League and Williams Lawyers

Author: Georgia Lockhart

  • BC Speculation and Vacancy Tax: Am I Exempt?

    BC Speculation and Vacancy Tax: Am I Exempt?

    The BC government first introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. Recently, the province has introduced legislation to expand the tax to more communities in BC. Most BC residents are subject to an exemption from the tax. In this article, we’ll discuss the various exemptions available for homeowners and how the declaration process works.

    What is the Tax?

    The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. Until recently, the Speculation tax only applied to residential properties in the following areas:

    • Capital Regional District (CRD)
    • Metro Vancouver Regional District
    • City of Abbotsford
    • District of Mission
    • City of Chilliwack
    • City of Kelowna
    • City of West Kelowna
    • City of Nanaimo
    • District of Lantzville

    As of 2024, property owners in the following areas also have reporting obligations:

    • Vernon, Coldstream;
    • Penticton, Summerland;
    • Lake Country, Peachland;
    • Courtenay, Comox, Cumberland;
    • Parksville, Qualicum Beach;
    • Salmon Arm; and
    • Kamloops

    Responsibilities of Homeowners

    If you own property in any of the areas listed above, you must submit a yearly declaration form. The form tells the government about where you live and how you use your property or properties. The BC government sends a letter to those subject to the tax to ensure people are aware of their responsibilities. Homeowners in applicable areas must fill out the declaration each year, even if they are exempt from the tax.

    The Yearly Declaration Form

    Residential property owners in the newly affected areas will have submitted their first annual declaration form in January 2025. The form will report on the property’s use in 2024. When you receive your declaration letter, it will include a letter ID and a declaration code. You can use this information to quickly submit a declaration online. You can also submit your declaration over the phone.

    Exceptions to the Speculation and Vacancy Tax

    Most BC residents are exempt from the tax, which aims to deter a specific type of property investment which reduces available housing stock. In this section, we’ll discuss the details of the available exemptions to individuals.

    Entities Which Are Always Exempt

    Properties owned by the following groups and organizations aren’t subject to the tax and do not need to submit an annual declaration form:

    • An Indigenous Nation or a corporation owned by an Indigenous Nation
    • Registered charities
    • Housing co-ops
    • Certain not-for-profit organizations
    • Municipalities, regional districts, governments and other public bodies
    • Corporation owned by municipalities or regional districts
    • Corporations incorporated or continued through an enactment (“crown corporations”)
    • Corporations designated as “agents of government” by legislation, and their wholly owned subsidiaries

    Further, properties with an assessed value under $150,000, or unstratified apartment buildings with four or more units are excluded from the tax.

    Exemptions for Individuals

    On the annual declaration form, you must claim the exemptions relevant to you only. Different exemptions can apply to different owners, even of the same property. The Provincial government has provided the following example of how individuals with shared ownership should report their exemptions:

    “If a parent co-owns a home with their adult child and the adult child lives in the home and the parent lives elsewhere, then the following exemptions may apply:

    • The child claims the principal residence exemption
    • The parents claim the tenancy exemption for family or other non-arm’s length persons”

    Principal Residence Exemptions

    In a nutshell, the principal resident exemption means that your home won’t be subject to the tax. However, there are a number of reasons that individuals may not live in their principal residence for extended periods of time throughout the year. There are detailed exemptions which homeowners can claim, depending on the circumstances. Owners of a property can be exempt, even if they are not living in the property full time, if:

    • A person with a disability designated under the Canada Pension Plan, Employment and Assistance for Persons with Disabilities Act, or the federal Disability Tax Credit under the Income Tax Act lives in the property as their principal residence. 
    • An owner or owners are temporarily living away from the residence for medical or work reasons. 
    • The owner is a member of the Canadian Armed Forces and is living away from the residence due to military service requirements. 
    • An owner is living in a residential care facility and their spouse still resides on the property.

    Previous Principal Residence Exemptions

    If you have moved out of a property that was your principal residence, you may still be able to claim the exemption if:

    • You lived in the residence before moving out of province, and were unable to tenant or sell the home before the end of the year. 
    • You lived in the residence before moving into a residential care facility. This exemption can apply for up to two years. 
    • You are living away from the home for medical reasons, for up to two years. 
    • You moved out of the property because it became uninhabitable as a result of a disaster or hazard. 
    • You have temporarily moved to a secondary residence to be closer to medical treatment. 
    • You and your spouse have separated or divorced in the same calendar year, and one spouse has moved out of the residence.

    Tax Exemptions and Estate Planning

    There are also a number of exemptions relating to the death of a homeowner and the estate’s tax liabilities if the house is held on trust after their passing. If a homeowner dies, their estate and any other living owners on title are exempt from the vacancy tax for that year, and the year immediately following. This eases the burden on estate administrators who may be stuck waiting for probate to be able to distribute the property to its beneficiary. 

    Further, if the property is held in a trust created in the owner’s will for the benefit of a minor, the property is exempt until the beneficiary turns 19. This means that a property can be vacant without being subject to the tax, so long as all beneficial owners of the property are minors. If the beneficiary of the trust is a charity, the property held on trust will also be exempt.

    Reminders for Homeowners

    It can be challenging to navigate exemptions for this tax, particularly if you are living in an area that is only subject to the tax for the first time this year. If you’re unsure of how the tax will impact you, your investments or estate plan, contact an experienced lawyer today.

    For more information, you can find the full list of exemptions for individuals here.

    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.

  • Married or Divorced? It’s Time to Update Your Will

    Married or Divorced? It’s Time to Update Your Will

    Updating your will is very important after major life events like marriage or divorce. These changes usually impact your estate planning goals, and failing to update your will can lead to unintended consequences. When you get married, your priorities and beneficiaries often change. If you fail to revise your will, your assets might be distributed in ways that no longer reflect your wishes. This can create stress and conflict for your loved ones. By proactively updating your will, you can ensure that your estate plan aligns with your current priorities.

    Does Marriage Impact the Validity of Your Will?

    In the past, if a testator became married after executing their will, the marriage would automatically revoke the will. Under section 55 the Wills, Estates and Succession Act, a will is only revoked in certain circumstances. It must be clear that the testator specifically intended for the will to be revoked. This means that after your marriage, your estate plans will remain unchanged unless you make an updated will.

    While leaving your will unchanged may be appropriate for some, it’s common for estate planning goals to change as your family grows. For instance, you may wish to include your spouse as a beneficiary or appoint them as an executor or trustee. By updating your will, you ensure that your estate plan aligns with your wishes and provides for your loved ones.

    If you were married before WESA’s introduction in March 2014 and haven’t executed a new will, your will is still revoked under the old legislation.

    Separation and Divorce

    After a divorce or separation, gifts to an ex-partner in a will are automatically revoked. The remaining arrangements made in the will remain unchanged. Though this sounds convenient for those with simple estates, it remains important to update your will after a separation. Neglecting to update a will after a divorce can lead to several problems. For example, gifts may fall into intestacy if a will-writer doesn’t include a residuary clause. This may result in specific gifts going to beneficiaries who you may not have intended. For more on the rules of intestacy, see our blog post here.

    In British Columbia, people who live together for two or more years in a ‘marriage-like relationship’ are considered spouses for legal purposes.

