This new BC statute is finally upon us. After several years in progress, it becomes law on March 31, 2014. Pre-existing wills are still valid; howev-er, one should be aware of the changes, as they are retroactive, meaning that, in effect, some of the changes may alter the ultimate disposition of your assets from your intent. We provide a very brief summary, which augments our earlier article on our website.
The survivorship rules change. Presently, when a couple decease in a common accident, the younger one is deemed to have survived the older spouse, thus dictating the order of estate exe-cution of wishes. Now, each will be deemed to have survived the other! Thus, both of their wills shall bear contemporaneously on executions. There is also a change with respect to jointly ten-anted assets in the case of common accident.– now, the joint tenancy assets will devolve to ten-ants-in-common instead, thus moving those assets back onto the respective wills to determine their ultimate disposition.
The documentation of wishes changes. Previously, the will document was the source to de-clare the deceased’s wishes. Where a surviving party felt hard-done-by in the will, the Wills Variation Act provided a vehicle through the Court system to seek redress. Now, the actual will is but one source to interpret the deceased’s wishes. The Courts may entertain various other forms of information that provide a window into the deceased’s mind, eg an email communique, hand-written notations, unsigned wills, lawyer’s file notes and electronic documents. This looser trail to a person’s wishes potentially will increase litigation and add a significant level of uncer-tainty and interpretation.
Three previous situations have been changed:
- A subsequent marriage no longer will void a pre-existing will. This gives good cause to be sure to review wills before, or soon after, nuptials
- The age to construct a will drops from 19 to 16
- A witness to a will no longer is precluded from also being a beneficiary, but must seek the Court’s approval
Dying without a will triggers statutory principles to distribute the assets. These principles change under WESA:
- Presently, the surviving spouse receives $65,000. That amount increases to $300,000, unless there are step children, in which the case the amount drops to $150,000
- Presently, where the deceased owned the matrimonial home, the surviving spouse had right of life interest to reside there. That is no longer. Now, the survivor can purchase the home outright, and pay with cash and/or other entitlements under the statute, eg above
- In the modern era where common law marital status stands on equal footing with legal marriage, there can legally exist what we used to call bigamy. Thus, a deceased might leave behind both a common-law spouse and an undivorced spouse. Under the new law, both will have rights to share under the above.
The bottom line is that, even if you have a will, you should dust it off for review in the con-text of these new rules. If you are “will-less”, the untidiness you leave behind for your heirs now may cause some very unexpected consequences for those you love…and those you don’t. An estate lawyer should be consulted if the changes appear relevant.
New Changers in BC for Wills & Estates
This article is for all British Columbians – including the 50% who have yet to write their wills, as well as the other half who already have done so. Yes, it’s sad to say, but this statistic is still alarmingly true. It is surprising how this statistic seems to prevail no matter what segment of the population you are looking at. Don recently lectured on estate planning to a room full of accountants, and only half of them had wills!
At issue is the imminent proclamation in B.C. of Bill 10 – the new Wills, Estates and Succession Act (now called “WESA”). The proposed changes are aimed at making the legislation more current (some aspects of the current laws date back to the last revisions in 1920) and cohesive (that is, to consolidate several laws and make them more consistent with each other).
If you don’t have a will yet, you should ensure that you are aware of the coming changes. If you do have your testamentary documents in place, you should consider whether this Act will alter the planning you have put in place. That is the first important point: an existing Will still is valid in BC; however in the future it will be interpreted by the courts under the new legislation, no matter when the Will was drafted.
Small estates are going to be easier to administer. Now for an estate less than $50,000 (increased from $25,000), there no longer will be a need to obtain probate or letters of administration. That said, it will be interesting to see how the banks react to this change. They may be slow to alter their tolerance for the release of funds.
