League and Williams Lawyers

Author: Janice Williams

  • Estate Planning for a Family Vacation Home

    Estate Planning for a Family Vacation Home

    The family vacation home is a place where some of us have our fondest memories. A vacation home can be a special place where people look forward to their next visit all year long. Vacation home owners often find it important to handle the property appropriately when they pass away. They might want to ensure that the family maintains it for generations to come. Or, some vacation home owners want their family to benefit from its sale. Vacation home owners often ask, ‘what’s the best way to pass along my vacation home to the family?’. Unfortunately, there’s no simple answer, and it will vary for each person.

    Keeping the Vacation Home in the Family

    In choosing how your vacation home will survive you, there are various options available. To keep the vacation home within your family, you could:

    • Keep full ownership of the vacation home while you’re alive, giving it to a family in your will. They will become the sole owner when you pass away;
    • Create a joint tenancy agreement while you’re living. In this case, the surviving joint owner is granted full ownership of the property automatically upon your death;
    • Sell the vacation home to a family member(s) at the market price at the time of your death;
    • Gift the property to a family member(s) while you’re living – in this case, you immediately lose complete ownership of the property unless you maintain a life interest which will give you ownership until your death.

    There isn’t one option that is definitively better than the other – each option suits each family and situation differently. For example, gifting the property now could be a better option if you, as the property owner, are reaching an age where you won’t be able to visit the vacation home as much as you used to. If your children are spending considerably more time at the home than you are, it could make more sense to gift them the property now rather than waiting to name the house to them in your will.

    Implications of Property Transfers

    If a spouse receives a vacation home as a transfer, they likely won’t have to pay capital gains tax.

    Before deciding how you want to transfer your property, it’s important to consider the tax implications of each option. The recipient of the property will likely need to pay capital gains taxes, depending on the circumstances. This means that the amount that the property has gained in value since you purchased/received the property will be subject to capital gains tax. If you choose to gift your vacation home to your children, they should expect to pay capital gains tax.

    For example, let’s say you purchased a family cottage near Pemberton, BC for $100,000. The property’s value has risen since you purchased it and is now estimated to be worth $400,000. If you gift or transfer this cottage to a family member, capital gains tax applies to approximately half of the gain. This would be half of the $300,000 gain, so $150,000 is taxable. However, the recipient of the cottage still realizes a net gain through the sale of the estate property.

    However, the recipient might not have the immediate funds to pay the tax without needing to sell the cottage. Property owners should involve the potential recipients to ensure they are prepared and fully understand the implications of the property transfer, as a way to avoid this.

    Managing Capital Gains Taxes For Gift Recipients

    While the capital gains tax can be problematic for some people, there are ways around it. If the capital gains tax is going to be more than the recipient of the property can afford, a common solution is for the original property owner to leave money in a trust fund for the use of paying any taxes arising from the vacation home transfer. This way, the recipient of the gift isn’t left burdened by the taxes and fees payable in receiving the gift, and is able to maintain the property according the the deceased’s wishes. Additionally, the entire property could be held in trust, which would defer the capital gains tax until the recipient eventually sells or transfers the property. For more information on strategies for minimizing the tax burden, read CIBC’s article on estate planning for your vacation property.

    If you’re unsure how you want to plan for your vacation home to survive you, contact an experienced estate lawyer today. We will help you to understand the implications of the options available to you in keeping the vacation home within your family.

    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.

  • Life Insurance: Can I Buy Life Insurance on Someone Else?

    Life Insurance: Can I Buy Life Insurance on Someone Else?

    As one grows older or gains dependants, it’s common to begin thinking about purchasing life insurance to ensure their loved ones are properly provided for in the event of an expected death. Aside from the obvious benefit of a pay-out to loved ones should you pass, life insurance can also be used as an estate planning tool. It can serve as a tool to lower probate fees, increase the efficiency of estate administration and provide privacy for the testator.

    Adding a life insurance policy to your estate plan could even be considered a way of diversifying your investment portfolio. For example, if you buy life insurance on someone else, you will receive the insurance premium in the event that the person passes away. Though it may sound morbid, it is not very different from a person buying life insurance for themselves and then naming you as the beneficiary of the life insurance policy.