    A divorce from a legal marriage is not the only consideration which may impact your estate plans. A breakup from a long-term separation may have a significant impact on your estate planning. If the relationship was considered “marriage like” under WESA, separating from your partner may have a similar effect to divorce. Couples are considered spouses if they have lived together in a marriage-like relationship for two years or more.

    Updating Your Will to Reflect a Relationship Change

    While it isn’t often at the top of people’s minds when entering a new relationship or separating from a long-term partner, estate planning is an important aspect of anyone’s plans for the future which must be given adequate attention.

    After a Marriage

    Depending on the nature of your relationship, the structure of your family and existing estate plan, the changes you might make to your estate plan after a marriage may vary, In general, the most common and important changes that people should consider after a marriage include: 

    • Including your spouse as a beneficiary of your estate;
    • Updating the guardianship of your children, if applicable; and
    • Making revisions to your executor, trustee and power of attorney appointments.

    Updating your will after marriage is crucial to ensure your wishes are respected, especially regarding appointments for a power of attorney and personal health representative. By updating your will, you can designate a trusted individual, usually your new partner, to make decisions on your behalf if you lose the capacity to do so.

    Mutual and Mirror Wills For Married Couples

    Spouses usually share a majority of their estate’s assets, and want to work together in their estate planning. Couples can create a mutual will or mirror wills to handle their estate in a way they both agree upon. If a couple decides to create a will jointly through either of these methods, it’s important to consider which one best suits your life, family, and estate planning goals. 

    A mutual will is a single will, created between two people. Will writers should be aware that you cannot change mutual wills after one of the spouses passes away. In some cases, one spouse goes on to remarry after the death of their spouse. If there is a mutual will in place, the spouse cannot go against the deceased’s wishes and change it. At first glance, this appears to be beneficial to both spouses writing the mutual will. However, it can create complications if the surviving spouse has more children after the death of their first spouse. Giving the new children an inheritance from the estate can be extremely difficult because you cannot change the mutual will.

    Mirror wills are two identical wills written by a couple. This differs from a mutual will because a mirror will doesn’t prevent someone from changing their will after the death of their spouse. With a mirror will, the surviving spouse could modify their will. They could disinherit or inherit people who the predeceased spouse would not have agreed with. The surviving spouse is in full control of the entirety of the estate. Spouses with mirror wills can’t be fully certain that their partner will honour their final wishes.

    After a Divorce or Separation

    Under section 16 of WESA, a gift, appointment or power given in a will to a spouse is automatically revoked upon divorce unless the will expresses a contrary intention. This means that, unless you explicitly state otherwise, any assets left to an ex-spouse in your will are to be disposed of according to the laws of intestacy or a residue clause as if the partner predeceased you.

    Although gifts in a will to your former partner are automatically revoked, it’s important to ensure that your precise testamentary wishes are reflected in your estate plan. For this reason, we recommend that people revisit their entire estate plan and reassess their estate planning goals after a separation. Similarly to those revisiting their estate plan after a marriage, those making changes after a separation should consider making revisions to the following at a minimum:

    • Beneficiaries of their estate;
    • Guardianship and custodial arrangements for their children, if applicable; and 
    • Appointments of executors, trustees, powers of attorney and personal representatives.

    If you had previously appointed a partner as your power of attorney, for example, and then divorce without updating your will before you die, you will not have a power of attorney prepared should you unexpectedly lose capacity.

    How to Legally Change a Will in British Columbia

    It is not complicated to execute a new will in British Columbia. Under WESA, when a testator creates a new will, any previous versions of their will are automatically revoked. However, it may be a good idea to inform your loved ones that you have created a new will to avoid confusion. If you are only making very minor revisions to your will, you may opt to use a codicil. This is a document that is attached to your will to make simple amendments to provisions within the existing document. It is usually advisable to create an entirely new will after a marriage due to the nature of the change in your succession plan which often results from marriage. A codicil is not an appropriate tool to amend an existing will if, for example, a couple chooses to have mutual or mirror wills or make arrangements for jointly owned property.

    Reminders for Will Writers

    Updating your will after marriage or divorce is important, and shouldn’t be overlooked despite the automatic protections under WESA. By making regular updates to your estate plan, you can ensure your wishes are clear and enforceable. This helps protect your assets and provides clarity for your loved ones. Whether it’s appointing a new power of attorney, updating beneficiaries, or making other changes, taking these steps now can prevent future disputes and simplify the probate and asset distribution process for your loved ones It can also ensure that, should you lose capacity unexpectedly, a trusted power of attorney or health representative is able to step in right away without waiting for a court appointment.

    If you’re ready to make an update to your will after a major change in your life, 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.

  • Testamentary Capacity: The Basics

    Testamentary Capacity: The Basics

    Testamentary capacity describes the mental ability required to create a valid will. When individuals draft their wills, they must be of sound mind and capable of understanding the implications of their decisions. This is crucial in estate planning. It ensures that wills accurately reflect the testator’s wishes and mitigate risk of estate litigation.

    Assessing capacity can be complex. The courts can be willing to find testamentary capacity in some cases where a person isn’t able to, for example, make financial decisions for themselves. Because wills drafted by a person lacking capacity are invalid, will writers and their beneficiaries should recognize the signs of lack of capacity.

    What is Testamentary Capacity?

    Testamentary capacity is the legal standard for having the mental ability to make or change a will. When someone drafts their will, they must meet specific criteria to ensure its validity. To have testamentary capacity, a will writer must have an understanding of the following.

    Nature of a Will

    •  The testator (the person making the will) must understand the purpose and effect of creating a will.
    • They should comprehend that a will outlines how their assets and property will be distributed after their passing.

    Extent of Their Property

    • The testator needs to be aware of the nature and extent of their property.
    • They must understand the extent of the assets which beneficiaries stand to inherit from the estate.
    • This includes knowing what assets they own, such as real estate, bank accounts, investments, and personal belongings.

     Beneficiaries and Relationships

    • The testator must recognize the people who stand to inherit from the will.
    • Understanding family relationships and friendships relevant to the will is crucial.
    • They must understand the nature of disputes which may arise, particularly from those left out of the will.

    Coherent Planning

    Testamentary capacity requires a will writer to understand these issues, and use that understanding to create a coherent estate plan. When the courts have reason to believe that a person didn’t have testamentary capacity, they can invalidate a will or reverse gift transfers.

    The Importance of Testamentary Capacity for Will Writers

    The general aim of the Wills, Estates and Succession Act and the BC courts that enforce it is to give effect to genuine, valid wills that reflect the will writer’s testamentary intentions. For this reason, the courts are empowered to cure deficiencies in invalid wills to ensure its writer’s wishes are respected. However, the courts can also invalidate a will that was written by someone lacking testamentary capacity for the same reasons. If you write a will without having the testamentary capacity to do so, it may not reflect your genuine testamentary intentions and may not be upheld.

    Ensuring Your Will is Valid and Enforceable

    To be valid in British Columbia, a will must be in writing, signed by the testator and by two witnesses. However, wills which meet these formal requirements can still be considered invalid if they were written by testators lacking testamentary capacity. 

