Unfair provisions in a will can be changed under the Wills, Estate and Succession Act (WESA) in British Columbia. However, the recent B.C Supreme Court case of Rawlins v. Rawlins (2023) demonstrated that even a will divided into equal shares can be unfair.
Varying a Will Under WESA
WESA defines a will writer’s duty to provide ‘adequate provision for the maintenance and support’ of their spouse and children. Importantly, this provision applies even to adult children of the testator. There are only narrow exceptions which allow will writers to disinherit their children, discussed in our article here. If a dependant was unfairly disinherited, or inherited an unfair amount, they can apply to vary the will. Interestingly, in the case of Rawlins, a completely equal division of estate assets was still found unfair.
Facts of the Case
Marguerite Rawlins had three sons, and her husband had predeceased her. Her estate was valued at around $2.5 million in total, comprising of her house, investments and cash. Her will divided the total value of her estate into three equal shares to be divided between her sons.
Care provided in end of life years is often the subject of moral rights claims to an estate.
Her son Roy raised a claim under WESA, stating that this division of his mother’s estate was unjust. First, he claimed unjust enrichment against the estate and an enhanced moral claim to the estate’s assets. Roy believed the estate had been unjustly enriched due to his contributions to the maintenance of his mother’s home. Further, he believed he had an enhanced moral claim to the estate due to the significant care he provided his parents in their final years, which his brothers did not participate in. He further claimed that his parents had told him he would receive the home and specific investments upon their death.
His brothers disputed his claim that the division of assets was unfair, even in light of Roy’s contribution to his parents’ care. They said that, because Roy had been allowed to live rent-free with his parents for his entire adult life, his benefit from his parents throughout his life outweighs the benefit he gave to them through his care.
The Court’s Decision
The judge considered the standard set in Tatyryn v Tatyryn, that the distribution of estate assets should be ‘adequate, just, and equitable’, and the Courts should only intervene where the distribution chosen by the will writer falls below that standard. Ultimately, the Court found that Roy failed to prove that the will did not make adequate provision for him. However, his claim of unjust enrichment was successful. Roy received a gift of $115,000 on top of his share of the estate. The remaining value of the estate was divided equally between the brothers.
Those creating their estate plan should take notice of this case which demonstrates that even equal provision of estate assets can give rise to estate litigation and variation of their will. In order to reduce risk of costly estate litigation between beneficiaries after your death, it’s important to consult an experienced lawyer to create a comprehensive estate plan suited to your unique situation. Further, will writers should keep their beneficiaries up to date with their estate plans and avoid surprises.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
B.C.’s new Housing Supply Act introduces measures to support specific communities in increasing their housing supply in response to the ongoing housing and rental crisis. The Act will impact buyers and renters, real estate agents and developers and those considering buying property in the future. Further, amendments to the Strata Property Act will work with policy introduced in the Housing Supply Act to improve the supply of rental and purchase homes in B.C. So what does this new legislation mean?
New Housing Policies Introduced
The new Housing Supply Act sets out ways the B.C. government can target specific communities facing the worst housing unavailability, set specific goals for that community to meet and support that community in actioning them. This policy provides support for communities facing high-demand and low-supply of rental properties in particular to make policy changes that suit their community’s specific needs while receiving support in achieving those goals form the Provincial government. It’s important to understand that, while Canadians all over B.C. and Canada are feeling the effects of the housing crisis, there is no one-size-fits-all approach to improving housing supply in every community. For example, a community may need significant development of new homes, but face environmental limitations on expansion of single-family homes sprawling outside of their city’s centre.
Under the Act, communities identified by the B.C. Housing Minister will have expanded powers to increase housing development and implement bylaws to improve housing supply. When the Minister identifies a target community under the Act, they will issue a housing target order which specifies housing targets, the metrics with which delivery on those targets will be measured, and a timeline for when these targets need to be achieved.
The Strata Property Act
It is important for both owners and renters of their home to stay up-to-date with legislative updates and new housing policy.
