Multiple Wills in British Columbia

Did you know you can have more than one will in British Columbia?  This is an estate planning tool that has been used for some time in Ontario, but it is not yet so well known here.  I have been drafting these for my clients for a number of years, and now the BC Supreme Court has confirmed that if done properly, they are a valid way of facilitating the transfer of assets from one generation to the next.  The case is Re: The Estate of Norman Frank Berkner, Deceased

The case is quite straight forward.  Mr. Berkner was the owner of a valuable egg farm, which he had incorporated as Berkner Egg Farms Ltd.  His wife had predeceased, and his only heir was his daughter, Shelley.

As part of his estate plan, Mr. Berkner had made two wills.  One will (the “Primary Will”) was designed to include those of his assets which would require probate to be transferred, while the other will was designed to capture his other assets, including the shares of the company.  Upon Mr. Berkner’s death, Shelley applied for probate of the Primary Will and renounced her appointment as executor under the second will.  The result was that the second will had a different executor (an accountant) which, as you will see, is important for the two-will method to work.

The court, when presented with the Primary Will for probate, asked for submissions as to why Shelley should be granted probate of that will without also needing to probate the other will, or including the shares.  The court posed the following three questions:

  1. Is a will maker permitted to make more than one will?
  2. Is a personal representative (ie, the executor) required to probate a will?
  3. If there is nothing to prevent a person from having more than one will, and nothing requiring an executor to probate a will, can the Primary Will be probated?

To answer the first question, the court pointed out that it is not uncommon for people with assets in multiple jurisdictions to have multiple wills, and pointed to two Ontario cases, each of which involved a person having two Ontario wills, only one of which was probated.  The fact that this is done to avoid probate on the “non-probate” assets was recognized but was not commented on.  The judge also mentioned a case going back to 1876 in England (yes, legal precedent goes back a long way!) and confirmed that it is permissible for a person to have more than one Will.

The answer to the second question confirms that there is no requirement that an executor must get probate of a will.  In fact, the main reason an executor needs to get probate is to confirm the validity of a will and to confirm the executor’s authority to third parties (such as financial institutions).  That means an executor of a “Secondary Will,” as it is referred to by this judge, does not need to apply for probate.

I mentioned above that it is important to have a different executor for each of the two wills.  This is because the executor of the Primary Will must disclose to the probate court all assets that come to her because of the death of the deceased.  If she is also the executor of the “Secondary Will” then she has to include the private company shares when she probates the Primary Will, which of course defeats the purpose of the Secondary Will.

Because the court confirmed that a person may have more than one will, and that a personal representative does not have to probate a will, that meant Shelley could get probate of the Primary Will without having to include the assets that fell to the Secondary Will.

The court looked at the Wills Estates and Succession Act (“WESA”) which specifically contemplates that only part of an estate may come to a personal representative.  That implies that other parts of the estate may go to a different personal representative, who may not have to get probate for that part.

The Berkner case therefore confirms that multiple wills can work if done properly.  Of course there are other considerations, such as the fact that if a will is not probated, the Wills Variation provisions of the WESA is never fully closed off.

If you decide to use multiple wills as part of your planning, you must make sure the wills are drafted carefully, appointing different executors for each will, with clear definitions as to what assets are to be dealt with under each of them.  A mistake that results in an asset that ultimately needs probate going into the “non-probate” will can mean that probate will be needed for all of your assets.

Finally, you need to keep track of past planning, because a revocation of “all previous wills” in a subsequent Primary Will can also result in the non-probate will being inadvertently revoked.

That said, this is a marvelous planning tool for business owners and other who have substantial wealth in assets that do not require probate to be transferred.  Add it to the bundle of tools such as tax-planned trusts, joint ownerships and beneficiary designations, and the amount of probate payable to the government when you die can be significantly reduced.

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You may have a Spouse even if you think you don’t

When my clients ask me about what problems might arise with the way they want to distribute their estates, I tell them that it’s often not blood relatives but in-laws that create the problems. A recent judgment of the British Columbia Court of Appeal  (Kish v. Sobchak Estate February 12, 2016) demonstrates the truth of this.

