October 2014 - Garton & Harris

Some properties may not be susceptible to ademption

October 24, 2014/in Wills/by gartonandharris

Individuals who are planning their estates in British Columbia may want to be aware of what items may and may not be adeemed after their death. Generally, when a piece of property that is to be gifted to a beneficiary is disposed of or is removed from the will-maker’s possession, whether voluntarily or not, the gifting of that property fails. That failure of the gifting of the property is known as ademption.

There are some items, however, that could possibly be excluded from being adeemed. If, for example, a nominee disposes of the property that is meant to be gifted, an amount equal to the value of the property may be paid to the beneficiary from the will-maker’s estate.

A nominee may be a number of entities, including a representative acting under an agreement, an attorney or a committee acting under the Patients Property Act. If, however, the property is disposed of on orders of the will-maker while they were alive and able to make decisions, then the gifting of the property will still fail.

Someone who is in the midst of planning their estate may wish to work closely with an experienced estate planning lawyer. A lawyer may be able to help a client in determining which properties to include on a will and which properties could be subject to ademption. A lawyer could also help to prepare the necessary documents and assist an individual in choosing the most beneficial choices to make in order to leave their beneficiaries well taken care of.

Source: CLE BC, “H. Exceptions to Ademption”, October 23, 2014

How the location of the executor can affect an estate

October 16, 2014/in Estate Administration & Probate/by gartonandharris

Individuals in British Columbia who are working on their estate plan may wonder whether the location of the estate executor has any impact on their estate. After a person’s death, the residency of their estate will be the same as the residency of the estate executor. The executor’s location, therefore, can have a major impact on how the estate is taxed.

There could be many drawbacks to choosing a nonresident of Canada as the executor of an estate. During estate administration, the estate may be subject to tax laws in the country where the executor lives. In some cases, the estate could be deemed a dual resident and end up owing estate taxes in both Canada and the executor’s country of residence.

Another negative impact of choosing a nonresident executor for an estate is that the executor would not be able to take advantage of preferred tax treatment for source dividends and capital gains. Taxes on a nonresident estate would also not be split between the Canadian beneficiaries and the estate itself, which could have some potential benefits.

The residency status of an executor is only one of many issues that a person might have to consider when engaged in estate planning. Understanding the different benefits and drawbacks of certain decisions can be difficult because of the complexity of estate law, and creating the necessary documents for outlining one’s wishes may require some professional assistance. A lawyer who is familiar with estate planning strategies may be able to help a client understand the different ways that wills, trusts and executor designations might affect the value and distribution of one’s legacy.

Source: Castanet.net, “Can executor be a non-resident?“, October 09, 2014

Who can be named under an enduring power of attorney?

October 10, 2014/in Power of Attorney/by gartonandharris

Under certain circumstances, the need for using an enduring power of attorney may arise. The process may not be as complicated as some British Columbia residents may think. In fact, just about anyone qualifies for the role including a relative or a friend who is at least 19 years old and who is trustworthy, willing and informed about the role. The exceptions include caregivers who receive pay for their services at the individual’s residence. However, if that caregiver is the individual’s parent, spouse or adult child, that person qualifies to act under an enduring power of attorney. Furthermore, an individual may choose a credit union or a trust company to be his or her attorney-in-fact, but arrangements should be made for compensation.

The person selected as attorney-in-fact should agree to bear particular responsibilities and follow certain legal requirements. He or she must fully understand the position, especially if the individual becomes mentally or physically incapacitated. Some of the attorney-n-fact’s duties include obeying the set of laws as outlined in the Trustee Act when investing assets, keeping track of assets for accounting purposes and distinguishing personal assets from the grantor’s assets.

The attorney-in-fact must act with prudence in diligently, skillfully and carefully following the rules and restrictions involved in the document. The law does not allow an attorney-in-fact to alter or make a will. If the attorney-in-fact desires to create or change beneficiary designations, he or she must follow certain restrictions.

Those who wish to use an enduring power of attorney may wish to consult a lawyer who is experienced in the legalities and details surrounding the position. If a person chooses a credit union or a trust company to act as his or her attorney-in-fact, a lawyer may assist with the various legal requirements that may apply.

Source: The Public Guardian and Truste, “It’s your choice: Personal Planning Tools“, October 09, 2014

What defines a spouse in terms of estate planning?

October 1, 2014/in Wills/by gartonandharris

Married, divorced or soon-to-be-married British Columbia residents beginning to undertake their estate planning might be wondering how the province’s Wills, Estates and Succession Act defines a “spouse” for the sake of estate planning. As it turns out, in keeping with similar B.C. statutes addressing spousal relationships, a person may be granted spouse status without necessarily being legally married; he or she need only live in a “marriage-like relationship” for at least two years. This stipulation applies to same-sex partnerships as well.

WESA, which received Royal Assent in October 2009 and effectively consolidated four separate statutes governing various aspects of estate administration, also defines when people can lose their spouse status. When court orders declaring the marriage null and void or calling for a judicial separation or dissolution of the couple’s marriage are made, both partners lose their legal spouse status. This will also occur if the couple make a separation agreement or if the Supreme Court rules that the spouses have “no reasonable prospect of reconciliation.”

In addition, if both spouses reside separately for a minimum of two years in accordance with one or both of their intentions, they legally cease to be spouses. The act further notes that unmarried persons legally recognized as spouses cease to be so when they or their partner terminates their “marriage-like relationship,” but it does not elaborate on what constitutes termination.

Marital status can substantially affect how a person’s assets are distributed after his or her passing. While the above information can be helpful for planning wills or other vital estate planning documents very broadly, each person’s situation is unique. A wills and estates lawyer could help clients with the finer details and ensure that they understand their options and the legal implications of each.

Source: The Continuing Legal Education Society of BC, “Legislative Changes and Update Highlights: Power of Attorney Act and Wills, Estates and Succession Act “, September 29, 2014

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