Amendments to the Strata Property Act ban rental-restrictions in strata managed property developments. Strata rules which prohibit renters from residing in a strata home are invalid and do not have to be followed. The updates stipulate that stratas maintain the power to ban short-term rentals (using services like Airbnb or VRBO to list your strata property for rent). Short term rentals in residential developments in high-demand communities like Vancouver put further pressure on the supply of rental properties, taking potential long-term rental homes effectively off the market for locals.
Another change introduced in the legislation is the banning of age-restrictions for those seeking to buy or rent a property in a strata community, except for the “over 55” rule allowed for strata communities catering to senior citizens. This change will hopefully reduce strata communities’ ability to create barriers or “red tape” for those seeking to buy and rent in their communities.
Own a Strata Property?
Owners should be aware that the ending of rental restrictions on strata properties across B.C. means that, if their strata property is unoccupied, it will now be subject to the B.C. Provincial speculation tax (empty home tax) at 0.5% of the property’s value. Note that this tax rate is variable, depending on the residential status of the homeowner. Owners in Vancouver can also be subject to the municipal Vancouver vacant home tax, at an annual rate of 3% of the home’s total value.
If you own a strata property that is unoccupied and unrented for 6 months of the year or more, or you’re unsure if your use of the property qualifies as unoccupied for the purposes of either the B.C. speculation tax or the Vancouver empty home tax, check out our article here.
Renting, or Planning to Rent?
The Housing Supply Act and amendments announced for the Strata Property Act aim to support renters in high-demand low-supply housing markets, like Vancouver, Victoria and their surrounding cities. There are a number of ways these new policies should help increase the supply of rentals in high-demand communities in B.C. over time:
Increased rental options: The removal of rental restrictions in strata properties can potentially increase the availability of rental units in Vancouver. This may provide renters with a broader range of options to choose from when looking for housing.
Removal of age restrictions: While age restrictions will still be allowed for “seniors only” strata, the elimination of 19-plus age restrictions might open up rental opportunities for a wider demographic, particularly families with children.
Application of empty homes tax to strata properties: The inclusion of strata properties in the empty homes tax may prompt owners of strata property which is unoccupied or under occupied to list the home for rent, potentially increasing availability of rentals in strata communities.
Increased housing supply over time: The introduction of the Housing Supply Act could lead to increased housing development in select municipalities. While this may not have an immediate impact on renters, it could help alleviate housing shortages in the long run.
These changes may offer some potential benefits for renters in terms of increased rental options and reduced age restrictions. However, the impact on rent prices and overall rental availability will depend on various factors, including how property owners, developers, and the market react to these legislative changes.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
We’ve recently come across the following question on a Canadian personal finance group: “Is there someone that could chat with me about naming a minor beneficiary (under age) with a trustee, vs naming the person I would use as a trustee as a beneficiary?” In this article, we’ll break down the question and legal answers in simple terms.
What is a Beneficiary?
In the estate planning context, a beneficiary is an individual or entity, like a charity, designated to receive assets in a will. They receive the specified assets according to the terms of the will. Anyone can be a beneficiary, but will writers should be advised that some provinces require that dependents such as children (and adult children) are provided for adequately in the will.
What is a Trustee?
A trustee is a person appointed to manage and give out assets on behalf of a beneficiary and on the terms of the will. The trustee has a duty to act in their best interests. Trustees can be individuals, such as family members or friends, or professional entities like banks, accountants or lawyers. Their responsibilities may include investing and managing assets, distributing income or assets to beneficiaries, and ensuring compliance with relevant laws and regulations.
Will writers can specify terms for how and when their beneficiaries receive their inheritance funds. This is especially common for inheritances going to young people.
Naming a Would-Be Trustee as a Beneficiary
There are a number of key differences between beneficiaries and trustees which are relevant to this question. The most important difference is their relationship with and responsibility to the estate. Because trustees have a duty to beneficiaries to protect the assets and give out their inheritance on the terms of the will, naming a would-be trustee as a beneficiary will not save you any time or money. The would-be trustee would likely be found to hold the asset on constructive trust if you have made your intentions for the asset clear, meaning it makes little difference to name them as a beneficiary rather than trustee. In fact, it could give rise to litigation over the assets in the long-run or risk mismanagement of the assets.