Ms. K and Mr. S started “dating” in 1991, when both were in their early 50s.  Each had been married before, and each had one adult child.

They both had their own homes, though Mr. S spent a lot of his time at Ms. K’s home. As Ms. K started showing signs of dementia, Mr. S became her caregiver, and to those who knew them, their relationship seemed a loving, romantic one. Mr. S’s stated intentions were that he did not wish to remarry or even be in a common law relationship, but he looked after Ms. K as if she were his spouse.

Unfortunately, in 2013 Mr. S became ill with cancer and died within a few months of his diagnosis. Before he died, he made a new will leaving everything to his daughter.  Ms. K also changed her will, leaving everything to her son and grandson. It was clear from both wills that they did not consider each other as spouses, and left their separate estates to their separate families. Mr. S even left a memorandum with his will explaining why he didn’t leave Ms. K anything.

It would therefore likely have been a huge surprise to each of them, when Ms. K’s son sued Mr. S’s estate on behalf of his mother, to find they were, in fact, spouses. The trial judge based her finding on the evidence of their living arrangements and their activities together, in spite of them keeping their assets and financial matters separate.

The trial judge’s decision that Ms. K and Mr. S were spouses when Mr. S. died meant that he should have left her part of his estate. This is where the “in-laws” part of the equation comes in.

Had either Ms. K or Mr. S been asked about why they made their wills the way they did, they would have said “that’s only fair; I’m not married and my daughter/son should get my estate”. If Ms. K had died first, it is extremely unlikely (based on the evidence in the case) that Mr. S would have sued her estate, even though he had been left out of her will. Likewise, had Ms. K been competent, it is doubtful she would have sued on her own behalf.

But what Mr. S and Ms. K failed to anticipate was that Ms. K’s son would be greedy and sue on his mother’s behalf. He, of course, is the one who will benefit from any part of Mr. S’s estate that goes to his mother.  She is incompetent and her needs are taken care of by her own resources. Of course, now that Mr. S is gone, he is no longer looking after her and no longer paying the bills, so the son will have to step up.  Ms. K also still owns a house which could be sold should she need additional funds. Her son didn’t provide the court with an explanation of why he hadn’t done that when he told the judge Ms K was in need.

Fortunately, the Court of Appeal wasn’t buying the hardship story. The five-judge panel said that it isn’t the intention of the wills variation law to benefit a spouse’s estate, and reduced the amount going from Mr. S’s will to Ms. K to $30,000, down from the $100,000 awarded at trial.  Still, in the end, the finding that Ms. K and Mr. S were spouses for purposes of the Wills, Estates and Succession Act stood.

The lesson here is that if you live and behave like spouses, the law will consider you spouses regardless of what your own intentions might be, and you need to arrange your affairs accordingly. You might think your kids are fine with your decisions, and you may be right, but don’t count on the in-laws. I have seen more than one case where a son- or daughter-in-law was the driving force behind a wills variation claim.

If you find yourself in a similar situation, there are steps you can take to ensure that your estate will go where you want it to, in spite of the wills variation provisions of the Wills, Estates and Succession Act. You need to do something more than just make a will leaving out the “spouse”, and it now seems that even a letter explaining why you have left out the “spouse” is not going to be good enough.

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No Will? No Way!

This topic just never gets old….what happens if a person dies without a will?  Many people think they have it all sorted out, but consider this….

I had a call today from an old colleague.  He has a client whose husband died in very unfortunate circumstances.  As a young couple, they didn’t have much, and what they did have was all in joint names.  So no will needed, right?  Well, almost.  One of the few things of value that the husband had was a significant tax refund from CRA.  Now, as anyone who has tried to deal with CRA on someone else’s behalf will know, they want consent from the taxpayer himself before they will deal with anyone else.  You can see the problem, right?  the deceased husband can’t consent.  He had no will, so his poor (literally) widow is going to have to apply for administration of his estate.  Because there is a very young child, she will have to notify the Public Guardian and Trustee (the “PGT”) (and pay a fee for the privilege).  She will also have to pay probate fees.  Out of what’s left, she will have to pay part of the money to the PGT to hold for her child until he’s 19.  Not good.

