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Difference between revisions of "Preparing a Will and Estate Planning"
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Preparing a Will and Estate Planning (view source)
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{{REVIEWEDPLS | reviewer = [https://www.mclellanherbert.com/Our-Team.shtml Hugh McLellan], McLellan Herbert|date= November 2020}} {{Dial-A-Law TOC|expanded = wills}} | {{REVIEWEDPLS | reviewer = [https://www.mclellanherbert.com/Our-Team.shtml Hugh McLellan], McLellan Herbert|date= November 2020}} {{Dial-A-Law TOC|expanded = wills}} | ||
Preparing a will is a key step in planning for what happens when you pass away. Learn the essentials of preparing a will and tips for creating an estate plan. | Preparing a will is a key step in planning for what happens when you pass away. Learn the essentials of preparing a will and tips for creating an estate plan. | ||
==What you should know== | ==What you should know== | ||
===A will is a legal document=== | ===A will is a legal document=== | ||
A '''will''' is a document that says what you want done with your property when you die. It’s a map for those you leave behind. | A '''will''' is a document that says what you want done with your property when you die. It’s a map for those you leave behind. | ||
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===What your will doesn’t deal with=== | ===What your will doesn’t deal with=== | ||
A will generally doesn’t cover property you don’t own exclusively. For example, a joint bank account or a house owned in joint tenancy has a right of survivorship. That means they automatically become the property of the joint survivor when you die (we explain some exceptions to this rule shortly). | A will generally doesn’t cover property you don’t own exclusively. For example, a joint bank account or a house owned in joint tenancy has a '''right of survivorship'''. That means they automatically become the property of the joint survivor when you die (we explain some exceptions to this rule shortly). | ||
{| class="wikitable" | {| class="wikitable" | ||
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===If you don’t prepare a will=== | ===If you don’t prepare a will=== | ||
If you pass away without having made a will, the law says how your property will get distributed, and who has the right to “administer” your affairs. [ | If you pass away without having made a will, the law says how your property will get distributed, and who has the right to “administer” your affairs. [https://dialalaw.peopleslawschool.ca/when-someone-dies-without-a-will/ Our information on when someone dies without a will explains how these rules work]. Dying without a will can make things more difficult (and more costly) for your loved ones. | ||
===A will is only one part of estate planning=== | ===A will is only one part of estate planning=== | ||
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===Step 1. Gather information and prepare well=== | ===Step 1. Gather information and prepare well=== | ||
It helps if you have the following information ready before you prepare your own will or meet with a lawyer or notary public: | It helps if you have the following information ready before you prepare your own will or meet with a lawyer or notary public: | ||
* A list of everyone in your immediate family, with their full names and contact information, their relationship to you, and the ages of all your children, including stepchildren. | * A list of everyone in your immediate family, with their full names and contact information, their relationship to you, and the ages of all your children, including stepchildren. | ||
* The names and addresses of any other people or organizations you want to give gifts to. | * The names and addresses of any other people or organizations you want to give gifts to. | ||
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If you have a complex estate or investments or need someone to take over the operation of a company, consider asking a lawyer, accountant, or trust company to act as your executor. Be aware that your estate will be charged for their services. | If you have a complex estate or investments or need someone to take over the operation of a company, consider asking a lawyer, accountant, or trust company to act as your executor. Be aware that your estate will be charged for their services. | ||
{| class="wikitable" | |||
|align="left"|'''Tip''' | |||
You can also own property with someone else as a '''tenant-in-common'''. When you die, your share doesn’t automatically go to the other owner. | |||
Say you own a family cottage with your siblings. If owned as tenants-in-common, you can pass your own share to whomever you want, through your will. Your share won’t automatically go to your other siblings when you die. | |||
|} | |||
===What your will doesn’t deal with=== | |||
A will generally doesn’t cover property you don’t own exclusively. For example, a joint bank account or a house owned in joint tenancy has a right of survivorship. That means they automatically become the property of the joint survivor when you die (we explain some exceptions to this rule shortly). | |||
{| class="wikitable" | {| class="wikitable" | ||
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===Step 4. Make plans for minor children=== | ===Step 4. Make plans for minor children=== | ||
If you’re a parent or guardian of a minor child (under 19 years old), the [https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/sbc-2011-c-25.html | If you’re a parent or guardian of a minor child (under 19 years old), the ''[https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/sbc-2011-c-25.html Family Law Act]'' lets you appoint someone to be the child’s '''guardian''' in your will. | ||