Naming a would-be trustee as a beneficiary of assets with the intention of those assets to ultimately go to another person is not an effective way to bestow a gift in your will.
Handling Estate Inheritance to a Minor Beneficiary
Estate planning for those with minor children, dependents or loved ones can feel complicated or stressful. While you may want to ensure their financial well-being after your passing, many people worry about entrusting a lump sum of funds or a high-value asset to a young person who might not be ready to maximize the benefits of such a gift. Fortunately, estate planning lawyers can use a variety of tools when crafting a will to ensure that you pass down assets to minors exactly as you intend. The most common tool is the trust, which holds assets for beneficiaries on specific terms decided by the will writer. The trustee actively manages the assets and cares for the beneficiary until transferring the trust assets to them.
A typical provision in BC wills contains instructions for handling estate shares designated for a minor child. For example, it may state that inheritance minors will be held on trust, paying out fully when they are older. Other common clauses might include instructions to pay out when the child graduates university or buying a home. Using the trust, the will writer has control over how and when the minor beneficiary will receive their inheritance.
Appointing a Trustee for a Minor Beneficiary
When creating a trust for a minor, it’s a good idea to choose a trustee who knows them well. Some will writers choose to hire a professional trustee to oversee the assets and release the trust funds. Naming your potential trustee as a beneficiary can complicate expressing asset management wishes in the will. This might necessitate separate documents for clear terms between the trustee and ultimate beneficiary.
Naming a minor beneficiary in a will and appointing a trustee is a common part of the estate planning process. If you’re looking for guidance on estate assets going to a minor beneficiary, contact an experienced estate planning lawyer today.
Executors have a duty to act in the best interests of the estate and its beneficiaries. Occasionally, executors act in breach of this trust, often accidentally. However, there are ways in which courts can impose penalties for executors breaching trust. Overall, executors have an obligation to administer the estate in a timely manner, in the interest of the beneficiaries. To summarize, some of the most common ways an executor is found to be in breach of trust include:
Commingling of estate assets with their own personal assets,
Fraudulent behaviour,
Not accurately reporting an estate’s assets in the detailed accounts, or
Failing to pay an estate’s debts.
Depending on the severity of the breach, courts can choose a consequence to remedy the losses suffered by beneficiaries. Possible consequences that the courts will consider are:
Reducing or eliminating Executor’s fees;
Holding Executors personally liable for losses; and/or
Removing and replacing the executor.
Removing Executor’s Fees
Generally, executor’s fees cannot total more than 5% of an estate’s value.
In cases of a minor breach, the courts may simply deny the executor from receiving compensation through executor’s fees. For example, if an executor were to act slowly and fail to administer the estate in a reasonable amount of time. The courts could find the executor failed to fulfill their duty by administering the estate in an untimely manner.
In the case of The Estate of Lilian Lai Lien Lowe (2002), the executor was denied any compensation for her duties. Unfortunately, under the executor’s administration, the estate lost a considerable amount of money which obviously impacted the welfare of the beneficiaries. Further, the executor was looking to charge a fee much greater than the usual 2-3% of the estate’s value. Summing up, the judge stated that the executor “has demonstrably failed to exercise an appropriate level of skill and ability. Because the executor failed to fufill her duty, the fee was distributed to the beneficiaries of the will instead.
Executors Held Personally Liable for Breaching Trust
Occasionally, executors find themselves responsible with selling assets or making investments on behalf of the estate. Undoubtedly, all investments carry a risk of loss. However, if the executor makes an investment that a reasonable person wouldn’t have, the executor can be liable for the losses. If the investment was reasonable and simply happened to result in a loss, the executor will not be liable. To put it another way, the executor must act in a demonstrably irrational manner to be held liable for losses to the estate. The courts will typically only order this if the executor has caused the beneficiaries to suffer a significant loss.
