Vancouver Wills and Estates Law Blog

What executors must do before distributing assets

When someone passes away, it can sometimes be difficult to figure out which steps to take first. There are many responsibilities faced by British Columbia executors, including overseeing probate, hiring an accountant, conducting an inventory of assets and even distributing those assets. Beneficiaries will often pressure executors to distribute assets as soon as possible if they know they will receive a big payout. But what is really the best order of operations?

Distributing assets too early in the process is one of the bigger mistakes executors can make. British Columbia law spells out several responsibilities that executors have. They are liable if they fail to oversee the process properly, which may mean hefty fines.

Tips to help executors file the final tax return

Once someone passes away, those in charge of overseeing the estate administration have many tasks ahead. One of the most challenging times of year for British Columbia executors can be tax season. While some people make robust plans to provide their executors with the information they need for their last tax return, others leave their estate representatives scrambling without the details to complete important forms.

Taxes can be quite complicated for anyone, especially a person handling them second-hand who may lack all the details. In order to complete a tax return, executors should know of all the assets owned by the deceased, particularly those subject to property or investment taxes. Recovering hidden assets can be a very time-consuming and difficult task, so a leaving a clear-cut list of all assets is a good idea for estate planners.

How to use trusts and trustees to protect inheritance

One of the main reasons people choose to draft a will is to ensure their assets end up with the intended people. For most British Columbia residents, their estate plans involve the majority of their assets being passed to family members such as a spouse or children. But is it possible to make sure assets stay in the family once they are distributed to beneficiaries? While this can be a challenge, setting up a trust and naming the right trustees can help defend these last wishes.

There are many ways assets can be lost from a family following the estate administration process. For example, money or property can be given up in a divorce, a beneficiary can pass away prematurely, or bankruptcy can force the assets into the hands of creditors. One of the best ways to prevent this is by taking advantage of added protection from trusts and trustees.

Trustees and the importance of family trusts in British Columbia

When a family begins to amass more assets, thoughts may turn to how to keep most of that money in the family. That's where some planning regarding family trusts and appointing a trustee or trustees might come into play. People in British Columbia  not only want to keep most of their income, but also want to see it grow, and with some prudent planning, those goals are attainable.

A trustee's job when it comes to a family trust is to act for the beneficiary by managing and administering the assets of the trust. Starting a family trust is the best way of ensuring that each family member is treated fairly and is protected against claims from estranged spouses or creditors. When parents act as trustees, they can protect their children's interests even further. Families who have a sizable worth can use such a trust to pool their assets.

Estate planning helpful for will writers and executors alike

Estate planning can be an emotional process. From picking the right executors to trying to understand tax implications, there are many things British Columbia adults must consider in preparing their estate plans. Understanding basic terminology and strategies is a good place to start.

For example, it is a good idea for British Columbia adults to be familiar with the different documents that may be involved in estate planning. A will is the foundation of an estate plan and designates how assets should be distributed. It also will name important people, such as executors to oversee this distribution and guardians to care for minor children. A living will, meanwhile, gives instructions for care should a person be incapacitated by illness or injury but is still alive. 

What forms to executors need to file for an estate's taxes?

Everyone knows they must file their own taxes by the Canada Revenue Agency's deadline, but what about the taxes for close family members who may have passed away in the past year? Executors in British Columbia are often faced with tax-related responsibilities around springtime, and may have questions about what exactly they need to do. The answers to these questions can be situations depending on the income sources of the deceased and who inherited these assets.

Executors are usually responsible for filing a the final income tax return for the deceased, which should include all income from the prior calendar year up to and including the date of death. If the person owned property, such as real estate or shares, the final tax return should note that he or she disposed of them at fair value on the date of their death. The only exception to this is if the assets were willed to a living spouse.

Benefits to naming trustees instead of just powers of attorney

Revocable living trusts are one of the many things which may come up during estate planning. British Columbia residents who undergo the process to create a living trust should understand how to make the best use of it. This includes naming the right trustees and understanding how to use the living trust to save on estate administration.

One of the main reasons people choose to create a living trust and name trustees is to avoid probate. Once a person with a trust passes away, the trust is handed off to the successor trustee who can sometimes pass by certain processes that a will would make necessary. This not only can save British Columbia beneficiaries financially, but can also preserve an estate planner's privacy. This is because unlike a will, the terms of a trust as well as the assets within that trust are not matters of public record.

Executors cannot choose where to probate a will

Handling probate fees is one of the many challenges people face when executing a will. Executors in British Columbia may be tempted to look at the different probate fees in different provinces to see if there is a less expensive location to undergo this process. However, under Canadian law a person's will must be probated in the province where the individual lived primarily. The only exception to this is if there is an estate asset in another jurisdiction that must be probated there.

The probate process determines estate administration taxes, and is usually needed to unfreeze and sell a deceased person's property. Executors who live in a different province than the deceased lived may find it challenging to oversee this process from across the country, or may wish to do it in a province with lower fees. However, they are not allowed to move the location as the province of the person's residence is entitled to probate taxes.

Cottages and capital gains taxes can complicate estate litigation

Families with multiple properties have many things to consider when preparing their wills. One of the issues that may arise in estate litigation is a beneficiary's ability to afford the taxes on a property he or she inherits. For families with a cottage that they would like to keep in the family, British Columbia and Canadian estate law and capital gains tax should be considered when drafting a will.

One of the reasons cottages can be so contentious in estate litigation is that many have increased substantially in value over time. Cottages in hot markets, such as Whistler, British Columbia, have skyrocketed in value with some properties valued at over $1 million. This can complicate estate plans for those looking to pass a cottage down to their children, as capital gains tax can make this a pricey acquisition.

Considerations for those named executors without prior knowledge

While many people have conversations and share documents with the person they have chosen to execute their estate, occasionally someone will learn of their position only after a person has died. Unwitting executors may be confused about their next steps upon finding out they are responsible for taking care of a person's will. There are often many questions about their next steps or even their ability to decline the position under British Columbia law.

When people list their executors in a will, it is a nomination not an obligation. That means that no one can force an executor to do the job if he or she does not want to. Acting as an executor can be a difficult job, especially with conflicting family members, large and varied assets or beneficiaries outside of British Columbia.

Lunny Atmore

900-900 W. Hastings Street
Vancouver, BC V6C 1E5

Phone: 604-259-1678
Fax: 604-684-0916
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