The ability to deal with CRA on your behalf is just one reason to have a will.   Applying for administration is a lot tougher than applying for probate of a will.  Why?  For one thing, the court needs to know that the person applying for administration is an appropriate person to do so.  If you name an executor in your will, the court can be confident that you wanted that person to act as your executor.  If you don’t bother to appoint anyone, then there is a class of persons who can apply, and everyone in that class has to consent to the appointment of the person brave enough to step forward.  There can be clashes among family members who have an equal right to apply, so you may be setting the family up for a fight.   And what if no one want the job?   The Public Guardian (or public administrator in some provinces) may step in, depending on who the heirs are.

Speaking of heirs, if you don’t leave a will, the law says who gets your estate, and neither you nor your heirs have any choice in the matter.  In BC, if you have children and a spouse, the estate gets divided among them in fixed proportions.  What those proportions are will depend on how many children you have, and whether those children are also the children of your spouse.  Step children will be left out in the cold.  Other provinces have similar provisions….why let the government make those decisions for you?

It gets worse…you might think that your spouse gets to look after the children’s shares, but you would be wrong.  If the children are of full legal age (ie, have reached the age of majority) they get their shares outright.  Party time!!!   If they are minors, the PGT will take the money, invest it, and pay it to the kids when they reach the age of majority.  While the money is invested, the PGT will charge a hefty fee and if the spouse needs money to raise the kids, she or he has to go cap in hand to ask for funds.  Why would you do that to your spouse and kids?

Of course you can avoid the above by having everything in joint names with your spouse, in which case the right of survivorship will apply.  But consider what would happen if your spouse dies before you?  or if both of you are killed in a car crash together, and neither of you has a will.  Someone would still have to apply for administration when the last of you and your spouse dies.

The most common situation where I see a real need for a will is with second marriages, when there are children from earlier relationships who are intended to be the ultimate beneficiaries.

Consider the case of Bruce and his 2nd wife Hilary.  Bruce made a lot of money in his business, invested well, and he and his first wife Ingrid lived a good life style.  Their children, Dan and Liz, went to private school and had the best of everything.  Then Ingrid died.

Eventually, Bruce met Hilary and they have since married.  The kids get on well with her, but she isn’t that much older than they are.  Bruce wants everyone to be happy and provided for and he spends accordingly.  He worries about what will happen when he dies, but not enough to actually make a will.  He figures having his business partners look after his companies will take of those interests, and he has put his house and real estate investments, as well as most of his banking and investment accounts, into joint names with Hilary.  He wants her to have everything when he dies and then he wants his kids to get the estate when Hilary dies. Will that happen?  Maybe, but maybe not.

If Bruce dies first, which is likely given he is 20 years older than Hilary, all of his assets that he has put in joint names will become Hilary’s sole property.  Those assets will only go to Dan and Liz if Hilary feels like making a will leaving the assets to them.

What if she doesn’t make a will?  everything then goes to her heirs.  She has no kids, so her brother and sister will get everything if they are still alive (her parents would be in line before them but they are both dead).

What if Hilary remarries?  if she still has no will, that new husband will inherit her estate, including all of Bruce’s assets.  Even if she makes a will there is no guarantee she would leave anything to Dan or Liz, and they would have no claim against her estate.

Bruce, like may other Canadians, is hiding his head in the sand.  He should be taking charge by getting an estate plan, including a will, in place.  He would be doing his family a huge favour.

 

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Death and Passwords

Some time ago I wrote about the issue of what happens to a person’s digital property when he or she dies.   https://thatwillsblog.com/2011/12/29/preparing-for-a-cloudy-day-death-passwords-and-other-assets/

So on the news today, there is a story about that exact problem:  http://www.cbc.ca/news/business/apple-wants-court-order-to-give-access-to-appleid-1.3405652

From the story it actually sounds like Apple isn’t really on top of this either, and the law in Canada is about a century behind.  Until everyone catches up, what to do?