    When Life Insurance can be Bought on Someone Else

    People aren’t allowed to buy life insurance policies on just anyone that they wish. Life insurance shouldn’t be used as a means to gain economically with minimal cost. Two conditions must be met for an insurance company to permit the purchase of life insurance on a person other than yourself. These conditions are:

    1. You must have an insurable interest in the person’s life and,
    2. You must have the consent and permission of the person to purchase this life insurance.
    Being a close relative to someone doesn’t necessarily mean you have an insurable interest in their life.

    An insurable interest typically means that you will suffer a financial loss as a result of the person’s death. If there is no insurable interest, you would essentially be gaining financially from the person’s death at no additional cost. Due to the nature of life insurance, insurance companies will require medical tests before creating the life insurance policy. This means that the insured person must be actively involved in the process.

    In some scenarios, it’s presumed that the person has an insurable interest in another’s life because of the relationship they have with one another.

    Presumed Insurable Interest

    In some relationships, it’s presumed that a person has an insurable interest in the other’s life because of the obvious loss that they would suffer if the other were to pass away. This principle arises for:

    • Parents and their children/grandchildren,
    • Spouses,
    • A person’s employees, and
    • Business partners.

    In these cases, you would only need the person’s consent to purchase life insurance on them. Regardless of the relationship, consent of the person is always required. Note that this list is not conclusive. For a full list, see s.46 of the Insurance Act.

    Using Life Insurance as an Estate Planning Tool

    Several personal reasons and scenarios may warrant purchasing life insurance on someone else. Sometimes, the person can’t afford payments, so a parent or spouse takes over. In other cases, a death may cause significant hardship, like in a jointly-owned business. By purchasing life insurance on a business partner, owners will be financially compensated should a death cause hardship personally and for their business.

    Even for children whose parents have large estates, buying life insurance on them might be a smart plan. By having someone else purchase the life insurance, the pay-out won’t have to go through probate or any estate administration. This way, the person opening the life insurance account can receive part of their inheritance immediately and without paying probate fees on its value.

    For businesses that rely on a select few employees due to their highly specialised expertise, it’s recommended that the company purchases life insurance on them. If one of these crucial employees was to unexpectedly pass away, it could leave the company at a significant loss. The life insurance policy could help to alleviate this damage financially. When an employee purchases life insurance for themselves, it’s unlikely they would name their company a beneficiary of the premium.

    If you are considering purchasing life insurance on someone else, first think about why the person isn’t buying it for themselves. To determine whether you should purchase life insurance on another person, contact an experienced estate lawyer today. We can ensure that your life insurance and estate plans are carefully arranged to maximize the value of your estate.

    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.

  • Posthumous Births: Are Children Born after Their Parent’s Death Entitled to the Estate?

    Posthumous Births: Are Children Born after Their Parent’s Death Entitled to the Estate?

    Sadly, children are sometimes born after one of their parents passes away – a posthumous birth or after-born child. In other cases, babies can be conceived well after one of their parents has passed away because of current and advancing reproductive technology. In such cases, is the after-born child entitled to receive any of their deceased parent’s intestate estate like a child who was born before one of their parent’s deaths would be? The answer can be yes and no; however, it is common for an after-born child to be entitled to the estate.

    When a Posthumous Child is Entitled

    An important distinction made in the Wills, Estates and Succession Act (WESA) is whether the child was conceived before or after the parent’s death. As described in s.8 of the WESA,

    “Descendants and relatives of an intestate, conceived before the intestate’s death but born after the intestate’s death and living for at least 5 days, inherit as if they had been born in the lifetime of the intestate and had survived the intestate.”

    As per this provision, it’s clear that posthumous children conceived before their parent’s death are entitled to an inheritance. On the other hand, when the child is conceived after their parent’s death, there are specific conditions that must be met in order for the child to be entitled to the estate. In summary, the conditions are:

    1. The surviving parent who was in a marriage-like relationship with the deceased parent has written permission allowing the use of their reproductive material, written within 180 days of being used;
    2. The child is born within 2 years after the parent’s death and lives for 5 days or longer; and,
    3. The deceased parent is the child’s parent as described in the Family Law Act.
    In BC, posthumous children conceived before their parent’s death are always entitled to an inheritance.

    When all of these conditions are met, the child is entitled to receive an inheritance from the deceased parent exactly like a child born before their parent’s death would be. If, for example, the posthumous child was born 4 years after the parent’s death, the child would not receive any of the estate if the parent died without a valid will. They would only be entitled to their surviving parent’s estate, once they have passed.

    What Does This Mean for Posthumous Children?

