August 2014 - Garton & Harris

How an estate is handled when there is no will

August 21, 2014/in Estate Administration & Probate/by gartonandharris

It may be difficult for some readers to think about and plan for end-of-life issues, and it can be tempting to put off estate planning and will preparation. The Wills, Estates and Succession Act recently passed in British Columbia outlines how a person’s estate will be handled in probate in the event that there is no will.

If the decedent had no children but was married, the estate will pass to the decedent’s spouse. The division of property becomes more complicated if the decedent had children and was married. How the property is divided will depend on whether the children belong to both spouses. If the children belong to both spouses, the first $300,000 of the estate’s value will go to the spouse and the rest will be divided among the children. If the children do not belong to the surviving spouse, then he or she will receive the first $150,000 of the value and the rest will be divided among the children.

The property belonging to an unmarried person will be divided between his or her children. If a person has no spouse or children, the person’s parents will receive the estate. The estate will be passed to the decedent’s siblings if the parents are no longer alive. There are additional rules governing situations in which the decedent had no living siblings, parents, children or spouses.

The division and distribution of a person’s assets when they pass away may be overly simplified if there is no documentation demonstrating how a person wishes to dispose of their estate. Those who would like to develop a more nuanced strategy for handling the execution of their estate might benefit from discussing the issue with an estate-planning lawyer. That lawyer could help a client create the necessary documents for outlining their wishes.

Source: The Canadian Bar Association BC Branch, “What Happens When You Die Without a Will?“, Aug. 20, 2014

The ins and outs of wills

August 18, 2014/in Wills/by gartonandharris

Residents of British Columbia may create wills in order to distribute their assets to the correct beneficiaries upon death. A will can be changed after its creation until its testator’s death. However, wills also have certain limitations of which individuals should be aware when creating them.

For example, wills do not cover provisions regarding the disposition of assets that individuals do not technically own at their death. These assets may be property that has a “right of survivorship,” such as a piece of jointly owned real property or bank accounts. Wills also do not usually dictate the distribution of assets that have beneficiaries already, such as life insurance policies, RRSPs, TSFAs or RRIFs. Assets may be transferred outside a will in order to avoid incurring costs or unnecessary taxes.

In order to safeguard their wills, individuals may take certain steps, such as appointing executors whom they trust to carry out their wishes. To keep their wills secure, individuals may decide to keep the documents with their lawyers or in safety deposit boxes. Executors require the original versions of wills, not copies. A wills notice may also be filed with the Vital Statistic Agency that states who made a will and where the executor can find it.

A will must be drafted in a proper manner in order for it to be legally valid and prevent an estate from falling into intestacy. This is why many professionals recommend speaking to an estate-planning lawyer when creating a will. Such a lawyer could also provide information on other aspects of estate planning, such as trusts and powers of attorney.

Source: The Canadian Bar Association British Columbia Branch, “The Disappointed Beneficiary“, August 12, 2014

Trust funds can still be a good idea for some families

August 8, 2014/in Estate Administration & Probate/by gartonandharris

Although many celebrities have been making a big deal about why they are choosing not to leave a trust fund to their kids, some British Columbians may want to consider it. Even if a person does not have a multi-million dollar fortune, setting up a modest trust fund could help to protect the inheritor from having their lives potentially ruined by future financial burdens that may pop up in adulthood.

During the estate administration for the late Philip Seymour Hoffman, reports came out that the actor had opted not to use any part of his $35-million estate to create a trust fund for his children. Hoffman apparently shared the same opinion as British musician Sting, believing that a trust fund would be detrimental to their future productivity and happiness.

Some financial planners say that in certain situations, setting up a trust fund can actually be the right choice for a family. With careful thought and planning, a person could set up an incentive trust that will only allow the inheritor to access money when a certain life milestone is reached. For example, an inheritor could receive their trust fund only after they complete a bachelor’s degree, or they could be paid a dollar from the trust fund for every dollar they earn at a job.

Speaking with a wills and estates lawyer might be the best way for an individual to begin designing a trust fund for their estate plan. A lawyer might be able to help a person to come up with a plan for their inheritors that will provide lifetime financial stability while still encouraging them to stay productive.

Source: The Globe and Mail, “Consider a trust fund for your kids even if you’re not rich“, Alexandra Bosanac, August 05, 2014

A discussion on enduring powers of attorney

August 4, 2014/in Power of Attorney/by gartonandharris

Some residents of British Columbia who might be creating an estate plan may be interested to learn about the enduring powers of attorney. These allow a person to appoint another party to act on his or her behalf while completing certain functions, and this appointment differs from a regular power of attorney because the authority to act continues even if the granter is incapacitated.

In order for a the power of attorney to continue after a person is deemed incapable, certain provisions must be included in the document. These include whether the powers are only transferred if the granter is incapable or if the powers are granted even though he or she can still make decisions for himself or herself. It must also state that the authority is still granted despite the person’s incapacitation. In addition, according to provincial statutes, the document must be signed in the presence of two witnesses.

In order to authorize an enduring power of attorney, a person must be an adult, which means that he or she is 19 years old or older. That person must also be deemed capable under British Columbia statutes. All adults are deemed capable unless it can be demonstrated that the opposite is true. However, a person’s way of communicating with other parties cannot be used as grounds suggesting incapability.

While some of the basics are discussed in this article, the requirements for making an enforceable enduring power of attorney document are subject to a number of other stipulations outlined in the provincial code, and drafting such documents without retaining the services of a legal professional might be difficult. A lawyer who is familiar with estate planning strategies could help a client develop an enforceable enduring power of attorney and might help draft other documents that outline the client’s wishes.

Source: BCLaws.ca, “Power of Attorney Act“, July 31, 2014

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