    To ensure that the administration of your estate aligns with your wishes, it’s important to keep your will updated while you maintain testamentary capacity. Further, a robust estate plan should include plans for who will manage your legal, financial, healthcare and lifestyle decisions in the case that you lose capacity unexpectedly. Remember, you can lose testamentary capacity unexpectedly at any time due to serious injury or illness. 

    Mitigating Risk of Estate Litigation

    It is not uncommon for estate litigation to arise when a beneficiary or interested party has suspicions that the will writer lacked testamentary capacity when they executed their will. A common example of this type of wills variation challenge happens when a will writer, lacking testamentary capacity, creates changes to their will without professional assistance. This can often take the form of a handwritten codicil or notes left in their estate home prior to their death instructing changes to their existing estate plan.

    When beneficiaries or interested parties (including past beneficiaries, spouses or children) have suspicions regarding the will writer’s capacity to make those changes, they can make a wills variation claim. Though the outcome of the claim may be that the most recent will from before the writer lost capacity is enforced, the process is still costly to the estate. Will writers should endeavor to prevent possible litigation arising as it can lower the overall value of their beneficiaries’ inheritances and significantly delay the administration of their estate. 

    It’s important to understand that loss of testamentary capacity is not always permanent. Older will writers may experience periods of testamentary incapacity due to health issues or medications they take, but can regain capacity later. Will writers should execute all updates and changes to their will with an estate lawyer, who can ensure that you have testamentary capacity and that your changes will be upheld.

    The Importance of Understanding Testamentary Capacity for Beneficiaries

    Beneficiaries should also understand the significance of testamentary capacity and recognize signs of incapacity for several reasons:

    Protecting Their Interest in the Estate

    Beneficiaries have a vested interest in the validity of a will that they stand to inherit from. Beneficiaries who recognize signs of incapacity can raise their concerns before the death of the will writer, potentially preventing future estate litigation. Further, if a will writer who lacks capacity makes inter vivos gifts of estate assets during their lifetime, beneficiaries can provide valuable evidence should a dispute arise concerning the transfers.

    Challenging Invalid Wills

    Beneficiaries and interested parties need to know when they can raise concerns over a will’s validity. If they have grounds to suspect the will writer lacked capacity when executing their will, they can seek legal help to raise a wills variation claim. Recognising the signs of testamentary incapacity early can help beneficiaries to protect their inheritance.

    An Example From Case Law

    Testamentary capacity is important to understand because the mere presence of cognitive deterioration or illness when a will was written doesn’t necessarily mean the will is invalid. The BC Supreme Court recently discussed this distinction in Nykoryak v. Anderson (2017).

    The case concerned the estate of Ivan Hlynsky. His son and grandaughter, Bill and Mariya, applied for an order from the courts declaring that the most recent version of Ivan’s will was invalid due to lack of capacity. Ivan drafted a will in 2006 leaving the residue of his estate to his son Stephan, and Mariya. Ivan did not include his other children, Bill and Natalie, as beneficiaries of the estate. Before his death in 2015,  Ivan created a new will excluding Mariya. He left the residue to his children Natlie and Stephan.  

    Bill and Mariya challenged the will on the grounds of testamentary incapacity because at the time, Ivan was experiencing cognitive decline including some memory loss and confusion. He was also having significant difficulty with his hearing.

    The Court’s View

    The court reviewed evidence from Ivan’s will drafting lawyer to determine if he had testamentary capacity at the time. Despite his cognitive decline, it was found that he understood:

    • The nature of a will;
    • The nature of his property disposed of in the will; and
    • The people who stood to benefit from the will.

    Further, a medical examination from shortly after the will was executed was reviewed by the court. The examination found that Ivan was experiencing ‘fairly advanced dementive illness’. However, the examining doctor noted that, at the time, Ivan had no delusions and a good understanding of his assets, beneficiaries, and the nature of the will. Ultimately, the court found that Ivan had testamentary capacity at the time he drafted the new will. In the judgment, several cases which acknowledge that testamentary capacity can exist despite the presence of cognitive decline. The judge granted the defendant’s request and ordered that the 2015 will was valid.

    Reminders for Will Writers

    As the Nykoryak case and other BCSC case law demonstrates, testamentary capacity can be found even where the testator is experiencing cognitive decline. However, even where a will written by a testator with cognitive decline is found valid, the estate and beneficiaries can ultimately lose out on time and money from resulting litigation. To minimize risk of litigation, will writers should update their will frequently, and ensure to seek help from a professional who can assess and provide evidence on their capacity if necessary. 

    Understanding the limits of testamentary capacity in BC estate law is important for all will writers and beneficiaries. Further, planning in advance for potential future incapacity is an essential part of a robust estate plan. Remember, you can lose capacity unexpectedly at any time, particularly later in life. If you’re curious about the impact of potential capacity issues on your estate, or an estate you stand to benefit from, 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.

  • Pre-Death Estate Litigation

    Pre-Death Estate Litigation

    Estate disputes are usually thought of as conflicts that arise after someone passes away. In some cases, these disputes begin while the will writer is still alive and can change their will. Pre-death litigation involves challenging a testator’s estate plan while they are still capable of making those decisions. This can happen due to concerns about their mental capacity, undue influence, or disagreements over broken promises.

    Pre-death litigation is becoming more common in British Columbia as families grapple with complex estate issues. These disputes can be highly emotional and may have long-lasting impacts on both the testator and their loved ones. Understanding why pre-death litigation occurs, the legal tools available, and the potential consequences is important for those considering challenging a will.

    What is Pre-Death Estate Litigation?

    Pre-death litigation are challenges to wills or property transfers that arise before a testator (the person making the will) passes away. Common reasons for initiating pre-death litigation over estate assets include allegations of undue influence, concerns over the testator’s mental capacity, or disagreements about the handling of property and assets.

    Will writers should ensure that the contents of their will are compliant with WESA to reduce the risk of estate litigation.

    Common Causes of Pre-Death Estate Litigation

    Most often, pre-death estate litigation concerns broken promises or wills created by people who lack testamentary capacity. Other issues that may prompt pre-death estate litigation are:

    • Committeeship orders for incapacitated testators;
    • Power of attorney appointments and disputes;
    • Advance care directives and their role in the broader estate plan;
    • Proprietary estoppel and broken promises in a new will.

    An Example From Case Law

    In Linde v Linde (2019)  the BC Supreme Court ordered a father to leave his farmland to his son upon his death. The father, Kenneth, had promised his son Howard that in exchange for his years of low or unpaid work on the family farm, he would inherit the land when his father died. Kenneth and Howard had a falling out, and Kenneth changed his will, removing Howard as the beneficiary of the farm. Howard sued his father, claiming that proprietary estoppel barred him from disinheriting Howard.

    The judge considered the promises Kenneth had made to Howard, the contributions Howard made to the farm, and the personal losses he suffered as a result of the broken promise. Ultimately, Kenneth was ordered to leave Howard the land in his will. However, Kenneth was given the right to live on the land and draw a modest profit from the land until his death. 

