Wills in BC and Canada

HOW A WILL WORKS

• A will is a primary tool a lawyer uses to implement a client’s proposed estate plan
• It is the document which sets out the persons who will assume control of the client’s estate upon death and the manner and scheme of gifts and distributions the client wishes to make to intended beneficiaries
• Properly drafted, a will achieves these estate goals in a manner which will maximize the advantages to the intended beneficiaries while minimizing the potential expenses to the estate

Essentially, a will allows you to

• Appoint a guardian for children who are minors;
• Appoint an executor to manage your affairs after death;
• Choose family, friends, charities, etc. that will receive your assets;
• Ensure your children receive their inheritance at the age and in the way that you feel comfortable with; and
• Possibly reduce taxes that would have to be paid as a result of your death.

VALIDITY OF WILLS

Formal requirements to make a valid will under the Wills Act:

• It must be in writing;
• It must be initialled on each page and signed at end by testator and two witnesses at the testator’s direction (all of which must be done with all three people present); and
• The testator must be at least 19 years old unless he or she is or has been married or is in the armed forces.

In addition to satisfying the formal requirements, the testator must possess the necessary intention to make a will.

• The requisite mental elements are:
  • The testator must understand the nature of the act in which he or she is engaged (making a will); and
  • The testator must be free of a mental disorder (i.e.he or she ought to be capable of making the will with an understanding of the nature of the business in which he or she is engaged, a recollection of the property he or she means to dispose of, the persons who are the object of his or her bounty and the manner in which it is to be distributed between them).

The testator must exercise genuine free choice in the making of the will (i.e. no suspicious circumstances or undue influence)

REVISING YOUR WILL

You should always revise your Will if there is a significant change in your life that could include:

• Birth
• Death
• Marriage
• Marriage Breakdown
• Divorce
• You want to change the designated Guardian for your children
• You want to change the designated Executor and/or Trustee in your will
• You want to change the scheme of distribution in your will
• Substantial changes in your assets or liabilities
• Changes in tax laws

Note that unless a Will is made in express contemplation of a marriage, marriage invalidates a will. Divorce results in the divorced spouse having deemed to have predeceased the testator (the person that made the will).

REVOKING YOUR WILL

• Under Section 14 of the Wills Act, a will can be revoked by:
• Getting married, unless there is a clause in the will specifically saying it is written in contemplation of that particular marriage
• Executing a later will
• A writing that declares an intention to revoke the will, executed in accordance with the Wills Act
• Destroying your will yourself or someone destroying it for you in your presence and by your direction with the intention to revoke it

A judicial separation, final order of divorce, or declaration of nullity only invalidates:

• an appointment of a spouse as a personal representative or trustee
• A gift of an interest in property to a spouse (the gift takes effect as if the spouse had predeceased the testator)
• A power of appointment granted in favour of a spouse

CONSEQUENCES OF DYING WITHOUT A WILL

When a person dies in BC without a will, that person is said to have died intestate. Where a person has died leaving a will which does not fully dispose of his or her estate, he or she is said to have dies partially intestate. The rules of intestate succession, found in Part 10 of the Estate Administration Act, set out the following mandatory scheme of distribution:

Where a person dies without leaving intestate successors, his or her real property escheats to the provincial Crown

¹ Issue means a person’s children or other lineal descendants such as grandchildren and great-grandchildren. It does not mean all heirs, but only the direct bloodline.
² per stirpes, Latin for “by roots,” by representation. The term is commonly used in wills and trusts to describe the distribution when a beneficiary dies before the person whose estate is being divided.
³ Escheat, from old French eschete, which meant “that which falls to one,” the forfeit of all property (including bank accounts) to the provincial crown if it appears certain that there are no heirs, descendants or named beneficiaries to take the property upon the death of the last known owner.

PROPERTY AFFECTED BY A WILL/INTESTACY

Only property which forms part of the deceased’s estate will be distributed under the terms of the will or under the scheme of intestate succession;

• Property which is subject to the terms of a will is said to “pass” by the will and, generally, includes all assets over which the client has complete control and beneficial interest, including:
• Tangible personal effects (furniture, artwork, jewellery and cars);
• Intangibles (stock, bond, investment certificates, bank accounts); and
• Real estate interests (fee simple or leasehold).

PROPERTY NOT AFFECTED BY A WILL/INTESTACY

Property which does not “pass” by a will or is not subject to the scheme of intestate distribution is property which the client may own but which is nonetheless distributed by operation of law upon death.

Such assets do not form part of the deceased’s estate upon death and are distributed in accordance with the applicable legal rule, for example:

• Proceeds of a life insurance contract pass to the beneficiary designated under that contract by virtue of the Insurance Act;
• A refund of premiums contributed to an RRSP, RRIF or pension plan pass to the beneficiary designated under that plan by virtue of the Law and Equity Act;
• Property otherwise subject to contractual obligations which limit the client’s right to alienate the property (i.e. a marriage agreement, separation agreement, shareholder’s buy-sell agreement) pass under the terms of that contract;
• Gifts of property which are conditional on death pass to the donee;
• Property subject to the Family Relations Act may pass to the surviving spouse directly;
• Property subject to an equitable claim, such as a constructive trust; and
• Property held in joint tenancy may pass to the surviving joint tenant by operation of the right of survivorship, depending on the facts at hand.*

*Note that an adult child of a deceased who holds assets jointly with the deceased cannot rely on a presumption that the deceased wanted the child to take the asset at death. The Supreme Court of Canada has recently clarified rules and limitations regarding the treatment of gratuitous transfers of assets from a parent to their child.

The presumption of advancement is limited to transfers by a mother or father to a minor child. The presumption of resulting trust operates in all other transfers without consideration. In the absence of evidence to the contrary, assets held jointly with an adult child will be deemed to be held in trust for the estate and governed by the provisions of the Will or intestate legislation as applicable.