Preparing a will and estate planning

A will is a document that says what you want done with your property when you die. It’s a map for those you leave behind.

Every adult who owns assets or has a spouse or young children should have a will. But surprisingly, many people don’t.

Having a clear statement of your wishes gives you some control over who gets what after you’re gone. And it helps your loved ones feel confident they’re carrying out those wishes. Knowing your intentions will save them time, stress and money at a difficult time.

Preparing a will lets you choose an executor. This is a person who carries out the instructions in the will. If you’re a parent, you can also appoint a guardian to care for any children under age 19 after your death.

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 doesn’t apply to property like life insurance, retirement savings plans and income funds, and tax-free savings accounts if you’ve already named a beneficiary for them. When you die, the bank or trust company directly transfers the asset, or pays it out, to the person you named.

If you pass away without having made a will, the law says how your property will get distributed, and who has the right to “administer” your affairs. Our information on when someone dies without a will explains how these rules work. Dying without a will can make things more difficult (and more costly) for your loved ones.

With estate planning, you may be able to reduce fees and taxes that your estate would otherwise pay. Consider, for example, the following strategies.

Joint assets

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.” 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.

One advantage of owning property this way is that no probate fees have to be paid for the home. Probate fees are paid to the court based on the value of the estate assets.

A joint asset doesn’t always pass to the surviving owner. In several recent cases, courts have said that a jointly-owned asset had to be returned to the estate. If your joint asset is with another adult other than your spouse (such as an adult child), then the court may make them return the asset to your estate. It would then be distributed according to your will. If you don’t want this to happen, talk to an estates planning lawyer. They may recommend clearly documenting your intention to give the asset to the other joint holder when you die.

Assets with a designated beneficiary

Life insurance policies, 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 flow outside your will to them. For example, a beneficiary will get the money in a registered retirement savings plan directly from the company holding the plan, and not from the estate.

Trusts

Depending on the size of your estate, you may want to set up a trust (outside of the will) to protect your estate against a wills variation claim. We explain wills variation claims shortly.

Charitable gifts

You can reduce the income tax owing from the sale of your assets on your death by making charitable gifts in your will.

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

• 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 insurance policies you own, and, specifically, the beneficiaries under the policy.

• Details of any pensions, retirement savings plans or income funds, and tax-free savings accounts, and who the beneficiaries are.

• Information on 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.

• The name, address, and occupation for your executor and guardian.

The executor is the person you name in your will to carry out your instructions. They locate all of your property, pay any debts and funeral costs, prepare the final tax return, and distribute the rest of the estate as the will specifies.

Most people ask a family member or close friend to be their executor. You can also ask a lawyer, a notary public, a private trust company, or the Public Guardian and Trustee.

Qualities to look for when choosing an executor

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’re 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 — so check in with them beforehand!

If you have a complex estate or investments or need someone to take over the operation of a company, consider asking a lawyer, accountant, or trust company to act as your executor. Be aware that your estate will be charged for their services.

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. The words used must be chosen carefully so that the will is clear.

Notaries can prepare simple wills. Getting advice from a lawyer 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.

If you’re a parent or guardian of a minor child (under 19 years old), the 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.

Protecting a minor child’s inheritance

The personal guardian generally doesn’t have any rights to look after a minor child’s property — they can only receive and hold a minor child’s property or money if it’s worth less than $10,000. 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, the law says their share has to be paid to the Public Guardian and Trustee. The money is then held in trust for the minor until they’re 19 years old. It’s best to speak to a lawyer about drafting a trust so you can choose your own trustee to manage the minor’s inheritance. The executor can be the same person as the trustee.

You can file a wills notice with the wills registry of the 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 probate process to make sure the court has the last will.

It’s good to review your will every three to five years. Does it still reflect your current wishes? You should also consider changing your will whenever your financial or personal circumstances change (such as if you get divorced), or if beneficiaries die or reach the age of majority.

Getting married or divorced

Getting married does not cancel a will. The exception is if you married before March 31, 2014, and made a will before you got married. If the exception applies, your will was cancelled when you got married (unless the will said it was made in contemplation of your marriage).

What about divorce or separation? If you had a spouse at the time you made your will, and later separated from them, your will is treated as if your spouse died before you. So your will is still valid, but any gift you left to your former spouse won’t be recognized. As well, if you named your former spouse as your executor, the appointment would no longer be effective. The rest of the instructions in your will can be followed.

If your will doesn’t adequately provide for your spouse and children (including illegitimate and adopted children), they can ask a court to change the will. This is called a wills variation claim. Our information on challenging a will explains this in more detail.

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 explains the process. Probate fees must be paid to the court registry. The fees depend on how much the estate is worth:

• less than $25,000 — no fee

• between $25,000 and $50,000 — $6 per $1,000 (this amounts to a probate fee of $150 on an estate valued at $50,000)

• over $50,000 — $150 plus $14 per $1,000 of estate value over $50,000

These fees can change. Details are in the Probate Fee Act and the Supreme Court Civil Rules.

Probate fees can often be avoided or reduced by estate planning outside of a will. A lawyer can help with that planning.

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.

When a person dies, the law assumes they sold all their assets on the date immediately before their death. If an asset increased in value since it was purchased, 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.

If your original will is in paper form, you can keep it with your lawyer or notary, or in a safety deposit box at your bank. That way the will is in a permanent, safe, and fireproof location.

If your original will is in electronic form, there will be multiple true originals. Assemble and store these in the same place, such as with your notary or lawyer or a secure electronic repository.

Your executor will need your original will (not a copy) to give to the probate registry. You should let your executor know where you keep your will and other important documents, so they know where to get it.

It depends on how complex your situation is. Most lawyers and notaries charge a fee that reflects the time, skill, and responsibility involved. Discuss the fees with your lawyer or notary when you call to arrange a meeting. You should be able to get free estimates. Feel free to shop around and compare prices.

If you made a will in another province and now live in BC, your will may work in BC. You need to see a lawyer to find out.

A notary public can help you prepare a will. The Society of Notaries Public of BC offers a list of notaries in the province.

• Call 604-681-4516 in the Lower Mainland

• Call 1-800-663-0343 (toll-free)

• Visit website

The Nidus Personal Planning Resource Centre & Registry has detailed information on all aspects of personal planning, including fact sheets, forms, and videos.

• Visit website