Vancouver Wills and Estates Law Blog

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.

Tips for picking executors

Picking the right person to carry out a will is a difficult and important decision for an estate planner. An executor will be tasked with an immense amount of responsibility once the person whose will they are executing passes away. British Columbia estate planners and their executors should be fully aware of these tasks and responsibilities when they enter into this arrangement. 

There are a few characteristics executors should possess in order to carry out their responsibilities in a proper manner. The first of these is continuity. Picking an executor who is old or ill could be a bad idea as that person may be likely to predecease the estate planner. Choosing to involve a lawyer or company with several employees and backups can help to mitigate any possible issues like this ahead of time.

Executors should discuss details with terminally ill relatives

When a family member is diagnosed with a terminal illness, one of the many things to consider is the steps to be taken after he or she passes away. For those named as executors, understanding these responsibilities is even more important. While it can be emotionally difficult to discuss these issues with a dying loved one, understanding his or her estate plans, assets and last wishes before they pass away can alleviate a lot of stress for British Columbia families.

Whether the loved one is sick or not, any executors named in a will should be immediately informed of where all important papers are kept. This includes their birth certificate, marriage and divorce certificates, pension plan information, life-insurance policies, military discharge papers, and financial documents. British Columbia executors should ensure all these papers are kept in one safe place, such as a safe deposit box. They should also be sure they have access to the keys.

Executors benefit from an organized estate plan

When making estate plans, it is a good idea to discuss key decisions with those who are impacted. Executors are particularly critical to communicate with, as they are responsible for administering the estate under British Columbia estate law. Not only should this person know what the estate planner's wishes were in detail, they should also have all the documents they need to see it through.

Executors in British Columbia must do several things. They must pay bills, file tax returns and manage investments until the estate is settled. This can be made easier if someone leaves a list of financial accounts and other important documents in a clearly marked place. The most important of these documents will be the original copy of the will.

Picking trustees can be challenging for some

While some people have an easy time naming people to handle their estates, others face a more difficult decision. British Columbia residents should take the necessary steps to name executors and/or trustees prior to passing away, even if it is a complex choice. Addressing the issues behind the indecision is a good idea for those looking to resolve these challenges.

There are many things which could cause challenges for British Columbia residents looking to name trustees. For example, family issues such as conflicting children or a lack of immediate family members could cause challenges for those preparing estate plans. Businesses can also cause additional complexity. For example, if closing a business would harm your estate or devastate employees, succession for that organization is critical to consider.

Preparation helps common-law couples avoid long estate litigation

Many couples who are in a long-term common-law relationship have questions about how to access a partner's estate after he or she passes on. These cases can often result in lengthy estate litigation, so advance planning and education about estate law is a good idea. British Columbia residents who are concerned about accessing a common-law partner's estate should plan ahead for issues such as access to funds, ease of transition and taxation.

Households that are being supported completely by one common-law partner are particularly vulnerable in the case of estate litigation, especially if the other partner is unable to access funds and has few savings of his or her own. Being named as the executor of an estate can help in this case. This will give the common-law partner access to bank accounts to pay expenses, as long as appropriate documentation is presented. 

Understanding responsibilities important for executors

While many people readily agree to be the executor of someone's estate, few understand the long list of responsibilities they are taking on in doing so. Many British Columbia residents only act as executors one or two times throughout their lives, so few have experience when they take on the task. It is a good idea to review the duties before getting started with probating the will of a loved one.

British Columbia executors have multiple responsibilities immediately following someone's death. This includes finding the original will, canceling credit cards, safeguarding valuables and disposing of prescription drugs. Some people leave their wills with a lawyer, while others keep it in a safe deposit box. Executors should know about the location of this as well as any other important items.

CPP death benefit given to executors may not cover funeral costs

One of the major costs people often forget to plan for is funeral expenses. In British Columbia, executors are often left with difficult decisions and responsibilities when it comes to making arrangements for funerals. A change to the Canada Pension Plan will provide a flat-rate death benefit so that low-income families can pay these costs, although funeral homes say the amount offered by the government is not sufficient.

Provincial and federal finance ministers met in early December to discuss changes. They set the death benefit at $2,500 flat for everyone, regardless of how long they had paid into CPP. This is short of the $3,580 that the Funeral Services Association of Canada has been lobbying for, the value which was in place in 1997. Adjusted for inflation, this would amount to $5,500, much closer to the $6,000 cost of an average Canadian funeral.

Executors should have details about digital assets

Most people know they need to make estate plans for the future of their physical belongings, but what will happen to their digital assets when they pass away? From files on a computer to profitable websites owned by someone who has passed away, any executors named for an estate may be called upon to handle these special matters, which are often overlooked by those preparing estate plans in British Columbia. Those who do not specify their wishes regarding items like digital files and social media accounts may leave relatives with questions as to the next steps after they pass away.

The value of digital assets can vary from person to person. For example, a bestselling author may have an unpublished manuscript on his or her computer. Others may own domain names, downloaded music or movies, or successful blogs that carry a monetary value. Sentimental value can also apply for items like digital photos or emails. 

Lunny Atmore

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

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