your marriage. After March 31, 2014, a marriage will not revoke a will. It is now more important than ever to ensure that you make a will so that you made provision for 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 him or her will not be valid. Any divorce after March 31, 2014 will mean that the appointment or gift won’t be valid if:
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 him or her will not be 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).
*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 (within the meaning of the Family Law Act).
*before you die, an event occurs that causes an interest in family property to arise (within the meaning of the Family Law Act).
• in the case of a marriage-like relationship, one or both of you end the relationship before you die.
*in the case of a marriage-like relationship, one or both of you end the relationship before you die.


Consider registering a “wills notice”
==Consider registering a “wills notice”==
You can file a wills notice with the Vital Statistics Agency at www.vs.gov.bc.ca/wills. A wills notice sets out who made the will and where it can be found. This is a voluntary registration and has a small filing fee. The Vital Statistics Agency doesn’t take a copy of your will; rather, you fill out a standard form of information, including information as to where your will is being kept.
You can file a wills notice with the Vital Statistics Agency at www.vs.gov.bc.ca/wills. A wills notice sets out who made the will and where it can be found. This is a voluntary registration and has a small filing fee. The Vital Statistics Agency doesn’t take a copy of your will; rather, you fill out a standard form of information, including information as to where your will is being kept.


Where should you keep your will?
==Where should you keep your will?==
You should store your 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 original will is what your executor will need to present to the Probate Registry in future, not a copy. It’s recommended that you let your executor know where you keep your will and other important documents, so your executor has what he or she requires when the time comes.  
You should store your 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 original will is what your executor will need to present to the Probate Registry in future, not a copy. It’s recommended that you let your executor know where you keep your will and other important documents, so your executor has what he or she requires when the time comes.  


What is LEAVE A LEGACY™?
==What is LEAVE A LEGACY™?==
LEAVE A LEGACY™ is a public awareness program of the Canadian Association of Gift Planners. (See www.cagp-acpdp.org). 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.  
LEAVE A LEGACY™ is a public awareness program of the Canadian Association of Gift Planners. (See www.cagp-acpdp.org). 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.  


 
[updated March 2015]
[updated December 2013]




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