The uncertainty and disruption created by COVID-19, the prevailing unpredictable and uncertain political environment, and a wavering economy, not to mention potential additional levels and rates of taxation, naturally encourage people to think about their own personal affairs and estate planning requirements. This article will focus on the primary estate planning steps and documents, which often make up a comprehensive estate plan, for those individuals with assets to manage and family to protect. Whether you are deciding to create an estate plan for the first time, or wish to update the one you have, please read this article and contact one of our lawyers, to ensure that you have what you need, to manage those assets and protect your family.
The primary, and most often thought of estate planning document, is the Last Will and Testament. This document “speaks from the time of death”, and provides your executor with your specific wishes, regarding your liabilities, assets, and the ultimate distribution of your estate to your beneficiaries. Many Wills will provide for specific bequests to individuals and charities, in the form of money or specified assets, may establish trusts for spouses or other family members and may make provision for religious ceremonies, burial, cremation, etc. Additionally, matters such as the distribution of specific registered plans and pension and insurance policy entitlements may be provided for in your Will (and may have certain asset protection advantages, if properly planned). Additionally, the appointment of guardians over any minor children, the establishment of mutual Wills between spouses, the use and retention of homes and cabins or cottages for subsequent generations, and the provision for disabled beneficiaries, along with other trust arrangements, can also be set out in your Will. While the proper drafting of the Will is very important to ensure that the document does what is intended, it is equally important that the Will be properly executed, as the laws in British Columbia contain very stringent signing and witnessing requirements. We are able to advise you on all of these matters.
Inter vivos trusts, or trusts that exist outside of or independent from your Will, can be an important part of a comprehensive estate plan. Such Trusts can hold assets during your lifetime, and can also distribute what remains, following your death (or the death of your surviving spouse). The Trustee has the power and responsibility to deal with the Trust assets, according to the terms of the Trust document. Trust can be used for a variety of purposes, including the avoidance of probate fees (N.B. As of August 7th, 2019, the BC probate fee is roughly 1.4%. There is no probate fee for the first $25,000. In between $25,000 and $50,000, the fee is 0.6%. And for amounts over $50,000, the fee is 1.4%), or the avoidance of litigation against your estate, including challenges to your Will, or where there is a wish for additional privacy (N.B. Wills are made public through the Probate Registry, while Trusts are not).
There is no requirement for a Trust to be signed in front of a lawyer, but if you are considering settling a Trust, it is important to consult a lawyer with experience in Trust law, to ensure that the Trust is right for your specific circumstances, is validly created, and that there will not be any adverse tax consequences. Our lawyers can assist you with the creation of a Trust.
Powers of Attorney
Most Powers of Attorney created as part of a comprehensive estate plan will be what’s known as an Enduring Power of Attorney. An Enduring Power of Attorney, appoints a person (e.g. often a family member or a professional), to act as:
a) your agent on your direct instructions while you are able to act; or,
b) as your trustee in your best interest, in the event of your mental incapacity;
respecting your financial and legal matters during your lifetime.
Regardless of age and health condition, the Enduring Power of Attorney is a crucial document that everyone should make, so that there is a trusted person who can manage your finances and provide for you and your family members, or others who are dependent upon you, if you are unable to act.
Advance Directives and Representation Agreements (Health Care)
Made under the Health Care (Consent) and Care Facility (Admission) Act, an Advance Directive is specifically intended to provide direction to health care providers (e.g. generally within a hospital setting), to take effect when the client is incapable. The Advance Directive may be relied upon without the need for any substitute consent from any other party. It is, in practice, a more simplified document, in relation to the Representation Agreements which are also used for health care purposes. Made under the Representation Agreement Act, a Representation Agreement is specifically designed to address a fundamental limitation of Powers of Attorney, allowing an adult to give another person (i.e. that person’s representative), the power to make health care and personal decisions for them (N.B. in addition to the routine management of the adults financial affairs). In short, there are two basic types of representation agreements available. A standard agreement under Section 7 of the Act and the non-standard or enhanced agreement under Section 9. It should be noted, that a Section 7, standard Representation Agreement, may be made by an adult with a diminished level of capacity, although the resulting Representation Agreement will therefore be more limited in scope.
Execution of Estate Planning Documents
It is important to note, that on May 20, 2020, the Government of British Columbia issued two emergency orders, that temporarily suspend in-person execution requirements for Wills and personal planning instruments. The emergency orders are tied to the provincial state of emergency and will expire when it is lifted. These provisions will make the execution of Estate Planning documents easier, for all involved.
As the reader will appreciate, there are many other issues that arise in any comprehensive and properly thought-out estate plan. Those other issues can include the holding of property in joint tenancy, Income Tax Act prescribed corporate rollovers, bare trust declarations, separate insurance trusts, asset protection considerations, multijurisdictional wills, and for many people these days, trans-national taxation and compliance issues arising from either citizenship or longer term residency in foreign jurisdictions.
Our lawyers regularly deal with the issues set out in this article, and many other issues related to or arising from wills, estates, and probate matters.