Key Changes in WESA: Part 2

by Lisa Collins | April 2, 2014

wesa blog part 2Earlier this week, we introduced the recent enactment of the Wills, Estates and Succession Act (WESA) in BC. Over our next few blog posts, we will highlight some of the key changes you should be aware of, and how they might affect your estate planning moving forward.

What is a Will?
Amendments contained in WESA will allow other documents (besides the Will itself) to have testamentary effect. This means that the court is given discretion in certain circumstances, to use a “record, document, writing or marking on a will or document”, including electronic data. These records or documents may not reflect the final intentions of the deceased person. The court has also been given the power to correct accidental errors or errors made by will drafters, if they failed to understand or properly carry out the will-maker’s instructions. Extrinsic evidence, including evidence of the will-maker’s intent, is required in this case.

Intestacy
When a person dies without a will, there are new rules that apply under WESA. Quite simply, the distribution of assets that would occur under the new legislation would NOT be favourable for anyone involved. Not to mention that estate planning itself also allows you to save taxes, ease administration and manage the assets of others. My best advice is to do your planning ahead of time, have a Will in place and not rely on the intestacy provisions.

Marriage No Longer Revokes a Will
Under the former legislation, when a person got married, the marriage automatically revoked their will. This is no longer the case under WESA.
However, a gift to a spouse, or appointment of a spouse as an executor, is revoked if after the Will is made the person ceases to be the will-maker’s spouse.

Definition of a Spouse
The definition of spouse is important for many aspects of WESA, including entitlement under a will, the right to vary a will and intestacy entitlements. WESA’s definition of “spouse” includes both legally married spouses and individuals who have lived together in a “marriage-like relationship” for at least two years. This includes same-gender relationships. Of even greater importance are the provisions which dictate when a person ceases to be a spouse, as this will impact their rights under WESA:

  • Legally married spouses cease to be spouses when they separate and cause an interest in family property under the Family Law Act (“FLA”) to arise. Under FLA, each spouse has a right to a half interest in all family property upon separation. However, there is a ‘reconciliation’ exception within FLA that is also being proposed as an amendment to WESA. It says that spouses are NOT considered to have separated if they begin to live together again within one year, for the purpose of reconciling, and they continue to live together for at least 90 days thereafter.
  • In the case of a marriage-like relationship, a person ceases to be a spouse when at least one person “terminate” the relationship. This means that spousal rights vanish overnight, and could result in significant unintended consequences due to a temporary separation or breakdown in the relationship. It is not yet clear how the proposed ‘reconciliation’ amendment may apply to these marriage-like relationships, especially if there has not been a physical separation.

In our next blog post, we will review some of the other important changes, including those relating to the new survivorship rules and multiple wills. If you have any thoughts or questions on this new legislation, please leave a comment below. As always, if you have questions about your own estate plan, feel free to contact me at any time.

The Introduction of WESA: Part 1

by Lisa Collins  |  March 31, 2014

WESA

Effective today, BC is making sweeping changes to its legislation on Wills and estates with the enactment of the Wills, Estates and Succession Act (WESA). WESA repeals and consolidates a number of Acts while making significant changes.

You may be wondering whether you need to amend your existing Wills. Essentially, a will that was valid under the previous Wills Act is still valid under WESA. However, with the extent of the changes that this new legislation brings, it is possible that certain areas need to be adjusted in order to fully protect your intentions. The best solution for this is to have your current situation and circumstances reviewed fully.

The BC government has even proclaimed this week ‘Make a Will Week’, to encourage BC residents to write a Will or bring their existing will up-to-date. For many people, the introduction of WESA may be the motivation they need to undertake a long overdue review of their estate plans! If you feel your Will may need some work, feel free to contact me to set up a complimentary consultation to review your estate plan.

Later this week, we will post a few of the significant changes you should be aware of. Stay tuned!

Lending Money to Family

by Lisa Collins  |  November 8, 2013 

Man writing a checkSome would say it is never a good idea to do business with family.  But that is just what a loan to a family member  is.  The problem is, it is usually not seen as a business transaction (by at least one of the parties).   Because of the family relationship, it is dealt with more casually.  But it is because of that family relationship that more formality and scrutiny is often warranted.

Lending money to a family member can be one of the quickest and surest ways to damage the relationship with that person.  If it is not repaid on time, the lender may not feel free to ask for repayment and would not be prepared to take legal action.  They would be afraid about how this would impact their relationship with that family member.   And perhaps with the lack of formality, the borrower may just be hoping that the lender will just never seek repayment (effectively making it a gift, which may have been the borrower’s hopeful intention all along).  This will breed resentment and conflict.

Also, there is always concern about the consequences of other family members becoming aware of the loan (and/or the failure to repay).  They may feel that this is not fair and allegations of favoritism may arise.  It can affect their relationships with both the lender and the borrower.

And when the family member making the loan is elderly, there is greater potential for misunderstanding or diminished judgment about whether the loan is a good idea.  They are also more susceptible to undue pressure or influence.  This is particularly the case where the family member receiving the loan also has some involvement in looking after the elderly person’s financial affairs.

“Get it in writing” is the best advice when a family member is loaning money to another.  It brings some business reality to the situation and goes a long way to avoiding misunderstanding and disputes in the future.  This will also make it easier for the attorneys under a power of attorney, or executors of the estate, to deal with it in the future.  They will have certainty about its nature, as well as all of the details of the loan.  They can take it into account in administering the person’s affairs.

So get it in writing.  Tell them the lawyer is insisting on it!

The ‘Real’ Power of a Power of Attorney

by Lisa Collins  |  May 26, 2013

power-of-attorneyAn important question for attorneys under a Power of Attorney is how far their power and authority goes when acting for a person who has become incompetent.  Even though the Power of Attorney document may say that the person appointed can “do on my behalf anything I can lawfully do by an attorney…” there are limitations under certain principles of law.  Can an attorney create an inter vivos trust for the principal under the Power of Attorney?

In a recent BC case (Easingwood v. Cockroft, BCCA), two attorneys, a sister and brother, acting under a Power of Attorney for their father, created an inter vivos trust for their father who had become incompetent, transferring most of their father’s assets to the trust (in this case an “alter ego trust” for tax purposes).  They took care to ensure that the trust mirrored the terms of their father’s Will.  After the father’s death, his wife, who was his second wife and not the mother of his children, challenged the Will and the creation of and transfer of assets to the alter ego trust. This was notwithstanding that prior to entering into the marriage she had signed a marriage agreement whereby she had waived her rights under the Wills Variation Act (WVA).

The court held that it was within the power of the attorneys to create an inter vivos trust because it had been within the donor’s power to do so when he was competent.  But a key question was whether the trust in fact mirrored the Will because the court held that the trust could be attacked if the actions of the attorneys did not conform to the intentions of their father.  In the end the court found that the trust deed did not diverge from the father’s known intentions and it was upheld.

Thus, the Power of Attorney can be used after the principal has become incompetent to create a trust for that person; however, it is critical that the provisions of the trust be consistent with the known intentions of the principal.  In addition, such a trust can provide protection against future Wills Variation Act (WVA) claims in British Columbia.