Removing the Executor
Importantly, in extreme cases where executors are found in breach, the courts can order the removal of an executor. According to the judgement in Nieweler Estate (Re) (2019), there are four categories of conduct that will warrant a removal of an executor:
Endangerment of the trust property (estate);
Dishonesty;
Incapacity to execute the duties; and
Lack of reasonable fidelity (good faith).
In general, executor removal is a last resort for the courts because it inherently contradicts the final wishes of the testator. An executor will only be removed if the courts see no other option to resolve the estate administration issue at hand. If you’re looking for more information, read our past blog post on executor removal here.
Ultimately, it’s at the discretion of the courts to determine how to handle an executor who has breached their trust. In some cases, multiple consequences are ordered against the executor of a will. To avoid this, executors must work quick and with the best interests of the beneficiaries in mind – hiring an estate lawyer can help to ensure that all the proper procedures are followed.
If you’re a beneficiary who has fallen victim to an executor who has breached your trust, contact an experienced estate lawyer today. We can ensure that the proper steps are taken to ensure that you’re compensated for any losses suffered and the estate is administered appropriately.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
Conveyancing is the process of transferring title of land when it is sold. Though it may sound simple, conveyancing is an area of law that must be practiced with precision. The job of a conveyancer goes beyond changing titles at the Land Registry. Conveyancing is an essential part of a home buyer’s due diligence in purchasing a new home. The conveyancer plays a key role in the transfer of property, so what does the process look like?
First Steps of Land Transfer
Before the conveyancing process can begin, the conveyancer must first confirm the identities of the seller and purchaser. They’ll carry out checks on the land title of the property being transferred and make sure there are no concerns. This due diligence will make sure there are no liens on the property, outstanding strata fees or unpaid property taxes the buyer is unaware of.
Importantly, conveyancers for the purchaser will often oversee or check that the relevant inspections of the property have been carried out. Generally, these inspections will vary based on the nature of the property, for instance, if it is commercial or residential land. These early steps will make sure the land is ready for transfer, preventing unpleasant surprises for the purchaser.
Preparing the Purchaser’s Documents
To move forward with the conveyancing process, there are a number of documents that will be prepared by your conveyancer. Usually, these documents will all be prepared for signing at one appointment for the convenience of the buyer. The signing appointment is an important part of any home purchase because it gathers all the relevant information in one place to be finalized, and provides an opportunity for the buyer to ask any legal questions. Usually, your conveyancer will go over the information in each document, making sure nothing is misunderstood by any party.
Your conveyancer should go over each document in detail at your signing appointment.
The documents necessary for conveyancing include all the details surrounding the financing of the property needed to complete the transfer. The purchaser’s documents that are most commonly prepared for residential conveyancing include:
Mortgage documents
Insurance documents
Tax documents
Bank draft for balance of the down payment
The seller has a different set of forms which must be completed. These documents also include tax details, but the most important document is the Freehold Transfer document. This document will effect the transfer of the land title from the sellers to the purchasers.
The Final Report and Filing
After all the documents have been signed, the buyer and seller’s conveyancers will exchange documents and draft a report to confirm all the documents are completed correctly and ready to be filed. This report includes the details of the transfer including tax and mortgage information. Most importantly, it includes the buyer’s certificate of payment.
Once the report is complete, your conveyancer will file with the Land Registry to transfer the land title. After the transfer has been registered and the sellers have been paid, the conveyancer and realtor will arrange possession. Finally, the conveyancer will order the Title Certificate for the property from the Land Title Office as proof of the transfer.
Summing up, conveyancing is an incredibly important final step in purchasing a home. Of course, attention to detail is key in ensuring an efficient and stress-free transfer of the land title. If you are buying or selling your home and need conveyancing support, contact an experienced lawyer today for a free consultation. We’ll make sure everything is in order for an easy transfer of title.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
The recent BC Court of Appeal case of Tom v. Tang (2023) demonstrated again that BC Courts are willing to change the contents of a will under the Wills, Estates and Succession Act (WESA). In this blog, we’ll cover the Court’s decision and the steps will writers can take to avoid estate litigation.