    If a posthumous child is entitled to inherit from the intestate estate, they will receive an inheritance as described by the guidelines on intestacy in WESA. For more information, read our blog post on how the WESA will distribute an intestate estate. In most cases, posthumous children can expect to split the estate with their surviving parent (with the parent receiving an additional $300,000 before the estate is split).

    Minors in BC cannot receive an inheritance until they are 19 years of age or older. This means that the posthumous child would have their inheritance kept in a trust, or held by a trusted adult until they reach the age of 19. Once the posthumous child is no longer a minor, they will receive the entirety of the their inheritance.

    When the deceased parent has not died intestate, the provisions for the child made in their will are to be followed. The distinction between posthumous or not, and if the child was conceived before or after death are irrelevant. When the parent has not died intestate, posthumous children do not need to worry about the courts overruling the will’s requests to follow intestacy directions.

    If your child is an after-born child and you’re unsure if they are entitled to the deceased parent’s estate, contact an experienced estate lawyer today. We will ensure that your after-born child receives the inheritance that they are entitled to.

    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.

  • Solicitor’s Negligence: Suing the Will-Drafting Lawyer

    Solicitor’s Negligence: Suing the Will-Drafting Lawyer

    Sometimes, due to the drafting lawyer’s negligence, a will may not reflect the testator’s requests, unbeknownst to them. Perhaps the lawyer failed to carefully review the directions given to them by the testator, or improperly applied the law, making an error which causes the will to be invalid. In either case, the beneficiaries of the will often discover these mistakes themselves and must find a remedy. Usually, these types of errors cause the beneficiaries of the will to sufferEven though the beneficiaries are not directly clients of the will-drafting lawyer, do they have a valid legal claim? The answer is commonly yes; beneficiaries can sue solicitors for negligence, depending on the facts of the case.

    A Lawyer’s Standard of Care

    The Law Society of BC regulates the legal profession to protect the general public of BC

    As described in the case of the Central Trust Co. v. Rafuse (1986), “a solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he has undertaken.” When negligence claims arise, the question that the courts must ask is whether a reasonably competent lawyer in the same situation would have made the same mistake or not. It is not a question of the drafting lawyer being perfect in their conduct, rather just that they were acting reasonably.

    The Law Society of British Columbia enforces a high standard of care for all BC lawyers handling client cases. They provide a checklist outlining tasks that will-drafting lawyers must adhere to. Some of the common errors made by will-drafting lawyers which can result in a negligence lawsuit are:

    • Not writing detailed notes on the client,
    • Not using proper witnesses for the will,
    • Not interviewing the client thoroughly enough,
    • Not suspecting undue influence,
    • Missing limitation dates on taking certain actions, or
    • Forgetting to include a certain provision that the client requested.

    Any one of these mistakes could alter the main principles or function of a will. When mistakes occur, beneficiaries can face significant financial loss.

    Beneficiaries Suing the Lawyer

    Until recently, the courts took the position that lawyers only owed a standard of care to their clients (in this case, the testator). Lawyers did not owe a standard of care to the beneficiaries of the will. Most of the time, the client of a negligent lawyer has no recourse as they have passed away before the negligence was discovered. This made the standard impractical. Now, a beneficiary is able to take legal action against the will-drafting lawyer – solicitors owe a duty of care to the third parties affected, including beneficiaries of a will.

    The case of Whittingham v. Crease & Company (1978) examines a scenario where a will-drafting lawyer is held accountable for their negligence. In this case, the solicitor did not follow the proper procedures for witnessing a will in British Columbia. The witnesses were unsuitable as they had an interest in the will. One of the witnesses was married to a beneficiary. The will was ruled invalid due to this error and the testator died intestate (without a valid will).

    Due to intestate succession laws, the plaintiff (a beneficiary) received less of the estate than he would have if the will had been valid. Believing he had suffered a loss because of the lawyer’s incompetence, the beneficiary sued the lawyer for negligence.

    The Court’s Decision

    The solicitor should have understood their responsibility to provide accurate information, because the client sought them out for professional advice. The courts ruled that the solicitor in this case committed the following acts of negligence:

    1. Failing to take care to ensure that in the matter of the witnessing of the said will the provisions of s. 12(1) of the Wills Act were not contravened;
    2. Failing to take any reasonable steps at all to remedy the said failure;
    3. Requesting the wife of the plaintiff to act as a witness to the execution of the said will;
    4. Misstating to the plaintiff that it was safe for his wife to act as a witness to the execution of the said will.