    Issues to Consider Before Pursuing Litigation

    Contesting an estate before the death of the will writer can be a lengthy and complex process. While it is beneficial to resolve disputes early, particularly in cases of broken promises or misrepresentations, it can come with significant challenges. Litigation can strain family relationships, incur substantial legal costs, and may fail if the court is unconvinced of the claims. Alternatives like mediation, estate planning reviews, or drafting binding agreements—such as cohabitation agreements or mutual wills—can address concerns without litigation. Consulting with an experienced estate lawyer can help you determine the best path forward in your circumstances.

    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.

  • Succession Planning for Small Business: The Basics

    Succession Planning for Small Business: The Basics

    As a small business owner, you put time, money and care into your business. The vast majority of businesses in Canada are small businesses, or are owned and operated by families. For many, it’s not just a source of income, but an important part of their family’s life and legacy. But what happens when you’re no longer at the helm? According to PWC, 25% of Canadian CEOs aren’t sure if their business will be viable in 10 years if they continue on their current path.

    Creating a succession plan is a crucial step for any business owner who wishes for their business to carry on after they retire or pass away. It’s more than a mere administrative task- it’s a strategic approach to planning your business’s future. Whether you’re considering retirement, giving leadership of the company to a family member, or planning for unforeseen circumstances, a detailed succession plan ensures continuity and secures your business’s legacy. In this article, we’ll discuss the basics of succession planning, and what you need to know to get started.

    Benefits of Succession Planning

    Each business’s succession plan should be tailored to their operational needs, being mindful of potential risks and opportunities within their organization and the market they operate in. Some of the benefits of creating a detailed succession plan include:

    Continuity and Stability

    A well-structured succession plan ensures that your business continues to thrive when you’re no longer leading it. In general, a succession plan helps to minimize disruptions, maintain operational stability, and provide an easier transition for employees, customers, and stakeholders.

    Business owners should consider all of their assets and liabilities, and potential longterm risks and opportunities in their market in their succession plan.

    Talent Retention

    Succession planning identifies potential leaders within your organization, and provides structured plans for their professional development in the company. By preparing existing employees for key roles, you retain valuable talent and avoid the costly process of external recruitment.

    Risk Mitigation

    Life is unpredictable, and unexpected events can impact your business. A succession plan prepares you for such contingencies, reducing the risk of business interruption due to illness, death, or other unforeseen circumstances.

    Preserving Company Culture

    Your business’s culture often contributes to its commercial success. This is usually a very important part of the operations of a family business. A thoughtful succession plan ensures that cultural values, work ethics, and organizational standards are passed down to the next generation of leaders in your business.

    Financial Security

    A smooth transition prevents financial instability arising from an interruption in operations and employees struggling with new responsibilities. Whether you’re selling the business or passing it on to a family member, a well-drafted succession plan safeguards the business’s financial interests.

    Tax Efficiency

    Depending on the company’s share structure, carefully planned succession can reduce tax liabilities for both the outgoing owner and the successor. Particularly for family businesses and companies with multiple shareholders, it’s essential to consult with financial and legal professionals.

    Different Models of Succession Planning

    There are a number of different paths business owners can take when creating their succession plan. As a business owner, you can customize your succession plan to align with your business’s unique needs, family dynamics, and personal goals. Some of the most common models of succession planning for family-owned and small businesses include:

    Internal Succession

    In this model, the successor comes from within the organization. It involves identifying existing employees for leadership roles, and working to develop their skills and knowledge over time to prepare them for taking over the business. Benefits of this approach include continuity, the successor’s familiarity with company culture, and a smooth transition for other employees and stakeholders.

    Family Succession

    For many family businesses, it’s very important to keep leadership of the company within the immediate family. This can be emotionally rewarding, and an essential part of supporting the culture and financial interests of the business and family. However, family succession requires careful planning to ensure a smooth transition, balancing family dynamics and the needs of the business.

    External Succession

    External succession involves bringing in an outsider—a qualified individual who may purchase the business or simply take over as the new leader. This model can provide fresh perspectives and skills, but requires thorough vetting of potential candidates. Further, it requires a detailed succession plan to ensure the original owner’s expectations and visions for the business’s operations are met in the future.

    Hybrid Succession

    Some businesses combine elements of internal and external succession. For example, an internal candidate or candidate from within the family may lead initially, with a long-term plan to bring in external talent for specific roles.

    Emergency Succession

    This model prepares for unexpected events (like sudden illness or death). It designates interim leaders and outlines procedures to ensure business continuity during crises. This planning method puts emphasis on contingency planning, and should include detailed guidelines for day-to-day business operations, long-term goals and company culture to ensure the most simple transition possible.

    The Succession Planning Process with a Lawyer

    Your business’s succession plan should be uniquely tailored to its operations, market, and employee and family culture. Every succession plan will look different, and every succession planning process will differ in some ways as well. In general, the process of creating a succession plan looks something like this:

    Step 1: Assessment and Setting Goals

    • Consultation: Meet with a lawyer to discuss your business, personal goals, and family dynamics.
    • Identify Objectives: Clarify what you want to achieve through succession planning (for example, smooth transition, tax efficiency, preserving legacy).
    • Assess Assets and Liabilities: Evaluate your business’s financial health, assets including intellectual property, and debts.

    Step 2: Legal Documentation

    • Buy-Sell Agreements: Set up agreements that address ownership and share transfer in specific situations (for example, retirement, disability, death).
    • Power of Attorney: Designate someone to make financial and legal decisions on your behalf if you become unable to.

    An important element of a detailed succession plan  is ensuring that your personal estate plan is up to date. If you become unable to manage your business and personal financial affairs suddenly as a result of serious injury or illness, it is essential to have a power of attorney and personal representative ready to assist. Otherwise, your family will have to seek a court order to authorize someone to manage your affairs. This not only causes stress and delay for your family, but can impact the normal operations of your business.

    Step 3: Identify Successors

    • Identify Roles: Consider the role or roles that you will be stepping out of in the future, and what responsibilities will need to be taken over by a successor or successors.
    • Internal Candidates: Discuss potential successors within your organization.
    • Family Members: Consider family members interested in taking over.
    • External Search: Explore external candidates if suitable for your business’s operations and your vision for the future.

    Step 4: Training and Transition

    • Professional Development of Your Successor(s): Create a detailed plan to support your successors in developing the knowledge and experience they will need to take a leadership role within the company.
    • Training Period: Allow time for the successor to learn the skills necessary to fill the role competently.
    • Gradual Transition: Avoid abrupt changes; gradually transfer responsibilities.
    • Communication Plan: Inform employees, clients, and stakeholders about the transition when it is time for you to step down.

    It’s important to remember that the training and transition process will look very different for every business, depending on their operations, licensing requirements and successors. Creating a detailed plan for training and transition is essential.

    Step 5: Regular Review and Updates to Your Plan

    • Life Changes: As circumstances change both personally, within your family, or the market your business operates in, update your plan.
    • Legal Changes: Stay informed about tax obligations, corporate governance regulations, and estate planning laws. 

    An estate lawyer brings legal expertise and objectivity to the succession planning process. They ensure your succession plan aligns with your wishes and protects your business’s legacy in an efficient and risk-averse way. It’s important to understand that your succession plan and supporting documents, such as power of attorney appointments and your personal will should be revisited frequently to ensure they align with your wishes.