Facts of the Case
In the recent case of Tom v. Tang, three siblings claim that their mother’s will is unfair. The will left equal shares of the estate to the five children. However, the sale proceeds of her house were only left to two. The result was that 85% of the estate’s value was left to only two of the five children. Ms. Tang gave the proceeds of the home to the two children in recognition for their contribution to her care in the final years of her life.
The three siblings who received lower inheritances claimed the will was unfair and should be varied by the Courts. The siblings who received larger inheritances argued that the Court must enforce the wishes of the will writer, Ms. Tang.
The Court’s Decision
Siblings are frequently party to estate disputes, either raising claims against or defending the validity of their inheritance.
The Court considered the testamentary wishes of the will writer and the rationality of the contested provision. Ultimately, the Court found that the division was unfair or irrational under WESA. Considering each child’s contributions to the family during their adult life, a more equal division would be reasonable. The Court rewarded the two siblings 30% each of the estate’s total value, and about 14% to each of the remaining three children. This balanced the fair division of assets to each child while acknowledging the will writer’s intention of rewarding the two siblings for their extra efforts.
Varying a Will Under WESA
In British Columbia, WESA regulates estate distribution and planning. Under WESA, Courts can change the provisions of a will to benefit family members that were excluded or treated unfairly. Section 60 of the Act allows interested parties, such as children or spouses, to challenge an unfair will. However, not just anyone who feels they should have been included can contest a will. For more on eligibility for challenging a will, check out our previous video blog by Darren Williams.
The Act requires will writers, or testators, to provide adequate maintenance for interested parties. There are a limited number of reasons that a testator can validly exclude, for example, a child from their will. If a dependant hasn’t been provided adequate provision in a will, they may be able to raise a claim.
Steps to Avoid Potential Estate Litigation
There are steps that testators can take to ensure their will is WESA compliant and potentially avoid litigation. First, testators should ensure that they carefully consult with an estate lawyer when planning and writing their will. The benefit of drafting with a lawyer over doing it yourself or with a notary is that a lawyer can foresee potential legal issues which may cause litigation later on. Being able to identify common pitfalls and predict problems in your estate plan can save time, money and stress.
Second, testators should ensure that they are very clear with their intentions when giving large gifts during their lifetime. This can include cash gifts, real estate or valuables which many family members may have a special interest in inheriting. By ensuring that they record all gifts in writing and expressly state that the transfer was a gift, testators can avoid ambiguity. Working with a lawyer to record your intentions for large transfers can help to avoid undue influence or testamentary incapacity claims. If the intention to gift is unclear on large gifts, potential beneficiaries may claim the transfer was not a gift on the basis of resulting trust or the testator’s legal capacity to make the transfer.
If you’re looking for specific advice on how to reduce risk of litigation arising from your will, contact an experienced estate lawyer today. We’ll help create an estate plan for you unique situation and needs.
If someone dies intestate (without leaving a valid will), the courts determine the estate’s distribution and the executor of the estate. In a past blog post, we discussed how an estate is distributed when someone dies intestate. In this post, we’ll identify who can be appointed executor of an estate when someone dies without leaving a valid will.
The job of an executor can be time-consuming and stressful, but it is highly important. The executor is crucial to the correct administration of an estate. Some of the responsibilities of an executor include planning funeral arrangements, locating all of the testator’s assets, liquidating assets for distribution, filing tax returns, paying any debts owed, and distributing the estate. When the deceased does not leave a valid will, the complexity of these tasks can increase as the executor does not have specific directions to follow. In appointing an executor, the courts must be sure that the person will take the job seriously and handle the estate as the testator intended.
Executor Priority List
When no one applies to administrate an intestate estate, the Public Guardian and Trustee can take on the duty.
For the courts to appoint someone as executor of an intestate estate, interested parties must apply. The person with the highest priority on the list described in the Wills, Estates and Succession Act (WESA) will become the executor.