    Due to the acts of negligence, the court ordered the lawyer to compensate for the damages suffered by the beneficiary. Though this is an older case, it demonstrates how a clear act of incompetence by a will-drafting lawyer will hold the lawyer accountable if a beneficiary suffers as a result.

    Contact an experienced estate lawyer today if a solicitor’s mistake has wronged you as a beneficiary. We can support you in holding the will-drafting lawyer accountable for their negligent acts.

    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.

  • An Executor’s Job: What an Executor of a Will Should Expect

    An Executor’s Job: What an Executor of a Will Should Expect

    Before naming someone as executor in a will, the will-writer usually asks the person if they’re comfortable with the responsibility. Often, without fully understanding the legal duties and obligations associated with being an executor, the person accepts. However, executors often make the mistake of accepting executorship just to please the testator. The size and structure of an estate may task executors with a long and complicated estate administration process. Therefore, executors need to understand what they’re agreeing to and ensure they can handle all the expected tasks.

    Duties, Tasks and Responsibilities

    An executor’s duties cover all aspects of estate administration. They are responsible from the testator’s death until the distribution of all assets from the estate to its beneficiaries. Planning the testator’s funeral is often one of the first tasks an executor faces.

    Generally, the executor must have the original copy of the will – there are scenarios which may arise where the original copy is not required and a copy of the original is fine. The executor must present the will to the probate courts for validation and execution. This is only necessary if the will requires probate, which is most often the case.

    Next, the executor can begin to administer the estate, preparing it for distribution to the beneficiaries. The testator must repay any debts owed even after their death. The executor, using the estate’s funds, is responsible for paying these debts, including taxes, on behalf of the estate. Executors are responsible for ensuring that they have not left any of the testator’s debts unpaid. This can even include putting adverts in the newspaper to notify any potential debtors of the testator’s death.

    Passing of Accounts

    It’s crucial that the executor is careful to account for all transactions involved with the estate, tracking anything that goes into and out of the estate. When the estate is ready for distribution to the beneficiaries, the executor must detail all the transactions made on behalf of the estate in an account. The accuracy and detail of these records is crucial in the instance that a beneficiary of the estate raises a claim for passing of accounts. To help make this process easier for executors, it’s recommended to open an estate bank account to keep all the estate’s funds in one place.

    Even if not specified in the will, an executor can receive compensation for their work.

    After all the debts and assets of the estate have been accounted for, the executor can then distribute the estate assets according to the will.

    In most cases, there can be excess assets of minimal value left behind with no one named in the will to receive them. The executor is responsible for disposing of these assets themselves. Once the estate has no remaining assets, the executor has finished their job.

    Remember, this list of executor duties isn’t exhaustive – each estate administration process is unique and requires attention to various debts and assets. This list covers the most common and important duties that an executor will likely be responsible for.

    Risks of Personal Liability

    Anything that the testator did or failed to do while they were alive which resulted in damages will not make executors personally liable. An executor becomes personally liable only if they do something themselves that warrants liability. For example, if the executor fails to give adequate notice of the testator’s death to the debtors of the estate and then distributes the estate, they can become personally liable.

    In this case, the beneficiaries of the estate would not be held responsible for repaying such debts after they’ve received their portion of the estate, as they cannot be held liable for the executor’s negligent administration. The court could order the executor to repay these debts from their own pocket, which is why keeping an accurate and detailed account of the estate’s assets and debts is essential for executors. The executor can also become personally liable if they abuse their power and engage in fraudulent behaviour.

    Is It Worth It?

    Everyone knows that an executor bears numerous responsibilities and must devote a significant amount of time and energy to ensure the proper administration of an estate. Executors can feel pressured by time as they usually have one year from the testator’s death to finish the administration and distribute the assets to the beneficiaries – known as the executor’s year. While there’s no strict deadline, beneficiaries can start urging the executor with court orders to speed up the process if the administration extends beyond the executor’s year and causes undue delay.

    When deciding whether to accept executorship, understand that the law allows executors to receive compensation for their efforts through executor’s fees. The Trustee Act entitles an executor to a maximum of 5 percent of the gross aggregate value of the estate, unless the will specifies otherwise. In most cases, 5 percent is a high figure for the executor’s compensation, and fees are more commonly between 2 percent and 3 percent of the estate’s value.

