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

==Understand your legal rights==

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 you should prepare 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 you spend preparing a will and 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 your money and property, 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 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 they automatically become the property of the joint survivor when you die (we explain some exceptions to this rule shortly). Also, a will does not apply to property like life insurance, retirement savings plans and income funds, and tax-free savings accounts if you have already named a beneficiary for them.

If you don’t have a will, your net estate is distributed to your qualifying next-of-kin or the provincial government under the ''[https://www.canlii.org/en/bc/laws/stat/sbc-2009-c-13/latest/sbc-2009-c-13.html Wills, Estates and Succession Act]''. Our information on [[When Someone Dies Without a Will (No. 177)|what happens when you die without a will (no. 177)]] explains this in more detail.

'''Joint assets''' can include a joint bank account that two or more people own, or a home owned by two or more people as joint tenants. The owners of joint assets 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 home as joint tenants, the surviving joint owner will get the home when you die. The home is said to '''pass outside your will'''. No probate fees have to be paid by your estate for the home (probate fees are paid to the court based on the value of the estate assets). If the home is your principal residence, no tax will be paid by your estate.  

Note that 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. In practice, this means that the asset is returned to your estate and distributed according to your will.  

This can be avoided by clear documentation showing that, when the person (say, your adult child) became a joint owner with you, you intended 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 to help them manage their affairs while they’re alive, on the understanding that the account is being held in trust for all the children, when the parent dies.

Registered retirement savings plans, registered retirement income funds, and tax free savings accounts 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 five days, the proceeds go outside your will to them. For example, a beneficiary will get the money in a registered retirement savings plans directly from the company holding the plan, and not from the estate.

 

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 the life insurance funds are not used to pay off the debts of the estate.

==Preparing a will==

===It’s important to get it right===

With good do-it-yourself materials, you can write a simple will. The will can take care of basic concerns, such as leaving a home, investments, and personal items to loved ones. You should be aware there are rules and formalities that must be followed, no matter how simple the will. Otherwise, the will may not be valid.

A will is a legally binding document. Having your will prepared by an experienced estates lawyer or notary public is the safest way to avoid mistakes. Knowing your will is properly drafted can give you peace of mind. You can be confident your affairs will be handled according to your wishes. To make an effective will requires a good understanding of property ownership rules and the law about wills. The words used must be chosen carefully so that the will is clear. If the formalities are ignored or the terms of the will are unclear, there may be extra legal costs for your estate to get court orders to fix the problems — and in some cases, that may not even be possible.

Getting advice from a lawyer or notary public is particularly important when there are features such as a blended family, a charitable gift, property outside of British Columbia, a family business, a desire to hold property in trust for someone (such as minor children), or a wish to leave certain people out of your will.

===You must appoint an executor in your will===

You have to appoint an '''executor''' in a will. An executor needs to:

*safeguard the estate (for example, change the home insurance if the home is unoccupied, or keep any vehicle insured)

*gather up your assets

*divide what remains of your estate among the people named in your will to receive a share of your estate — these people are called '''beneficiaries'''

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 your executor is well organized, good at keeping records, and a good communicator. Most importantly, they must be willing to do the job as executor.

===You can appoint more than one executor===

You can appoint more than one executor and they can act together as '''co-executors'''. It’s important to appoint an '''alternate executor''', who can take over if the first executor can no longer act.  

If you have a complex estate or investments or need someone to take over the operation of a company, consider naming 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 for them in your will===

If you’re a parent or guardian of a minor child (under 19 years old), the ''[https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/sbc-2011-c-25.html 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. 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 role====

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.

====Create a trust for a minor child’s interest====

Make sure your will is written so that a child under 19 won’t have direct access to their share until they’re 19 or beyond. If a minor is entitled to a share in an estate, and the will doesn’t say that their share is going to be held in '''trust''' for them, [http://canlii.ca/t/52x69#sec153 the law] says their share has to be paid to the '''Public Guardian and Trustee''' to be held in trust for the minor until they’re 19 years old. It’s best to speak to a lawyer about drafting a trust.  

It helps if you have the following information ready before you meet with a lawyer or notary public about preparing your will:

*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 pensions, retirement savings plans or income funds, and tax-free savings accounts, and who the beneficiaries are.

*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 for your '''executor''' and '''guardian'''.

===Filing a wills notice===

You can file a '''wills notice''' with the [https://www2.gov.bc.ca/gov/content/life-events/death/wills-registry Wills Registry] of the [https://www2.gov.bc.ca/gov/content/family-social-supports/seniors/health-safety/health-care-programs-and-services/vital-statistics 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. Vital Statistics doesn’t take a copy of your will. You or your lawyer or notary 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.  

===You should review your will to make sure it still reflects your wishes===

It’s good to review your will every three to five years to ensure that it still reflects your current wishes. 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 prepared 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 become adults. And you may want your adult children or a sibling to be executor instead.  

====Review your will after any change in your marital status====

If you married before March 31, 2014 (when a new wills and estates law came into effect), any will made before marriage was automatically cancelled when you married, unless the will said it was made in contemplation of your marriage. After March 31, 2014, a marriage does not revoke — that is, cancel —  a will.  

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''), or

*in the case of a marriage-like relationship, one or both of you end the relationship before you die.

If your will doesn’t properly provide for your spouse or children (including illegitimate and adopted children), they can request to have your will changed by a court. This is called a '''wills variation claim'''. Our information on [[Challenging a Will (No. 179)|challenging a will (no. 179)]] explains this in more detail.  

A '''spouse''' includes both a married spouse and a person you have lived in a marriage-like relationship with for two years before your death.

 

The law is 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.  

If you have a disabled adult child, and do not leave enough for them, the court may order that they receive more from your estate. A lawyer can help draft an appropriately worded '''trust''' for a disabled adult child.

===Your estate may have to pay probate fees===

With most estates, an executor must apply to court to '''probate''' the will. The word “probate” means “proof”. The process proves the will is legally valid. Our information on the duties of the executor (no. 178) explain the process. In applying for probate, '''probate fees''' must be paid to the court registry. The fees depend on how much the estate is worth:

These fees can change. Details are in the ''[https://www.canlii.org/en/bc/laws/stat/sbc-1999-c-4/latest/sbc-1999-c-4.html Probate Fee Act]'' and the [https://www.canlii.org/en/bc/laws/regu/bc-reg-168-2009/latest/bc-reg-168-2009.html?searchUrlHash=AAAAAQAZc3VwcmVtZSBjb3VydCBjaXZpbCBydWxlcwAAAAAB&resultIndex=1 Supreme Court Civil Rules].

When a person dies, the law assumes 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 (even if the property is not actually sold). 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.