Section 130 WESA
As described in section 130 of WESA, the courts will use the following order of priority:
The spouse of the deceased person or a person nominated by the spouse;
A child of the deceased person having the consent of a majority of the children of the deceased person;
A person nominated by a child of the deceased person if they person have majority consent of the deceased’s children;
A child of the deceased person not having the consent of a majority of the deceased person’s children;
A successor other than the spouse or child of the deceased person, having the consent of a majority of the other successors including the successor who applies for a grant of administration;
A person, other than the spouse or child of the deceased person, nominated by a successor of the deceased if that person has the consent of a majority of the other successors, including the successor who nominated the person to apply for a grant of administration;
An intestate successor other than the spouse or child of the deceased person, not having the consent of a majority of the other successors, including the successor who applies for a grant of administration;
Any other person the court considers appropriate to appoint, subject to the Public Guardian and Trustee’s consent.
Executor Priority in Practice
In simple terms, the order of priority goes: the spouse, a person nominated by the spouse, a child with majority consent, a person nominated by the children, a child without majority consent, a successor of the intestate estate and lastly, any other interested party. ‘Interested parties’ can include registered professionals such as lawyers and accountants in these circumstances.
For example, if a person dies intestate without a spouse, but with three children (two daughters and one son).
While the executor order of priority is clear if one dies intestate, it’s always best to write a valid will naming exactly who you want to be named executor of your will. If you need help drafting your will, contact an experienced estate lawyer today.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
When first setting out to write a will, many people have no idea where to start. It’s very common for a first-time will writer to underestimate the complexity of their estate, especially if they hope to maximize the value of their estate for their future beneficiaries. Individuals and families use estate planning to efficiently and lawfully pass their assets on to their loved ones. But who should you ask for help, a notary, or a lawyer?
In British Columbia, both notaries and lawyers are able to assist individuals with drafting their will. However, notaries have some limitations that will writers should consider before deciding which services to use. Hiring a lawyer rather than a notary is essential when seeking advice for a robust and effective estate plan, no matter how simple your asset holdings and family structure may seem.
Notaries and Lawyers: What are the Key Differences?
Notaries have the authorization to witness and authenticate legal documents such as wills and powers of attorney. While they can guide the execution of these documents, they do not have the authorization to provide legal advice in other areas of law. People often use notaries to witness the signing of wills, powers of attorney, and other legal documents. This is because some individuals prefer a professional witness over asking a family member or friend for assistance.
On the other hand, a lawyer is qualified to provide advice on a wide range of areas of law. This includes estate law, but also encompasses many other areas including criminal law, family law, and business law. This is important to will writers because a lawyer will be able to advise on overlapping areas of law which are relevant to the unique circumstances of the client and their estate. In estate law, people often call upon a notary to witness the signing of a will or power of attorney. However, they are more likely to involve a lawyer in the process of creating and drafting these documents.
Notaries are commonly used in the estate planning and administration process for professional witnessing and authentication services.
Limitations of Hiring a Notary to Create Your Estate Plan
In Society of Notaries Public of British Columbia v. Law Society of British Columbia2017 BCCA 448, the Court of Appeal for British Columbia clearly set out the limited scope of notaries’ work in estate planning. The decision affirmed that notaries cannot prepare a will where the will writer’s assets do not immediately transfer to their beneficiaries upon death. Though this may sound ideal for will writers hoping to transfer their assets to beneficiaries as quickly as possible, this places severe limitations on the estate planning tools available and can ultimately mean your beneficiaries receive an inheritance of lower value. A notary cannot create a will which:
Contains a testamentary trust;
Contains a trust for minor children;
Contains a spousal trust;
Contains a fully discretionary trust;
Or contains provision for a life estate in a property
These limitations severely restrict the ability of will writers to create an estate plan that suits their specific needs. They will not be able to make full use of trust instruments, which can be some of the most powerful tools for estate planners. For more information on the value of implementing trust instruments in your estate plan, read our article here.
Hiring a Lawyer to Create Your Estate Plan
In British Columbia, the courts have the power to change, or vary, someone’s will even after their passing if it is found to not provide adequate provision for spouses and children. When creating your estate plan, it’w essential to minimize the risk of litigation arising from your will after your death. If you consult with lawyers who have expertise in estate litigation, they can guide you on structuring your estate in the best way to ensure its distribution aligns with your specific wishes after your death.