Some of the issues addressed relate to the formalities of writing a valid Will, such as the change in the legal age at which one can create a Will. The legal age will change from 19 to 16. Importantly, the new legislation will allow the courts more latitude to “rectify” a Will. That is, if there are certain imperfections in the formal drafting of the document, a judge more easily may amend the Will to give effect to his/her interpretation of the intention of the testator. A sticky point from the above may be that, if you jot some notes down on your Will…. perhaps some idle musings about how you might alter the document …. those scribbles could be given a lot more weight than you intended. It used to be that this sort of additional text would not pass muster in the Courts, but that is about to change. So don’t allow any of your brain-storming to be misconstrued as your actual wishes. Keep your official documents clean and clear. Anything you write down or, for that matter, state publicly, could be interpreted as germane to your plans when you are no longer there to clarify your intent.
WESA will change the Court-imposed asset distribution when a deceased dies intestate. If there is neither a surviving spouse or child, WESA will direct the asset distribution along a blood-line pathway from the deceased’s parents and their descendents. Where there are both a surviving spouse and children, the distribution amongst them will change radically from before. Previously, spouses were entitled to a life-interest in the matrimonial home. Now, they merely have the right to purchase that home from the Estate, and do so within six months of the date of grant of probate. That said, the Court may intervene on the spouse’s behalf where economic circumstances preclude purchase. In trade, however, the spouse now gets a larger proportion of the Estate (which includes the home). The child and parent entitlements will vary depending upon the connection to the marriage. If they are children of the marriage, the spouse receives $300,000 plus 50% of the residue. If not, the spouse receives $150,000 plus 50% of the residue. Formulaically, this is radically different to before; however, the actual impact depends upon the numbers!
Aspects of current family law have been incorporated in the new legislation. For instance, it used to be that marriage automatically revoked a Will in BC. That no longer will be the case; however the courts will have the power to assert that a Will is revoked under that circumstance. WESA addresses the definition of termination of a relationship. For legally-married couples, there is no change—a relationship terminates after two years living apart where there is intent by either or both parties to do so. Common law relationships, both same and opposite sex, continue to be formed after two years of living together. However, the cessation of such relationships is now defined, albeit loosely, under WESA as when one or both persons “terminate” it.
There is a new approach to deal with “common disaster”, meaning the simultaneous death of both partners. It used to be that the older of the two was presumed to die first. This meant that any jointly owned properties would become entirely the property of the so-determined last-to-die and be disposed of according to that person’s estate instructions. In a blended family situation, this could potentially disinherit one of the partner’s heirs. Under the amended Act, each spouse is deemed to survive the other. Consequently, all joint ownership is severed and each decedent’s share of the property is distributed according to their specific instructions. If you are wondering about the effect of this change on probate costs, the impact should be negligible since the whole of the relevant property would have been subject to probate on the second death anyway.
If you own property that carries a mortgage and it is included in your testamentary bequests, there is another change that you should be aware of. Previously, the property would be transferred free and clear. The mortgage was a debt, and therefore the responsibility, of the estate, not the direct beneficiary, and thus fell to the residue beneficiaries. Now, secured debt attributable to acquisition, improvement or preservation of the asset follows the gift, unless otherwise specified in the Will. This change could result in unintended consequences vis-à-vis the testator’s wishes. Also, in a serious down-market, it could be that the asset is worth less than the under-lying debt, in which case the planned inheritor may choose to repudiate the gift.
If you have provided gifts to certain heirs while living, a Supreme Court ruling opens the door for others to challenge that (see our website article). WESA introduces similar presumptions of “undue influence” where a Will bequeathment has been bestowed preferentially on a particular beneficiary. You might want to add explicit language in your testamentary documents to ensure that your actions aren’t assailed by competing heirs as “gifts made under undue influence”.
The processes of challenging a will by aggrieved parties, as previously defined in the Wills Variation Act, remain as such in the new WESA legislation. An aggrieved spouse or child has six months from the granting of probate or administration to lodge their claim.
Remember that, regardless of these changes, estate strategies whilst living involving joint tenancies and designated beneficiaries (eg for pension accounts and TFSAs) are still valid, but need to be carefully thought out. Too many people don’t understand the repercussions when they make certain elections, or they neglect to make revisions when life circumstances change.
With all this in mind, it is probably a good time to review your estate planning, whether that means finally getting around to drafting your will, or whether you need to dust off your existing will and re-read it in the context of these retro-active changes.