    Other Details to Consider

    When contemplating accepting executorship, it is also important to consider the proximity with which you live to the location of the estate’s assets. It can be quite difficult to administer an estate when you are living in another province or country. An executor usually cannot complete their tasks during a week-long trip to the location of the assets. They will need to stay in the same city where the majority of the assets are for an extended period.

    Taking on the role of executor for a will can be a significant burden. However, if you do it correctly, you will receive rewards for your efforts. The will always names an executor for the estate. If you decline the position, the courts will assign someone else. However, this could lead to the appointment of an incapable executor, which could cause extensive and potentially expensive delays in the administration process.

    If you are an executor and are unsure how to begin the estate administration process, contact an experienced estate lawyer today. We can help guide you through the tasks of being an executor, and can help ensure that you are not held personally liable for any issues related to the administration of the estate.

    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.

  • Self-Representation in Estate Litigation: Is a Lawyer Required?

    Self-Representation in Estate Litigation: Is a Lawyer Required?

    People involved in small-scale estate litigation cases often question if they can represent themselves to save on legal costs. In short, yes, the law in BC allows people to self-represent. However, those who choose to do so may find themselves at a significant disadvantage.

    What to Expect

    The recent estate case of Sull v. Pengelly (2019) featured a self-represented litigant. The courts specified exactly the obligations that a self-represented litigant must adhere to:

    1. Familiarize themselves with the relevant legal practices and procedures that pertain to their case;
    2. Prepare their own case; and
    3. Be respectful of the court process and the officials within it.

    Essentially, the court holds a self-representing litigant to the same standards as a lawyer, and they must prepare well to avoid undue delays in court proceedings. Further, the courts do not have any special treatment for self-represented litigants. In the case, the Court stated, “the mere fact a party is self-represented is not a basis on which to depart broadly from the rules that govern litigation, for the administration of justice is not well served by an imbalance in the latitude afforded litigants.” In sum, the court treats a self-represented litigant as a trained lawyer, expecting them to act and prepare for the court hearing as a lawyer would, which puts them at a disadvantage due to their legal inexperience and lack of formal legal training.

    When is Self-Representation a Good Idea?

    According to the Law Times, 98% of self-represented litigants lose their case.

    Being a self-represented litigant almost always poses a significant disadvantage when the case is against someone who has formal legal representation. Self-represented litigants lack the experience to present the necessary information to the Court, struggle to find the resources for researching relevant legal issues, and are unfamiliar with the legal procedures involved in an estate dispute claim.

    While self-representation may save money in legal fees, it comes at the cost a significant amount of time to research the relevant legal issues and to prepare the case. Further, self-represented litigants have a heightened chance of losing their case with an estimated 98% of self-represented litigants failing to win their case. People should approach representing themselves in an estate dispute with a high amount of caution as the lack of legal training and experience can mean failing to get the desired result from the claim.

    Other Options Available

    In some cases, lawyers will offer to work on your case on a contingency basis. The lawyer receives payment only if they win the case, sometimes earning a percentage of the winnings. If they lose the case, they charge the client only for their out-of-pocket expenses, known as disbursements, incurred while pursuing the case. If cost is the main determinant to choosing to self-represent, a contingency fee agreement with a lawyer can be a great option to consider. It’s important to note however, that contingency fees are typically higher than regular lawyer fees because of the risk of loss on the part of the lawyer.

    Other Limited Legal Services

    There are also other approaches that one can take when it comes to estate dispute litigation that fall somewhere between complete self-representation and full lawyer representation. A limited scope retainer or unbundled legal services is one option. In a limited scope retainer, the litigant engages a lawyer for case preparation assistance, receiving advice on the necessary documents and the evidence to present before the courts. The litigant then represents themselves before the courts with the information imparted to them by a lawyer. This way, self-represented litigants can be sure that they are following proper legal procedures while they have the autonomy to present the case before the courts as they wish.

    In the end, even though complete self-representation can save legal expenses-if they win the case– it ultimately puts litigants at a considerable disadvantage, particularly when their opponents have retained counsel. Lawyers will always strive to represent their clients to the best of their abilities, ensuring the best possible outcome. If a person is considering self-representing, pursuing a limited scope retainer or full lawyer representation, consultation an experienced estate lawyer can be helpful in making the right choice.

    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.

  • Probate vs. Letter of Administration: What’s the Difference?

    Probate vs. Letter of Administration: What’s the Difference?