A lawyer who specializes in estate planning will have a deep understanding of the various options available to clients, such as wills, trusts, and power of attorney documents, and will be able to advise clients on the best course of action for their specific situation. This is particularly important in situations where there are complex family dynamics or high-value assets involved. Further, estate planning lawyers will be able to advise on providing care and financial planning for will writers even before their death through the appointment of powers of attorney and personal representatives. Lawyers will also be able to provide service after the death of the will writer through supporting the executor of the will in the probate process and distributing estate assets to beneficiaries.
Estate planning, a critical aspect of one’s financial health, enables individuals and families to pass on their assets to their loved ones efficiently. Hiring a lawyer is essential when it comes to estate planning in BC, as they have the expertise and knowledge necessary to navigate the complex laws that govern the distribution of assets after death to avoid estate litigation.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
It’s that time of year! Victoria News’ annual Best of the City awards where you’re able to vote on your favourite Greater Victoria businesses! Voting includes a wide variety of categories, including best attraction, ice cream, whale watching, and best law firm. This year is the 29th annual Best of the City Awards. As an added bonus all valid entries (those who vote in at least 10 categories) are entered into a draw to win an Explore Victoria prize pack valued at $400.
League and Williams is extremely proud to have won the best law firm in Victoria award five years in a row (since 2018) and we have no plans of ending the streak this year! Voting is easy and now more than ever your local Victoria businesses need your support. To submit your vote for League and Williams, head on over to the contest page here. You can find League and Williams’ Lawyers under the “Services” category and then under “Best Law Firm”. After verifying your email address, you will be able to submit your vote for at least 10 categories and as many other categories as you’d like!
Voting for the contest has already begun and continues until midnight Pacific Standard Time on Wednesday, May 17, 2023.
Prizes for the Voters
The Victoria News holds their own giveaway for all of the voters. For everyone who enters and votes on a minimum of 10 local businesses in Greater Victoria will be entered into a draw to win an Explore Victoria Prize Pack Valued at $400!! This contest is subject to Victoria News’ rules and is done solely by them.
And finally, thank you so much for your continued support! We pride ourselves in our team’s ability to provide our clients with a high level of service. We encourage you to share our giveaway details with your family and friends. To submit your Best of the City votes, visit https://vicnews.secondstreetapp.com/Best-of-the-City-2023/To stay informed follow us on our social media accounts – like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.
Estate planning is a vital component of financial planning that involves making arrangements for the distribution of assets after death. This is crucial for individuals of all net worths, as it provides peace of mind that loved ones will be cared for and assets will be distributed according to wishes. Estate planning can also reduce the tax liabilities that heirs may face and protect assets from creditors or long-term care costs. This article explores the significance of estate planning for family business owners and highlights why it is crucial for them to carefully plan their estate for a smooth transition of their business according to their wishes.
The Unique Challenges Faced by Owners of a Family Business
In her 2019 article, Continuity Planning for Family-Owned Businesses (2019 CanLIIDocs 416) Nicole Garton discussed the objectives of the owners of family businesses in their estate plans, and common pitfalls which lead to failed or ineffective transfers of wealth. Succession planning for family businesses aims to transfer wealth smoothly from one generation to the next while preserving family harmony and business stability. However, this process is often unsuccessful due to lack of family unity, breakdown in trust and communication and insufficient preparation of heirs. These factors often co-exist and can exacerbate one another. Family businesses are everywhere and have a wide-reaching impact on the Canadian economy. Approximately half of all workers in Canada are employed by family enterprises. These businesses are believed to contribute between 45% to 60% of Canada’s Gross Domestic Product (GDP), and the transfer of wealth through family businesses is important to the livelihood of many Canadians.
Planning for the future of your family business and the beneficiaries of your estate go hand-in-hand.
Family Dynamics and Continuity Planning
Family businesses are unique in their complexities, as they require juggling the demands of both the family and the business. This can be challenging, as the two often have competing needs and the interplay between them adds an extra layer of complexity. In addition to dealing with common business issues, such as changes in technology and market conditions, as well as competition from other companies, family businesses must also navigate the psychological dimensions of having family members work together.