The simplest solution (though by no means the best) is to give someone you trust access to all of your passwords.  There are so many problems with this idea that I don’t even know where to begin.  Hands up, everyone who has the same passwords today as you did, say, a year ago?  (you with your hand up, you need to fix that pronto).

Not only that, but for things like online banking, you can actually lose your protection from fraud if the bank finds out you have shared your password.

One solution that might work is to have a provision in your will giving your executor the right to access your digital accounts when you die.  In that case, if Apple (or any of the gate-keepers at other service providers) demands a court order, your executor can provide a copy of the grant of letters probate, which is an order of the court confirming your executor’s appointment.  That would put digital assets in line with all other kinds of assets for which probate is required.

The unfortunate thing is that you may have planned your estate and affairs so that your executors doesn’t need to probate to transfer your assets.  It sounds like that was the case with the lady in the above news story.

Still, it’s better to have a plan (by adding that clause to your will) than to ignore the problem all together.

And in other news:  http://www.cbc.ca/news/technology/worst-passwords-2015-1.3410002

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Where there is (not quite) a Will

Since the Wills Estate and Succession Act (the “WESA”) came into effect in March of 2014, we have waiting to see what the courts would do with the new provision, Section 58, allowing judges to decide whether a document that did not meet the formal requirements to be a will, might still qualify as a will.

Before the new act, in BC a will had to meet very strict requirements to be valid, with some really perverse consequences. Very minor errors in making the will could mean a person’s estate would be subject to an older (outdated) will, or no will at all. Other provinces had already enacted laws similar to the WESA, and gave us some idea of what might happen. But we now have some guidance from our own courts, and here is what we know so far.

The key is that the document must contain the will maker’s “fixed and final” intention that this is their will. This would typically still prevent an unsigned will, even if printed and ready for signing at the lawyer’s office, from being a valid last will. This is because it is not unusual for a client to arrive at the lawyer’s office, read through the will before signing, and make last minute changes. There would have to be some very persuasive evidence to over-come this.

What kind of evidence is needed to prove the fixed and final intention? In a recent BC case, Re Yaremkewich Estate, the judge was asked to find that an improperly signed pre-printed will and several additional hand-written documents referred to in it, formed the valid will of the deceased. The judge looked at the surrounding circumstances, such as the deceased’s diagnosis with a life-threatening illness not long before she made the will, and the amount of detail included in the documents. The judge also accepted that the information was all in the deceased’s own handwriting, and no amendments or cross-outs were found. The will and the documents were all found together in an envelope on which the deceased had written “Will of Denise Lynn Bevan Yaremkewich.”

On the facts of this case, the judge was able to find that the documents, taken together, were the valid last will and testament of Ms. Yaremkewich.

Interestingly enough, the judge found that directions relation to the deceased’s dog, Jake, including instructions for his care and descriptions of his likes and temperament, though found with the other papers, was not part of the will, because this letter did not include “testamentary intentions.” However, there was a provision in the other documents, which were found to form a valid will, leaving money to some friends for the care of Jake. In that regard, the instructions for the Jake’s care would be analogous to a “letter of wishes;” non-binding instructions which the deceased hopes the executor or others will carry out.

What we now also know about Section 58 is that each of these cases will be dealt with on their own peculiar set of facts.

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BC Court of Appeal Upholds “living will” Decision

I wrote about this sad case about a year ago, after the Supreme Court of BC denied the request of Mrs. Bentley’s family to have the care home where she lives stop feeding her and allow her to die.

This time, the BC Court of Appeal has ruled that the trial judge was correct in his finding that feeding by natural means (spoon feeding, as opposed to a feeding tube) is personal care, not health care, and personal care was not covered by Mrs. Bentley’s living will.  The trial judge had also said that the fact Mrs. Bentley took the food willingly showed that she “consented” to being fed.

The family has indicated that they are considering an appeal to the Supreme Court of Canada.  I’m not sure that the SCC would hear the appeal, because I don’t think their decision would be any different in these circumstances.

