Considering what will happen to your property and affairs when you die may be an uncomfortable topic. Or perhaps you are thinking that there are laws in place that will take care of these things, so you don’t have to worry about it. Or you just can’t find the time to get around to dealing with making a Will or considering your other estate planning options.
There are significant benefits to everyone in having a Will. Most importantly, if you do not have a Will, your estate will be distributed not how you may have wished, but as provided for under the Estate Administration Act (British Columbia).* In addition, if you do not have a Will, or have not considered other estate planning options, you may be missing out on significant opportunities to save on the income taxes or probate fees that your estate may have to pay when you die.
There are several common circumstances where it is very important to have a Will or other estate planning documents in place:
Minor Children – If you have minor children, you should have a Will that appoints a guardian (and an alternate) to look after your children until they reach adulthood, in the event both parents die. If you do not have a Will, the Ministry of Children and Family Development of B.C. will decide who is best suited to look after your children. In addition, you should set up trusts in your Will for your children, so that your estate assets can be managed by someone financially responsible on behalf of your children. If you do not have a Will, or do not appoint a trustee of your minor children’s inheritance, the Public Guardian and Trustee of B.C. will be appointed to manage this money on behalf of your children until they reach age 19 (even if only one parent dies, the Public Guardian and Trustee will be required to manage a portion of your estate assets on behalf of your minor children).
Blended Families – If you have children from a first relationship and have entered into a second marriage or common law relationship, you will need to consider carefully your estate planning options. You have an obligation under the Wills Variation Act (British Columbia) to make adequate provision for the proper maintenance and support of both your spouse and children upon your death (spouse includes common law spouse). Unfortunately, this often creates conflict between your new spouse and the step-children as both are entitled to a share of your assets. There are several estate planning tools, such as trusts included in your Will, that can proactively deal with this situation, to avoid conflict in your family in the future.
Disabled Child – If you have a child with a disability, you will want to make arrangements for your disabled child in a Will, including appointing a guardian and a trustee of any assets to be inherited. The use of trusts in the Will in this situation is particularly helpful to ensure there are sufficient funds to support the child, and they can be structured in such a way that the disabled person does not lose their entitlement to government benefits, which may otherwise be the result if they inherit assets directly from you when you die.
Marriage – If you have a Will, but have since been married or are engaged to be married, you should immediately do a new Will. Marriage invalidates your Will (unless it was prepared in contemplation of marriage).
Separation – If you have just separated from your spouse, you should immediately do a new Will if you do not want him or her to inherit your assets. Until you have separated with the intention of living apart for at least one year or have obtained a divorce, your spouse will still be entitled to inherit a portion of your estate (if you have no Will) or will inherit whatever portion of your estate you gifted to him or her under your Will.
* The Estate Administration Act provides that if you die without a Will, if you have a surviving spouse or surviving children (but not both), your estate assets will be transferred solely to your spouse or children. If you have a spouse and children, your spouse receives the first $65,000, the household furnishings and a life interest in the family home, and the remainder is split either 50/50 between the spouse and child (if only one child) or 1/3 to the spouse and 2/3 to the children (if two or more children). If your children are minors, the Public Guardian and Trustee will assume responsibility for managing approximately 1/2 to 2/3 of your assets (other than the family home) on behalf of your children and your spouse will not have control over these funds. If you have no spouse or children, your estate will be transferred to your parents, your siblings or your next closest family members.