Each family member involved in the business brings their own objectives, perspectives, and goals, which can sometimes result in increased family problems and exacerbate existing ones, such as sibling rivalry or competition between generations. To succeed, it’s important that family businesses find a way to resolve conflicts, maintain good communication and trust between family members, and work towards a common goal. Not addressing these issues can detrimentally impact the business’s health and operation.
The Role of Continuity Planning
Estate planning for a family business is crucial in order to ensure the smooth transition of ownership and control of the business from one generation to the next. Proper estate planning can help to minimize the tax impact of transferring the business to the next generation, ensure that the business remains financially viable, and avoid disputes among family members. It can also provide a clear roadmap for the future of the business and help to preserve the family’s legacy. Estate planning allows the current owners to make decisions about the future of the business while they are still able to do so, and can help to ensure that the business continues to thrive for future generations.
Continuity planning differs from traditional tax and estate planning because it takes a holistic approach which specifically considers the nature of the family’s relationships and how they individually contribute to and benefit from the family business. Continuity planning for a family business is the process of preparing for the future of the business, including the transfer of ownership and control from one generation to the next.
The goal of continuity planning is to ensure the long-term sustainability and success of the family business. This may involve identifying and preparing potential successors of the business, developing a strategy for transferring ownership, and creating a clear vision for the future of the business. Continuity planning also addresses issues such as estate planning and tax planning, as well as any potential conflicts that may arise within the family. It is important for family businesses to engage in continuity planning early on, as it can help to ensure the successful transition of the business from one generation to the next, and preserve the family’s wealth and legacy.
Means of Continuity Planning for Family Businesses
Business owners use trust instruments in many forms to carry out their wishes in their estate and business continuity plan. A trust is a legal arrangement in which a trustee holds and manages assets on behalf of one or more beneficiaries. A key feature of a trust is that it separates ownership and control of an asset from the benefit of that asset. This separation allows the founder of a family business to transfer elements of the business into a trust, retain control of those elements as the trustee, and make distributions to the beneficiaries as they see fit.
In her article, Nicole Garton also discusses the use of joint tenancy ownership, life insurance with designated beneficiaries or trusts, annuities, RRSPs and RIFs and wills as tools commonly employed in continuity planning. A carefully drafted estate plan for supporting the transfer of wealth and management of a family business will often use most or all of these tools to advance the interests and wishes of the business owner.
Preparing for Testamentary Incapacity
Another crucial aspect of continuity planning, and all estate planning, is preparing for the unfortunate but common occurrence of testamentary incapacity. Failing to properly plan for incapacity can result in severe harm to a business’s assets and operations if a crucial family member suddenly becomes unable to manage them. Without the necessary preparations made in advance, it may be more difficult to appoint a guardian or committee after the individual has lost testamentary capacity, which can be time-consuming, arduous, and harm the business’s reputation and viability.
To prevent this, it’s advisable to execute an enduring power of attorney before any incapacity occurs. For more on the basics of appointing a power of attorney, read our article here. This gives another person or entity the authority to handle the family member’s legal and financial affairs, including managing a business and assets. It’s also recommended to have multiple powers of attorney in place, including one for managing the business specifically. This way, a skilled and knowledgeable fiduciary can be appointed to handle each aspect of the family member’s assets and ensure a smooth transition for the business in case of unexpected incapacity. For more on testamentary incapacity and how both business owners and private individuals can prepare, read our article on creating a living estate plan.
Next Steps
Ultimately, business owners should be proactive and thorough in creating their estate plan to ensure the continuity and smooth transition of their family business. Business continuity planning is crucial for family businesses to ensure their longevity and success. By preparing for unexpected events and having contingency plans in place, owners can protect their assets, minimize downtime, and maintain the stability of their business for future generations. It is a proactive approach that allows for quick and effective response to any disruptions, ensuring the continuation of the family legacy.
If you’re thinking about managing the transition and legacy of your family business, or own a business and don’t know where to start, contact an experienced estate lawyer today. We’ll help to create an estate plan that suits the needs of your unique family and business.
Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.