    When someone dies, it often leaves their loved ones wondering about how they should start administering the estate. If the deceased leaves a will, the courts need to verify its validity. If the deceased didn’t write a will, the courts take on the responsibility of deciding a fair distribution of the estate and appointing an estate administrator. Ultimately, it can become confusing and stressful for those involved with handling a loved one’s estate. In this blog we’ll clarify the difference between processes of probate and letters of administration.

    Probate

    Probating a will ensures its authenticity, confirms it was left by the deceased, and validates the executor’s authority to manage the deceased person’s estate. The executor must apply to the court for a grant of probate, which can make probate a lengthy process. The court gives the grant of probate to the executor once they prove their legal authority over the estate. Probating a will aims to prevent the improper handling of large assets after the owner’s death.

    If the will-writer doesn’t own land, a large bank account, or a large investment account, their estate assets don’t meet the minimum value required for a grant of probate.As a general rule of thumb in British Columbia, if the total value of the estate named in a will is less than $25,000, the will won’t need to go through probate; however, there can be exceptions to this rule. The most common of which being instances where there are joint tenancy agreements over the assets in question.

    If the testator is in a joint tenancy agreement with someone, such as their spouse, the spouse will have full ownership of the asset upon the testator’s passing. This is also the case for any assets that have a designated beneficiary assigned to them; the beneficiary will gain authority of the asset upon the testator’s death. If the value of the estate is above $25,000, excluding any joint tenancy assets and assets with designated beneficiaries, the will must be granted probate.

    Letter of Administration

    When someone dies intestate, the letter of administration names an administrator, not an executor.

    If a person dies without leaving a valid will, the courts decide the distribution of the person’s estate. Since there is no will in such cases, it does not make sense to apply for probate as there is no valid will to test. Interested parties can apply for a letter of administration to receive executor-like duties as the estate administrator. In our estate blog on dying intestate – who becomes the executor (or administrator), we discussed the order of priority for multiple applicants.

    In some cases, a person leaves a valid will; however, it does not account for all of their assets. When this happens, the Court grants probate to the will and must also award a letter of administration to properly distribute the assets not named in the will. As an example, an elderly man names all of his assets in his will except for his savings account with $100,000 in it. Someone must obtain a letter of administration to distribute the savings account, and to distribute the remaining assets, the valid will needs a grant of probate.

    Probate Fees

    Whether the court grants probate or a letter of administration to the estate, it must pay approximately 1.4% of the total estate’s value plus a $200 court filing fee. However, if the value of the estate assets is under $25,000, these fees will be waived.

    In general, probating a will and receiving a letter of administration are similar processes, but have different purposes and applications in different circumstances. When an individual dies fully or partially intestate, the distribution of assets requires obtaining a letter of administration. In the case of a properly validated will, the executor typically needs to secure a grant of probate, eliminating the need for anyone to receive a letter of administration.

    If you’re unsure whether you need to receive a grant of probate or a letter of administration, contact an experienced estate lawyer today. We can help guide you through the probate process or through the process of receiving a letter of administration.

    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.

  • Stepchildren Challenging a Will: Assets in Joint Tenancy Held in Resulting Trust

    Stepchildren Challenging a Will: Assets in Joint Tenancy Held in Resulting Trust

    In BC, courts can rule a will unfair and have it revised – or varied – if it doesn’t make ‘adequate provision for the proper maintenance and support’ of the will-maker’s spouse or children. This ensures that spouses and children aren’t disinherited without sufficient cause. But, what about stepchildren? According to the Wills, Estates and Succession Act (WESA), a child is a natural birth child or an adopted child. A stepchild is not a child under WESA, unless they have been adopted by their stepparent.

    It’s clear that stepchildren can’t vary a stepparent’s will under WESA. However, there are ways that stepchildren can challenge a will. These scenarios can arise if:

    Assets in Joint Tenancy Held in Resulting Trust

    Stepchildren cannot directly vary a stepparent’s will if they’re unfairly disinherited.

    Houses are usually the largest asset in a person’s estate. Homeowners want to be sure that their homes are distributed as intended when they pass away. Joint tenancy is typically used by couples to ensure that the surviving spouse will receive the home, without having to go through probate (the process that ensures a will is real). Joint tenancy agreements can also help to maintain continuity in the life of the surviving spouse following the death of their partner.