    Reminders for Business Owners

    For many family-run and small business owners, their company represents more than just an income. Your company is an important part of your family’s lifestyle, history and legacy. Developing a detailed succession plan for your business is essential to ensuring its continuity if you become unable to run the business. Business owners should remember to:

    • Start Early: Begin your succession journey well before retirement. The earlier you start, the more finely tailored your plan can be.
    • Seek Professional Guidance: A lawyer’s expertise ensures legal compliance, tax efficiency, and a smooth handover.
    • Tailor Your Succession Plan: While we’ve discussed different common models of succession planning—internal, family, external—don’t hesitate to combine them. Hybrid models or personalized adaptations to the succession plan can fit your business’s unique circumstances.
    • Be Mindful of Your Legacy: Yes, financials matter, but so do your business’s values, culture, and social impact.
    • Make Regular Updates: Life and business changes with time— marriage, death, and market shifts can all impact your family business. Regularly review and update your plan to keep it relevant and effective.

    Succession planning, particularly for family businesses, is not just about financial and operational stability. A detailed succession plan can support you in achieving your long-term goals for your family and business, even when you are no longer able to work. If you’re ready to start succession planning for your small business, contact an experienced lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • New Short-Term Rental Rules in BC

    New Short-Term Rental Rules in BC

    In recent months, British Columbia has introduced and passed a number of bills to address the ongoing housing crisis. These bills address a wide range of housing policy issues, and will impact many people. Broadly, the bills all aim to increase available housing stock for purchase and for rent in British Columbia. In particular, new restrictions on short-term rentals have sparked discourse online and in the news. In this article, we’ll discuss the rules that came into effect on May 1st, and what hosts need to know.

    The New Rules

    B.C. passed the Short-Term Rental Accommodations Act in 2023. New restrictions on short-term rentals came into effect on May 1st, 2024. They aim to take short-term housing stock in high-demand areas and make them available to long-term renters. They also expand the powers of local governments to enforce restrictions on short-term rentals locally. 

    The main obligations imposed on affected short-term rental hosts by the Act are:

    • Hosts must display a local government business number on their short-term rental listing.
    • Hosts must comply with the provincial principal residence requirement.

    The Provincial Primary Residence Requirement

    The most significant change faced by hosts as a result of the new rules is the Provincial principal residence requirements. Essentially, this rule limits short-term rentals to rooms within the host’s principal residence, plus one secondary suite on the same property. This rule aims to ensure that suitable long-term homes aren’t taken off of the market for vacation accommodation. In a nutshell, short-term rental properties in affected areas can only be on the host’s primary residence property. Hosts aren’t allowed to construct more than one extra suite on that property for the purposes of short-term renting. 

    For example, a host can advertise a room or suite on their property on websites like Airbnb and VRBO. They can even construct a separate dwelling on their property, known as an accessory dwelling unit, for this purpose. However, a host can’t divide their existing basement suite into two studio apartments to be rented out on sites like Airbnb and VRBO.

    Which Properties Are Affected?

    The Act applies to short-term rentals offered to the public, including:

    • Those on online platforms connecting short-term renters with hosts, like Airbnb and VRBO
    • Those offered through other online channels, including Facebook and Craigslist
    • Listings in print offers, like newspapers and flyers

    Traditional Bed and Breakfasts are still able to operate as normal, though the provincial principal resident requirement still applies. B&B owners must live on the property that they host guests on in order to comply.

    What is a “Short-Term Rental” According to the Act?

    The Act considers rental properties available for stays of less than 90 days short-term rentals. According to the province, data from 2023 indicates there are over 16,000 entire residential properties being used as short-term rentals for at least most of the year in BC. More recent figures estimate that number is up to 19,000 properties.

    Regions and Municipalities

    The rules automatically apply to cities that have a population of 10,000 or more. However, smaller municipalities can opt in to have the bylaw apply in their town. Restrictions on short-term rental properties must be as restrictive as the Provincial guidelines or more restrictive, unless they do not apply due to population size. It’s important to note that local governments usually can’t opt out of these rules. The province only allows local governments tol request to opt out if they have a rental vacancy rate of at least 3% for two consecutive years.

    As of right now, the communities which have the principal residence requirement are primarily in the Lower Mainland, and areas in the Okanagan and Capitol Regional District. For more information, the province has provided a map of the municipalities that currently have this requirement.

    So far, at least 17 unaffected municipalities have elected to opt-in to the new rules, including many of the Gulf Islands, Tofino, and Osoyoos.

    Which Properties And Businesses Are Exempt?

    Some properties may be exempt from this requirement, depending on their zoning and the type of accommodation service provider the business is. The aim of the Act is to increase long-term rental housing stock by taking suitable properties on the short-term market and ensuring they are available as long-term homes for British Columbians. Properties which aren’t suitable for long-term housing are exempt. According to the province, this can include:

    • Strata-titled hotels and motels
    • Time share properties
    • Properties listed on home exchange websites
    • Fractional ownership properties, where no one owner uses it as a principal residence
    • Overnight accommodation lodges (fishing or hunting lodges, for example)
    • Student accommodation owned by an institution or non-profit
    • Employee accommodation owned by an institution or non-profit
    • Strata guest suites

    How Will The Rules Be Enforced?

    The Act aims to help local governments enforce regulations on short-term rental businesses. This includes the following requirements and enforcement methods:

    Requiring Display of Business Licence: In areas where businesses must display a local business licence, short-term rental owners have to display that licence number on their property listing. 

    Holding Online Platforms Accountable: Online short-term rental platforms must remove non-compliant listings from their offerings at the request of the local government. The Act requires these platforms to share information on local short-term listings with local governments on a monthly basis. 

    New Licensing Authority for Local Governments: Amendments to the Local Government Act now allow regional districts to regulate and grant licences to short-term rentals.

    The Provincial Compliance and Enforcement Unit: The Province will establish a dedicated unit to ensure compliance and enforce the new regulations. This unit will monitor compliance using data provided by online short-term rental platforms and can issue penalties for violations.

    Introduction of a Provincial Registry: The Province says it aims to launch a short-term rental registry by early 2025 to aid in compliance monitoring. Hosts will have to register with the province, and include their registration number on their property listings. Online platforms will be required to validate the provincial registration numbers on listings to ensure compliance.

    Fines For Non-Compliance

    Non-compliance with the new regulations can result in receiving fines for bylaw offences. Regional districts can issue fines of up to $50,000 for bylaw offences, and municipalities can issue fines of between $1,000 and $3,000 per infraction per day. It is yet to be seen how municipalities and regional districts will approach ticketing for violations of short-term rental bylaws.

    New Responsibilities For Short-Term Rental Owners

    Many short-term rental owners have expressed concern about the new regulations, including the lack of consultation from the government and potential impact on their investments. If you are or have been operating a short-term rental business, it’s essential to understand your new obligations under the Short Term Rental Accommodations Act. Here is an overview of the new rules under the Act:

    • Short-term rentals must be hosted in your primary residence or on the property.
    • Only one accessory dwelling unit or secondary suite is allowed on that property for short-term rental.
    • You must display a local business licence on your short-term rental listing.
    • You may have to register that short-term listing with the province in the future.  

    If you’re unsure of how your business operations will be affected by the new rules, or need guidance to ensure compliance, contact an experience corporate 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.

