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Feb. 8, 2008
Make a will and do it right
Thinking ahead may help you avoid much trouble in the future.
ALAN E. FARBER and FELICIA S. FOLK
It has been repeated many times how important it is to have a current will. This advice is repeated because it is good advice. If you do not have a will, you should make one as soon as possible no matter what your age. If you have not checked your will for a number of years, it may be time to do so and make any necessary changes.
If you pass away without a will in British Columbia, your estate will be governed by the legislation under the Estate Administration Act and will be distributed to beneficiaries in accordance with that act, which may not be in accordance with your wishes. Moreover, your estate may be administered by someone you would not have chosen to distribute your assets.
When making a will, it is important to do it right. The will must comply with the terms of the Wills Act of British Columbia. It must be signed properly. Two persons who are not beneficiaries of the estate or their spouses or the executor of the estate must witness it. It must identify the beneficiaries clearly and unambiguously and it must set out the bequests carefully. You should decide who will receive your assets if one of your chosen beneficiaries dies before you do, but at a time when you are no longer capable of making a new will. The following are useful suggestions of things to consider when preparing your will and making decisions about end of life choices.
Choosing an executor
The choice of an executor to administer your estate and comply with the directions contained in your will is an important decision. You may choose a family member, a lawyer, a friend or a trust company. There are different reasons to choose or not choose a certain type of executor, including family issues and costs.
The executor of a will has important responsibilities. First, he or she must always act in the best interests of the estate and attempt to comply with the directions set out in the will. If the estate is sued by creditors or by a disinherited spouse or child, the executor may be obliged to defend the estate from that attack. The executor must keep a strict accounting of revenue and expenses and may be required to pass those accounts in the Supreme Court. This may be expensive, time consuming and stressful, especially if the executor of the will is also a beneficiary.
Choosing a guardian
If your children are under 19, it is extremely important that you name a guardian who will look after them if you die. The guardian may be the same person who looks after your money for the children or a different person, but you should be the one choosing their guardian. If you don't have a will, and do not name a guardian, a court will have to make that decision.
In case of a dispute
There is in British Columbia a legislative act known as the Wills Variation Act. That act states that a testator (the person who has died) must provide adequate support and maintenance in the will for his or her spouse and children. If the testator does not provide adequately for, or completely disinherits a spouse or child, that person has the right, within six months of probate, to commence a proceeding in the Supreme Court to change the way in which the estate is divided.
Very often the dispute arises between the children of a first marriage of the deceased and the second spouse. This often leads to acrimonious and hotly contested lawsuits. The prevailing law is that although the courts can and will respect testamentary autonomy, the right of a testator to leave money as he or she chooses is generally outweighed by the obligation on that person to maintain the spouse and children of the marriage. The amount of money that a court awards may depend on a number of factors, including the size of the estate, the length of the marriage, the age and needs of the spouse, the age and needs of the children and how the estate assets were acquired. The court may award part of the estate to adult independent children even though they do not exhibit financial need.
Support your choices
If a testator chooses to disinherit a spouse or child, the lawyer who prepares the will and the testator who has made the will should keep notes as to why a person has been disinherited. If it is for a valid and rational reason, the courts will generally respect that decision. A clause may be inserted in the will stating the reason for the disinheritance or a letter attached to the will signed by the testator as to his reasons for disinheritance. Legal advice is strongly recommended if a person is to be disinherited, as the lawyer will take notes of the reasons for the disinheritance and the notes will form part of the lawyer's file. In the event of litigation, the lawyer's notes may become evidence.
A trust? Joint tenancy?
Another way of avoiding potential litigation, as well as probate fees, may be to create a trust. Trusts may be complex or simple and can sometimes be used to lessen probate fees and to protect the estate from attack under the Wills Variation Act. Basically, the trust removes assets from the estate, ensuring they do not pass to the beneficiaries by will. A proper trust should be prepared by a lawyer after consultation with respect to its terms and on the advice of an accountant regarding tax issues. A trust is not suitable for everyone.
Another way of avoiding probate and attack under the Wills Variation Act is to put property into joint tenancy. A joint tenant is the owner of the property by right of survivorship. If one party dies, the entire property goes to the survivor. It does not form part of the deceased's estate. While this may be effective in achieving lower probate fees and wills variation actions, there are risks with joint tenancy. Once a property is transferred into joint tenancy, the original owner loses control of the sole ownership of the property, which can be a considerable problem, for example, if he or she wants to sell the property or make other changes.
Changes in your life
Marriage invalidates a will. If you have married after making a will, unless you have a specific clause in your will contemplating marriage, then you are without a will. Divorce does not invalidate a will. If you are separated or divorced, the will you made while you were together is considered a valid will. In both these cases, consider whether you need a new will.
Consult with a lawyer
Consulting a lawyer in the preparation of your will is highly recommended and if the estate is of substantial size, consulting an accountant is also recommended. The money spent on these professionals prior to death may save your estate many thousands of dollars and litigation after you are gone.
Make instructions easy
Most people need a simple will and a simple will is not very expensive. We have discussed a number of issues, but most people need only to make a limited number of decisions: who to name as executor, who to name as beneficiaries and how to divide what you own after your death. Your will is the legal way of ensuring those instructions are followed.
Alan E. Farber and Felicia S. Folk are the owners and managers of Farber and Folk Barristers and Solicitors, a Vancouver-based law firm specializing in commercial litigation, wills and estates, employment law, insurance law, personal injury, arbitration and mediation.
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