    Agreements with rights of survivorship can allow the surviving partner full rights to the property and accounts belonging to their partner – as specified in their agreement- following their death. In joint tenancy agreements, disputes can ensue over whether the property contributed by one partner to the joint tenancy was a gift, or if the property was to be held in a resulting trust following their death. In BC, there is a presumption of resulting trust – the presumption that a transfer of property is not a gift.

    If a property is held in resulting trust by someone, it does not necessarily mean that they own the property. Rather, that they hold the legal title of the property for the benefit of the owner. On the other hand, if the property was given as a gift, they do own the property. Unfortunately, surviving spouses sometimes try to “steal” their spouse’s estate by claiming that it was given as a gift rather than to be held in resulting trust.

    Consider This Example

    Let’s look at how this might apply to a stepchild who has been unfairly disinherited. As an example a man, Alex, has a son, Ben. Alex is married to a woman, Emily, who is Ben’s stepmother. Before Alex dies, he transfers joint tenancy to Emily, intending for her to hold his estate in resulting trust so he can provide for her if she survives him. Upon Emily’s and Alex’s death, Alex wants the remainder of his estate to be given to Ben. After Alex dies, Emily decides to remarry and give Alex’s estate to her new husband. As a result, Ben does not receive any part of his biological father’s estate.

    Ben decides to bring this case to court because he believes he was unfairly disinherited. According to the presumption of resulting trust, Emily’s trustee must be able to prove that Alex intended to give the estate as a gift to Emily, not to be held in resulting trust. If Emily’s trustee cannot do this, Ben should receive the estate as intended by his father.

    When there is a transfer of ownership using a joint tenancy agreement, stepchildren should still expect to receive their inheritance from their biological parents. If you are a stepchild who was disinherited by a stepparent through a joint tenancy held in resulting trust, you could be eligible to challenge the will. Contact an experienced estate lawyer to ensure that you receive your fair share of the estate.

    Have a question about estate disputes 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.

  • Are Executors Entitled to Compensation?

    Are Executors Entitled to Compensation?

    Estate executors may have extensive and time-consuming responsibilities to fulfill, and, in most cases, they receive compensation for their efforts through executor’s fees. Sometimes, the person who writes the will specifies how to compensate the executor, but some wills make no mention of compensation for the executor. Is the executor still entitled to compensation when their estate plan doesn’t mention fees?

    Wills Without Provisions for Executor’s Fees

    When the will specifies the executor’s fees, the courts and beneficiaries cannot convene to modify the fees.

    In short, yes – executors in British Columbia are entitled to compensation even when the will does not make any mention of executor’s fees. In such circumstances, the beneficiaries must unanimously agree upon a reasonable amount to compensate the executor.

    According to the Trustee Act, the executor is entitled to a maximum of 5% of the gross aggregate value of the estate (the combined value of all assets) unless the will specifies otherwise. In most cases, 5% is a high figure for executor’s fees, and it is more common to pay fees worth 2-3% of the estate’s value.

    If the beneficiaries and executor cannot come to an agreement, the Courts determine the fees owed to the executor. Additionally, if any of the beneficiaries are minors or mentally incapable, the Court will determine the fees.

    How the Courts Determine Fair Executor’s Fees

    When determining executor’s fees, the courts will consider the interests of both the executor and the beneficiaries. The case of McColl Estate (Re) (1967) summarized the criteria that British Columbia courts use to make this decision:

    1. The magnitude (value) of the trust;
    2. The care and responsibility involved in administrating the estate;
    3. The time occupied in the administration of the estate;
    4. The skill and ability displayed by the executor; and
    5. The degree of success achieved in the final result of the administration.

    The complexity of the estate plan plays a crucial role when determining executor compensation. For example, if the estate includes multiple small properties around the world, it can be hugely time-consuming and exhausting for the executor to finish the administration. On the other hand, if the estate is primarily cash, it will likely be a reasonably simple task for the executor to administrate the estate.

    British Columbia Caselaw

    The case of Sangha (Re) (2018) raises the question of how large of an executor’s fee is fair in the situation where a will does not specify executor’s fees. Since the will had only one beneficiary, the courts tasked themselves with determining a fair amount to compensate the executor to protect the interests of both parties. The executor was seeking 4% of the estate’s value ($91,644). The judge considered each of the 5 factors mentioned above to determine a reasonable fee. In summary, the judge noted the following:

    1. The estate was not of particular complexity – it primarily consisted of a home in Vancouver, a vehicle, 3 bank accounts and personal various belongings (such as jewelry). These assets required minimal administration by the executor.
    2. The proper care and responsibilities of demanded of executorship were taken. The executor had probate of the will granted, and paid appropriate taxes on behalf of the estate.
    3. The administration process was not particularly time-consuming.
    4. The skill and ability of the executor was deemed to be very low. The executor had terribly mishandled the sale of the testator’s jewelry.
    5. While the executor successfully administered the estate and the vehicle, the liquidation of the jewelry was extremely unsuccessful, and this mishandling impacted the beneficiary financially.