  • Speculation and Vacancy Tax Exemptions for Estates and Trustees

    Speculation and Vacancy Tax Exemptions for Estates and Trustees

    The BC government first introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. Recently, the province has introduced legislation to expand the tax to more communities in BC. In this article, we’ll explore the impacts of the tax and exemptions available for estates, trustees and businesses.

    What is the Tax?

    The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. Until recently, the Speculation tax only applied to residential properties in the following areas:

    • Capital Regional District (CRD)
    • Metro Vancouver Regional District
    • City of Abbotsford
    • District of Mission
    • City of Chilliwack
    • City of Kelowna
    • City of West Kelowna
    • City of Nanaimo
    • District of Lantzville

    As of 2024, property owners in the following areas will also have reporting obligations:

    Properties held on trust for a minor are eligible for an exemption until the minor turns 19.
    • Vernon, Coldstream;
    • Penticton, Summerland;
    • Lake Country, Peachland;
    • Courtenay, Comox, Cumberland;
    • Parksville, Qualicum Beach;
    • Salmon Arm; and
    • Kamloops

    What Is the Tax Rate?

    Currently, the rate varies based on the owner’s residency status, and if they are a Canadian citizen or resident. The tax is calculated on your property’s assessed value for that year. The rates are:

    • 0.5% of the property’s assessed value for Canadian citizens and residents (excluding untaxed worldwide earners)
    • 2% of the property’s assessed value for foreign owners and untaxed worldwide owners

    Exceptions to the Speculation and Vacancy Tax

    Most BC residents are exempt from the tax, which aims to deter a specific type of property investment which reduces available housing stock. However, the impact may be greater on some businesses which hold or develop residential property. According to the provincial government, many of the exemptions available to individuals can also be claimed by corporations and trustees.

    Disclosure Obligations

    In order to be eligible for certain exemptions, corporate interest holders, beneficial owners and partnership interest holders must all meet the requirements that individual owners would. This means that, in order to claim an exemption, all interest holders must be:

    • Canadian citizens or permanent residents 
    • BC residents for income tax purposes, and 
    • Not untaxed worldwide earners or members of a satellite family

    Additionally, trustees and business owners should contemplate their obligations under the Land Owner Transparency Act (LOTA). The Act requires that corporations and trustees register interests in land with the BC Land Title office. This requirement includes the submission of a transparency report. Under the Act, beneficiaries must be disclosed as indirect owners. There is a high bar for disclosure obligations, and all interest holders must meet the above criteria in order for an owner to claim an exemption.

    Entities Which Are Always Exempt

    Trustees of certain organizations may have no reporting obligations in order to be exempt from the tax. Properties owned by the following groups and organizations aren’t subject to the tax and do not need to submit an annual declaration form:

    • An Indigenous Nation or a corporation owned by an Indigenous Nation
    • Registered charities
    • Housing co-ops
    • Certain not-for-profit organizations
    • Municipalities, regional districts, governments and other public bodies
    • Corporations owned by municipalities or regional districts
    • Corporations incorporated or continued through an enactment (“crown corporations”)
    • Corporations designated as “agents of government” by legislation, and their wholly owned subsidiaries

    Further, properties with an assessed value under $150,000, or unstratified apartment buildings with four or more units are excluded from the tax.

    Exemptions for Tenanted Properties

    Properties which are rented out for at least six months of the year are eligible for an exemption to the tax. Owners may have a number of different tenants throughout the year to meet his requirement. However, it is important to note that other provincial and municipal laws may impact business owners who rent out residential properties for periods of six months or less. For example, the Short-Term Rental Accommodations Act restricts short-term rentals of non-primary residences of less than 90 days in some areas. Having several consecutive short-term tenants is likely not a viable way to claim a tenanted property exemption to the tax.

    Further, the Act differentiates between arm’s length and non-arm’s length tenants for determining exemption eligibility of owners. An arm’s length tenant has no personal relationship or advantage with the owner, and usually has a traditional tenancy agreement and rent arrangement. This arrangement always allows the owner to claim an exemption, even if they are a foreign owner.

    A non-arm’s length tenant may be a family member or friend who lives in the property under a casual arrangement. A homeowner’s spouse or child can’t be considered a tenant for the purposes of the Act. Under section 39 of the Act, if the owner of the non-arm’s length tenanted property is not a Canadian citizen or resident, the tenant must meet the following conditions to claim an exemption:

    • Be a Canadian citizen or resident;
    • Be a BC resident for income tax purposes;
    • Not be an untaxed world-wide owner or member of a satellite family; and
    • Have BC income for the calendar year that is equal to or greater than 3 times the annual fair market rent for the entire property.

    Exemptions for Estate Properties and Properties Held On Trust

    There are also a number of exemptions relating to the death of a homeowner and the estate’s tax liabilities if the house is held on trust after their passing. If a homeowner dies, their estate and any other living owners on title are exempt from the vacancy tax for that year, and the year immediately following. This eases the burden on estate administrators who may be stuck waiting for probate to be able to distribute the property to its beneficiary.

    Further, if the property is held in a trust created in the owner’s will for the benefit of a minor, the property is exempt until the beneficiary turns 19. This means that a property can be vacant without being subject to the tax, so long as all beneficial owners of the property are minors. Trustees must still disclose beneficial ownership and complete the yearly declaration form to claim an exemption.

    How to Declare

    Corporations, trusts and business partnerships with residential property in taxable regions will receive a declaration letter. The declaration process for these entities is similar to that of individuals, but requires more detailed information. You can fill out the declaration form on eTaxBC using your declaration letter, CRA business number and incorporation number. 

    The form asks you to describe the ownership of the property, and disclose the personal details of all corporate interest holders, beneficial owners and partnership interest holders related to the property. This information includes their name, date of birth, country of residence and Social Insurance Number. 

    If you’re unsure of how the newly expanded tax will impact your business or estate, contact an experienced lawyer today.

    You can find the full list of exemptions for individuals, many of which are available to corporations and trustees, here.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.

  • Codicils: The Hidden Risks

    Codicils: The Hidden Risks

    It’s not uncommon for a will-writer to want to make a modification to an outdated will that they’ve written years ago. Often times, will-writers only want to make small changes to their will – maybe changing a single sentence in the will or adding a beneficiary to the will. You can use a codicil, usually a small document, to make amendments to a will. The document specifies any changes to the original will that the will-writer would like to make. Codicils can be suitable for simple modifications, but you shouldn’t use them when the changes are complex. It’s important to consider the legal implications when drafting a codicil, especially when attempting to draft a codicil without professional guidance. In this article, we’ll go over some of the common problems that can arise from implementing codicils into your estate plan.

    Codicil Basics

    A codicil is a document that allows you to make minor changes or additions to an existing will without having to create an entirely new will. Essentially, it serves as an amendment to the original will. People usually implement codicils for updating specific provisions in their will. Common reasons people use a codicil to update their will include:

    If you find yourself implementing multiple codicils, it may be time to draft an entirely new will.
    • Updating names of beneficiaries who have changed their name.
    • Changing your executor.
    • If you acquire a new asset and wish to designate a beneficiary for it.