It’s important to name a guardian if you’re a single parent. For separated parents, it’s best to agree on the choice of a guardian if one or both of you die. If that’s not possible, it’s important to consider your parenting responsibilities (through a court order or separation agreement) and ensure that you include them as part of appointing a guardian in your will. | It’s important to name a guardian if you’re a single parent. For separated parents, it’s best to agree on the choice of a guardian if one or both of you die. If that’s not possible, it’s important to consider your parenting responsibilities (through a court order or separation agreement) and ensure that you include them as part of appointing a guardian in your will. | ||
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==After you pass away== | ==After you pass away== | ||
===Your will can be changed after you die=== | ===Your will can be changed after you die=== | ||
If your will doesn’t | If your will doesn’t adequately provide for your spouse and children (including illegitimate and adopted children), they can ask a court to change the will. This is c[https://dialalaw.peopleslawschool.ca/challenging-a-will/ alled a wills variation claim. Our information on challenging a will explains this in more detail]. | ||
===Your estate may have to pay probate fees=== | ===Your estate may have to pay probate fees=== | ||
With most estates, an executor must apply to court to '''probate''' the will. The word “probate” means “proof." The process proves the will is legally valid. [ | With most estates, an executor must apply to court to '''probate''' the will. The word “probate” means “proof." The process proves the will is legally valid. [https://dialalaw.peopleslawschool.ca/your-duties-as-executor/ Our information on the duties of the executor explains the process]. '''Probate fees''' must be paid to the court registry. The fees depend on how much the estate is worth: | ||
* less than $25,000 — no fee | * less than $25,000 — no fee | ||
* between $25,000 and $50,000 — | * between $25,000 and $50,000 — $6 per $1,000 (this amounts to a probate fee of $150 on an estate valued at $50,000) | ||
* over $50,000 — $ | * over $50,000 — $150 plus $14 per $1,000 of estate value over $50,000 | ||
These fees can change. Details are in the [https://www.canlii.org/en/bc/laws/stat/sbc-1999-c-4/latest/sbc-1999-c-4.html | These fees can change. Details are in the ''[https://www.canlii.org/en/bc/laws/stat/sbc-1999-c-4/latest/sbc-1999-c-4.html Probate Fee Act]'' and the [https://www.canlii.org/en/bc/laws/regu/bc-reg-168-2009/latest/bc-reg-168-2009.html Supreme Court Civil Rules]. | ||
Probate fees can often be avoided or reduced by estate planning outside of a will. A lawyer can help with that planning. | Probate fees can often be avoided or reduced by estate planning outside of a will. A lawyer can help with that planning. | ||
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Probate fees are usually just a small part of the total cost of the process. There can be legal fees, fees to transfer assets from one name to another, and other costs. | Probate fees are usually just a small part of the total cost of the process. There can be legal fees, fees to transfer assets from one name to another, and other costs. | ||
===Your estate may have to pay taxes=== | ===Your estate may have to pay taxes=== | ||
When a person dies, the law assumes they sold all their assets on the date immediately before their death. If an asset increased in value since it was purchased, a '''capital gains tax''' will have to be paid for the same year as the person’s death (even if the property is not actually sold). There are some exceptions, such as gifts to spouses and principal residences. But if you own assets that will be subject to capital gains tax on your death, you should speak to a lawyer or an accountant to see how to deal with this tax. For example, a recreational property in your name alone will normally be subject to capital gains tax. | When a person dies, the law assumes they sold all their assets on the date immediately before their death. If an asset increased in value since it was purchased, a '''capital gains tax''' will have to be paid for the same year as the person’s death (even if the property is not actually sold). There are some exceptions, such as gifts to spouses and principal residences. But if you own assets that will be subject to capital gains tax on your death, you should speak to a lawyer or an accountant to see how to deal with this tax. For example, a recreational property in your name alone will normally be subject to capital gains tax. | ||
==Common questions== | ==Common questions== | ||
===Where should I keep my will?=== | |||
If your original will is in paper form, you can keep it with your lawyer or notary, or in a safety deposit box at your bank. That way the will is in a permanent, safe, and fireproof location. | |||
If your original will is in electronic form, there will be multiple true originals. Assemble and store these in the same place, such as with your notary or lawyer or a secure electronic repository. | |||
Your executor will need your original will (not a copy) to give to the probate registry. You should let your executor know where you keep your will and other important documents, so they know where to get it. | |||
===How much does it cost to get professional help to make a will?=== | ===How much does it cost to get professional help to make a will?=== | ||
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==Who can help== | ==Who can help== | ||
===With preparing a will=== | ===With preparing a will=== | ||
A notary public can help you prepare a will. The '''Society of Notaries Public of BC''' offers a list of notaries in the province. | A notary public can help you prepare a will. The '''Society of Notaries Public of BC''' offers a list of notaries in the province. | ||