    In the end, the Judge decided that a more reasonable fee for the executor’s service was $35,000.

    If you’re a beneficiary of an estate and believe that an executor is being unreasonably compensated, contact an experienced estate lawyer today. We can help to ensure that the amount payed in executor’s fees is fair to all interested parties.

    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.

  • Benefits of Gifting your Estate Assets Before Death

    Benefits of Gifting your Estate Assets Before Death

    People often hold onto their assets until death, giving them to loved ones, friends, and charities through a will. Though will writers commonly retain possession of their assets until passing, they should consider gifting cash or other assets before death. This enables the gifted assets to avoid probate fees. In Canada, gifts are tax-free.

    Before gifting, create a detailed financial plan, outlining expected lifetime expenses. Prioritize personal needs and wants, as it is your estate and assets. Will writers should be careful to only gift assets that they will not want or need to support themselves in their lifetime. Gifting before death should only be used as a means of using excess estate assets, after you’re certain you can provide for yourself for the remainder of your life.

    Advantages of Gifting Before Death

    Ultimately, beneficiaries receive their inheritance, whether before or after your death. So, what’s the difference between beneficiaries receiving the funds before or after your death? There are many different benefits to gifting estate gifts before death. As mentioned above, the most important benefit to the majority of people is the reduction of probate fees.

    Saving Money

    Gifting is a popular method of maximizing an estate’s value. However, will writers need to be clear about their intentions when gifting assets.

    Gifting during one’s lifetime can result in significant savings in fees, which can be passed down to the beneficiary.

    Consider this example: A grandmother with $1,000,000 in cash assets anticipates spending only $100,000 for the remainder of her life. She gifts $900,000 to her beneficiaries and passes away the next day. Since BC probate fees are about 1.4% of an estate’s value, her estate would pay $1,400 in probate fees on the $100,000. The $900,000 gift incurs no probate fees or gift taxes. If she hadn’t gifted the money, the entire $1,000,000 would face probate, and the estate would pay approximately $14,000 in fees—an extra $12,600 cost.

    You Get to Watch Loved Ones Enjoy the Gift

    Some may find joy in watching family members use their inheritance. Monetary gifts can benefit young adults starting school, buying a home, or launching a business. The gift offsets costs, and the giver sees the positive impact on their loved ones’ lives. Further, gifting physical assets like land or high-value personal items can also have the effect of reducing probate fees and provide sentimental value for the gift giver.

    Aiding for Personal Reasons

    There can also be personal reasons that a will-writer might choose to give a gift before their death. In the case of a family emergency or unexpected circumstance, it can be extremely helpful to receive an inheritance as soon as possible. As a will-writer, you might recognize that you won’t necessarily need the excess money and it can make more sense in some scenarios to simply give a gift of cash, to help out. While it might seem unfair to do this, the other beneficiaries of your will can receive a higher percentage of the estate to make sure everyone is still receiving a fair share of the estate. There are various different work-arounds to ensure fairness amongst beneficiaries.

    In the end, whether you give gifts before your death or name the inheritance in your will, those you wish to benefit from estate do so. The difference is that gift giving before death can avoid additional probate fees and provide sentimental value to you and your loved ones. Before naming any gifts, you should always be certain that you will keep enough to provide for the remainder of your own life.

    Things to Consider Before Gifting

    Unfortunately, gifting is a common reason for litigation in estate law, so will writers must be careful and clear about their intentions when distributing assets during their lifetime. It is important that will writers considering gifting significant portions of their estate during their lifetime are clear on their intentions for the asset transfer. The transfer of gifts should be recorded in a way that will make it clear that you did not intend for the receiver of the gift to hold the asset on resulting trust in order to minimize the risk of estate litigation after your passing.

    If you need help estate planning, contact an experienced estate lawyer today. We will work with you closely to create the perfect estate plan for your situation, maximizing your estate’s value and convenience for your loved ones during an otherwise challenging period.

    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.