What is the take-away for all of us from this case?  In British Columbia, there really is no such thing as a legally binding “living will” which is what Mrs. Bentley thought she had.  You can give directions about your care, but it should be within one of the documents that has legal effect under BC law.  Those are Advance Directives and Representation Agreements.

Advance Directives are typically used in a hospital setting, but can be made by your lawyer as well.  In an Advance Directive, you can state that you consent to, or refuse to consent to, any health care.  There are a number of health care matters that cannot be dealt with under and Advance Directive, including abortion, electroconvulsive therapy, psychosurgery, or risky experimental procedures.

Note that the Bentley case hinged on the difference between health care and personal care.  It would appear that even if Mrs. Bentley had written an Advance Directive, the outcome in her case would have been the same.

The other option you have is a Representation Agreement.  The idea here is that you are appointing someone to be your representative in case you become incapable of giving or refusing consent.  Your Representative then has the ability to accept or refuse both health care and personal care.  There are many benefits to doing this, in that you can give your Representative as broad or as narrow a range of powers as you choose.  The only drawbacks are the cost and relative complexity (compared to printing off a living will from the internet and signing it).

Given the potential downside of not appointing a representative, though, the drawbacks would seem pretty minimal.  Just look at the expense and complexity, not to mention the heartbreak and stress, that Mrs. Bentley’s family has gone through, and continues to experience.

None of this is their fault, of course, and Mrs. Bentley thought she was doing what was necessary to ensure this exact thing would not happen.  I’m sure there are many others in the same situation.

The law evolves.  The best thing anyone can do for their family is to make their wishes known, and to actually put the proper tools in place.  That will ensure your family has the power to stop unwanted procedures, and that you are allowed to die with dignity when your time comes.

Talk to your family and then call your legal adviser to make sure you have the right documents in place.  And yes, you could do it yourself, but as the Bentley case demonstrates, that doesn’t always turn out so well.

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Can my last email be my will?

Can my last e-mail be my will?
That was a question being asked (mainly by lawyers, admittedly) after the Wills Estates and Succession Act (the “WESA”) came into force last March 30th, 2014. Lawyers ask some pretty wacky questions, but this one wasn’t so far-fetched. It stemmed from a new provision in the WESA, Section 58.

Section 58 says that a court may make an order if it determines that a record, document or writing or marking on a will or document represents the testamentary intentions of a deceased person.

The definition of “record” includes data that is recorded or stored electronically, can be read by a person, and is capable of reproduction in a visible form.

So, can my last e-mail be my will? S. 58 seems to say it could.

The question recently came before the Supreme Court in BC. In that case, Estate of Sharone Young, a lady who died in 2014 had made a will, but had also written a number of other documents stating what she wanted done with some of her things after her death. None of these documents were signed the way a will needs to be signed. The executor decided she had better ask the court whether these writings were actually a “will”, and therefore represented the deceased’s testamentary intentions.

Here is what the judge said:

“… Two principal issues for consideration emerge from the … authorities. … is the document authentic? The second, and core, issue is whether the non-compliant document represents the deceased’s testamentary intentions.
In George [a Manitoba case] the court confirmed that testamentary intention means much more than the expression of how a person would like his or her property to be disposed of after death. The key question is whether the document records a deliberate or fixed and final expression of intention as to the disposal of the deceased’s property on death.
…….. While imperfect or even non-compliance with formal testamentary requirements may be overcome by application of a sufficiently broad curative provision, the further a document departs from the formal requirements the harder it may be for the court to find it embodies the deceased’s testamentary intention.”

In other words, the more the document looks like an email and the less it looks like a formal will, the less likely a court would consider it the deceased’s “fixed and final” testamentary intentions.

This is good news for those of us who might have been wondering what documents need to be given to the court when applying for probate, and whether all of grandma’s musings and notes that she wrote all over the copy of her last will might actually be her last will. And that email she wrote to you the evening before she died? The one where she says your brother was always her favourite and he should get everything? You can safely ignore it.

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