    However, it’s important to remember that while codicils provide flexibility, they have limitations. Though a codicil is straightforward, it’s not always the best option for modifying your existing will. If you need to make complex changes, we recommend drafting an entirely new will.

    Codicils Can Hinder Your Estate Planning Goals

    Drafting unclear testamentary documents can expose the estate to risk of litigation. If your executor can’t specifically determine your testamentary wishes, they might distribute your assets in a way you didn’t intend. Further, beneficiaries can dispute the will, which can lead to lengthy litigation. Having imprecise testamentary documents will ultimately cause stress for your loved ones and can delay their inheritance. Codicils, while useful, can pose significant risks if not properly implemented. Here are some risks to consider:

    Legal Disputes: Interested parties may dispute the codicil in court if you haven’t executed it correctly. This can lead to lengthy legal battles, causing emotional distress and financial burden for the beneficiaries.

    Inconsistencies with the Original Will: A poorly drafted codicil may contradict the original will in unintended ways, leading to confusion and potential disputes. You must ensure the codicil aligns with the intentions you outlined in the original will.

    Misinterpretation of Intentions: Without clear language, a codicil may be open to interpretation. This could result in the estate being distributed in a way that the testator did not intend.

    Invalid Codicils: For a codicil to be valid, it must meet certain legal requirements, such as being signed and witnessed. The courts may deem the codicil invalid if it doesn’t meet these requirements. This may mean the codicil is set aside, or beneficiaries must apply to the courts to have the codicil cured into a valid testamentary document.

    Implementing Multiple Codicils

    A very common mistake is the addition of multiple codicils to your will over time. This can lead to a confusing patchwork of amendments that may contradict each other or the original will. It can also make the will difficult to interpret, increasing the risk of legal disputes. Undertaking proper execution and witnessing of each codicil increases the chance of error with each addition. Drafting a new will often becomes more efficient when there are multiple changes. This allows for a comprehensive review of the estate plan and ensures that all provisions are consistent and up-to-date. Remember, clarity is key in estate planning to ensure your wishes are carried out as intended.

    Preventing Codicil Complications

    Preventing complications with codicils involves careful planning and execution. Will writers should consider the following when implementing codicils:

    Proper Execution: Ensure that the codicil is executed correctly in order for it to be a valid testamentary document. The will writer and two witnesses must sign a codicil, just like wills.

    Consistency with the Original Will: Review the original will and the codicil together to ensure they are consistent and there are no contradictions. If a change is significant or complex, it may be better to create a new will.

    Using Clear Language: Use clear and unambiguous language in the codicil to ensure your intentions are understood. Ambiguities can lead to disputes and legal challenges, so include as much detail as possible.

    Professional Advice: Estate planning professionals can provide guidance on whether a codicil is the best option and ensure it is implemented correctly.

    Regular Reviews: Regularly review your will and any codicils to ensure they continue to reflect your wishes. Life changes, such as marriage, divorce, or the birth of a child, may require updates to your estate plan.

    Reminders for Will Writers

    Codicils may be the right solution for making minor amendments to your will. They offer a way to adjust your estate plan without having to rewrite your entire will. However, as we’ve discussed, they come with their own set of risks, especially when not properly implemented or when used multiple times in your will. 

    The key takeaway is this: always seek professional help when making amendments to your estate plan. Estate planning professionals can provide valuable guidance on whether a codicil is the best option for your intended changes, or if a new will would be more appropriate. They can also ensure that any changes are implemented correctly, reducing the risk of disputes and litigation after your death.

    Remember, your estate plan is a living document that should evolve with your life and circumstances. Regular reviews and updates, done with professional assistance, can help ensure that your wishes are carried out as intended and that your loved ones are protected. Estate planning can be complex, but with careful consideration and the right advice, you can navigate it successfully.

    If you’re ready to make updates to your will, or begin your estate planning journey from scratch, 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.

  • Deathbed Gifts in British Columbia

    Deathbed Gifts in British Columbia

    In estate law, gifts and the context under which they were given is one of the most common issue that families litigate over. There are many different types of gifts a testator can give, each with specific requirements to be legally valid. One of the biggest reasons family members raise claims is that they believe a gift was given under unfair or suspicious circumstances. Some claims assert that a transfer was never intended to be a gift at all. In this article, we’ll discuss the concept of Donatio mortis causa, or deathbed gifts. These are gifts given when the gift giver (donor) is contemplating death.

    Concerns Over Gifts Given Late in Life

    One of the easiest and most efficient ways of gifting assets from your estate is inter vivos gifting. This is giving gifts while you’re still alive instead of through your will. Inter vivos gifting has many benefits for will writers, including reducing probate fees and allowing them to watch their loved ones enjoy the gift. However, inter vivos gifts are often the subject of estate disputes. Sometimes, family members expect to inherit an asset, only to find that it has been gifted to someone else already. In these circumstances, the family member might raise a claim that the asset wasn’t intended to be a gift, and is held in a constructive trust. To avoid conflict, will writers should make their intentions clear in writing when making significant asset transfers. 

    Another concern which can give rise to litigation is uncertainty over the testamentary capacity of the donor. To make a valid gift, the donor must have capacity, and must not be under undue influence from other parties. Lack of capacity and undue influence can invalidate a gift, meaning the asset becomes part of the estate’s residue. Beneficiaries may be very concerned when their loved one gives away a large asset near the end of their life. However, deathbed gifting is valid in many circumstances, and there is extensive case law demonstrating valid deathbed gifting. 

    It is always best to plan gifts in advance and be clear about your intentions.

    Elements of a Valid Deathbed Gift

    Legally, a gift is a ‘voluntary and gratuitous transfer of property’ from which the donor of the gift draws no personal benefit. Beyond the basic legal criteria of a gift, a deathbed gift must: 

    1. Be made in contemplation of death;
    2. The gift is effectively delivered to the donee (receiver of the gift); and
    3. The gift is only complete upon the death of the donor.

    Let’s take a closer look at the requirements of a deathbed gift.

    1: Made in Contemplation of Death

    The gift must be motivated by the gift donor’s contemplation of their own death. This means that the donor was contemplating the prospect of their death while making the gift. The primary motivation of the donor to give the gift is the imminence of their death. However, this does not mean that the donor must expect or be certain of their imminent death.

    2: Effective Delivery of the Gift

    The gift must be effectively delivered to the donee. This could simply mean the donee takes the physical asset into their possession. When ownership has technical requirements, those must be satisfied before the donee is said to have received the gift. For example, if the gift is land, necessary documents for the transfer of that land must be completed and filed. 

    3: Completion Upon the Death of the Donor

    Any gift is only complete or “perfect” after specific criteria have been met to effect the transfer. An imperfect gift might be void or unenforceable by the donee until the conditions are met. In the case of a deathbed gift, the gift is not ‘perfected’ or complete until the death of the donor. 

    An Example From Case Law

    A commonly cited case in this area of law helps clarify what “contemplation of death” might entail. In Thompson v. Mechan (1958), the deceased was concerned about upcoming air travel. He gave Mechan the keys to his car and blank ownership documents before traveling. There was no incident with Thompson’s air travel, but he passed away from an unrelated medical condition just days after the flight. Mechan argued that the transfer of the car was a valid gift under donatio mortis causa, and the gift was complete upon Thompson’s death. 

    The court found that the gift was not a deathbed gift because it was not made in genuine contemplation of death. The court found the risks associated with air travel were no more than ordinary risks people face in everyday life. Further, even if the donor had reasonably contemplated death resulting from the air travel, the gift would not have been perfected upon his death because he died of unrelated causes. Ultimately, the court ordered Mechan to either return the car to the administrator of the Thompson estate, or pay her the value of the car.

    Reminders for Will Writers and Gift Givers

    While the law provides mechanisms to respect and enforce the wishes of testators, it is always best to make your intentions clear in writing when giving gifts. This simple act can help avoid costly and stressful estate litigation after your death, sparing your loved ones additional hardship during an already challenging time.

    Deathbed gifting and inter vivos gifting can occasionally cause controversy amongst beneficiaries, so it is best to avoid uncertainty by created a detailed estate plan and keeping it updated. If you’re ready to begin drafting your first estate plan or make changes to an existing one, 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.

  • Curing an Invalid Will: Acceptable Evidence

    Curing an Invalid Will: Acceptable Evidence

    A will is invalid in BC if it isn’t compliant with the formal requirements of the Wills, Estates and Succession Act (WESA).  In British Columbia, courts have the power to “cure” an invalid will which still represents the intentions of a testator. But how do the courts discern the true intentions of a testator with an invalid will? In this article, we’ll go over the principles surrounding extrinsic evidence interested parties can submit to support the court in curing an invalid will.

    Requirements Under WESA

    Under WESA, for a will to be valid in BC it must satisfy three requirements: 

    1. The will must be in writing;
    2. The will must be signed at the end, and;
    3. The will must be properly witnessed.

    According to WESA, the will-writer must sign the end of the will while in the presence of two or more witnesses in order to create a valid will. Basically, you must have two people witness you sign the last page of your will. Importantly, witnesses can’t be beneficiaries of the will, or the spouse of the will-writer. Further, the will must be in writing. A video or voice recording is not a valid legal will under WESA.

    Curing Invalid Wills

    According to s. 58 of the Wills, Estates and Succession Act (WESA), the courts have the ability to make a curative provision to an invalid will. Essentially, this means that if a will does not satisfy the above requirements, the courts can “fix” the deficiencies of the will and validate it. If a judge is satisfied that the owner wrote the will and it truly represents the owner’s intentions at the time of their death, they can cure the invalid will.

    The court uses medical records as evidence to understand the mental state of the will writer when they prepared a testamentary document.

    Evidence Used by the Courts to Discern a Will Writer’s Intention

    In the case of Hadley Estate (Re), 2017 BCCA 31, the judge discussed the difficulty of discerning if a non-compliant document expresses the testamentary intentions of its writer. This is because, obviously, the person most able to express those intentions has already passed away. Invalid wills, drafted without a lawyer’s help, are more likely to be unclear in their use of legal language. Because of these challenges, interested parties are able to submit extrinsic evidence to aid the courts. Extrinsic evidence can be almost any material which relates to or demonstrates the will writer’s testamentary intentions.

    Examples of Evidence

    In curing a will, the court aims to ensure that, even though the document is invalid due to WESA non-compliance, it still expresses the fixed and final testamentary wishes of its writer. To demonstrate that the will should or should not be cured, evidence that could be submitted includes:

    • Personal Letters or Emails: These can provide insight into the will writer’s relationships and their intentions for their estate. For example, a family member receives a letter discussing the writer’s wishes for them to receive specific assets.
    • Audio or Video Recordings: Recordings where the will writer discusses their estate plans can be powerful evidence. However, the recency and context of the video recording will determine the value of this evidence.
    • Financial Documents: Bank statements or other financial documents can show patterns consistent with the will writer’s stated intentions. For example, regular payments to a charity that the will writer wished to leave a bequest to could confirm a clause making a large donation in an invalid will.
    • Witness Testimonies: People who were close to the will writer can testify about conversations they had regarding the will. A friend could testify about the testator’s relationship to their family members and any comments they might have made about their testamentary wishes.
    • Medical Records: These can help establish the will writer’s mental capacity at the time the will was made. This could include a doctor’s report stating that the will writer was of sound mind when discussing their estate plans.
    • Diaries or Journals: Personal writings can reveal the will writer’s thoughts and intentions about their estate. For instance, a journal entry where the will writer discusses their reasons for wanting to disinherit a particular family member.

    Examples of Evidence from Case Law

    An Unsigned Handwritten Note

    There are numerous examples in BC case law which demonstrate admissible extrinsic evidence to support the courts in curing a will. In the recent case of the Skopyk Estate (2017), a will writer told his family that his will from 1995 didn’t express his current wishes, and that he was working on a new one. He passed shortly after, but family found an unsigned handwritten document in his apartment after his death. Even though the document was unsigned, the court cured the document based on the following extrinsic evidence:

    • The document was placed somewhere it could be easily found after the death of the will writer;
    • The estate distribution set out in the document was rational based on it’s exclusion of a beneficiary of the 1995 will who had since died;
    • The document referenced the 1995 will, and even clarified a typo from that old will;
    • The deceased had told family numerous times that he was trying to update his 1995 will before passing; and
    • The distribution in the document matched the wishes he had communicated to his family while in the hospital before someone found the document.

    Based on the above evidence, the court found that the note was a deliberate expression of the deceased’s final wishes. The court ordered that the document was a valid alteration to the pre-existing 1995 will.

    A Document Labelled “Will” Stored With Valuables

    In Dickinson-Starkey Estate (Re) (2022), the deceased’s nephew sought legal assistance in locating his uncle’s valid will. There was no notice of will in force, and no document was found. He gained access to his uncle’s house using a neighbour’s spare key, and found a folder labelled “will” with the deceased’s name and address. The writer had stored the folder with items including antiques, family photos, expensive liquor, crystal and china. The document was lengthy and detailed, and clearly intended to serve as a will. However, the court couldn’t cure it under s. 58 based on the following discrepancies:

    • There were a number of handwritten notations and changes on the types document, indicating that it was still a work in progress;
    • The deceased did initial some pages, but there was no signature;
    • No one was given a copy or told specifically about a new will;
    • The deceased spoke frequently about his will, but had not taken any steps to finalise this new document, indicating it is not an expression of fixed and final intentions;
    • The deceased indicated he was still preparing his will in November 2017, and the document found in his home was dated July 2017;
    • There were clauses in the will which were inconsistent with one another.

    On the balance of probabilities, the court couldn’t determine that the deceased intended the document to express his fixed and final intentions. The deceased was likely still considering the contents of the document at the time of his death. Unfortunately, this meant that the estate had to be distributed according to the laws of intestacy, as the deceased had not written another will.

    Reminders for Will Writers

    Even though beneficiaries may have recourse if WESA finds your DIY will to be invalid, it’s always best to have a valid will in the first place. The process of applying to have a testamentary document cured under s. 58, gathering evidence and presenting it to the court can be time consuming and costly for loved ones. It is always best to seek legal advice when preparing your will, at least to ensure that it is valid under WESA and can be easily probated and executed after your death. If you have questions about the validity of your DIY will, or are ready to start your estate plan from scratch, 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.