WHAT ASSETS CAN BE LEFT BY WILL? There are certain rules of law and certain statutory provisions that have the effect of preventing property owned by a client from passing under their Will.
Joint Tenancies at Law and in Equity
Property that is owned in joint tenancy will pass under the Will of the last of the joint tenant owners to die.
On the death of each joint owner(s), their interest in the jointly owned property disappears, leaving the survivor(s) as the sole owner(s); this is referred to as the right of survivorship.
Joint tenancy is a way to avoid probate fees on certain properties.
There are specific statutory provisions that allow the owners of life insurance, RRSPs, and RRIFs, and employees owning interests under employee benefit plans, to designate a beneficiary to receive the property on the death of the owner.
Where a beneficiary is designated, these statutory provisions provide that the property will pass directly to the beneficiary and will not be comprised in the estate of the deceased owner.
Donatio Mortis Causa
An individual who is facing death from some existing peril may make a gift of movable property to another person conditional upon the death of the giver.
For the gift to be effective, it must be delivered to the recipient prior to the death of the giver.
The subject matter of this gift, called a donatio mortis causa, will not form part of the estate of the giver and therefore is not subject to the terms of their Will.
If the giver subsequently recovers, then the gift will fail.
The giver is free to revoke the gift at any time prior to their death and, if the beneficiary predeceases the giver, then the gift will lapse.
Presumption of Survivorship
When two individuals are killed simultaneously or in circumstances where it is not possible to determine which of them survived the other, there are statutory rules that determine which of them died first.
These rules provide that for all purposes determining the title to property except life insurance, the younger of the two individuals is presumed to have survived the elder.
Probate fees are assessed on the value of a person’s property within BC that passes to the personal representative.
Such property must be disclosed in the probate application as passing under the Will, and is usually considered part of the estate.
Probate fees are approximately 1.4% of the value of the probateable assets.
Probate fees can be avoided by planning your estate so that certain properties pass outside your Will upon your death.
ASSETS PASSING UNDER A WILL
Movables, Immovables, and Situs
All property other than interests in land, is referred to as “movable” property, and can be moved from one jurisdiction to another.
Interests in land are referred to as “immovable” property, and cannot be moved from one jurisdiction to another.
Situs is a legal characteristic of property that determines which courts have jurisdiction to grant orders in respect of the property.
The situs of property is determined by applying legal principles known as “conflict of laws principles”.
The situs of property is important because it can affect what law will govern dealings with the property, both during the owner’s life-time and following death.
The situs of movable property is usually considered to be the jurisdiction where it can be dealt with most conveniently.
The situs of immovable property is the jurisdiction in which it is located.
Domicile is a legal concept that roughly equates to the place where a person was born or where a person has chosen to take up permanent residence.
The determination of a person’s domicile is considered to be a question of mixed fact and law.
Every person has a domicile of origin, usually determined by the domicile of that person’s father at birth.
A person may acquire a domicile of choice by establishing residence in a new jurisdiction with a fixed and settled intention to remain there permanently.
The domicile of choice displaces the domicile of origin.
Devolution of Property by Will
A client’s movable property, wherever it may be situate in the world, will pass on death under the law of his domicile.
Immovable property will only pass under a Will that complies with the law of that jurisdiction, which may require a Will to be executed in the presence of three witnesses if it is not in the client’s domicile.
WHAT ASSETS CAN BE LEFT BY WILL?
Restrictions on Testamentary Freedom
Community Property Laws
Unless negative by express agreement, community property laws are an incidence of the matrimonial property regimes in certain jurisdictions.
If the client was married in a jurisdiction with community property laws, without an ante-nuptial agreement that provides that the client is separate as to property, one-half of any property acquired during the marriage by either spouse will belong to the surviving spouse on the death of the titled spouse.
Family Relations Act Rights
Under the Family Relations Act, each spouse is entitled to an undivided one-half interest in each family asset on the first occurrence of a marriage breakdown event as defined in the statute.
Under the Family Relations Act, the court has the power to vary the division of family assets provided by the statute or the marriage agreement
The Family Relations Act empowers the court within two years of marriage breakdown to order provision to be made out of property dealt with under an ante-nuptial or post-nuptial settlement for the benefit of either spouse, or a child of a spouse, or a child of the marriage.
If worried about the future marriage of a child failing, a client may arrange for a property to be held by a discretionary trust. The child’s spouse can always be added as a beneficiary at a later date.
Orders for Alimony and Maintenance
If a court order exists requiring a client to pay alimony to a divorced spouse or maintenance of children and the obligation of the client continues following their death, it may affect the client’s ability to freely dispose of their estate.
If the client is providing a benefit under the Will to the child or spouse who benefits under the court order, it will be important to ascertain whether the client intends the benefit under the Will to be in addition to or in satisfaction of the client’s obligations under the court order.
Wills Variation Act Claims
Under British Columbia law, spouses, common law spouses, same sex couples, and natural or adopted children of a deceased have the right to contest an estate on the basis that the deceased parent, partner, or spouse failed to “make adequate provision for their proper maintenance and support” in the Will.
The Court has a wide discretion to vary a Will in any manner that it thinks just.
The Court may take into account evidence of the testator’s reasons for not making adequate provision for the spouse or child that is contained in a statement in writing signed by the testator.
Wills Variation Act
A testator has a legal obligation to provide for his or her spouse, and only a moral obligation to provide for adult children.
Legal obligations take priority over moral obligations.
If there are sufficient assets, then both legal and moral obligations should be met.
If a testator’s spouse and/or children are not happy with what is left for them, they may choose to act upon the Wills Variation Act.
Restrictions on Testamentary Freedom Based on Statute or Case Law Principles
The Notary must ascertain whether the client owns property in a foreign jurisdiction in which there are currency controls prohibiting the client from removing property from the jurisdiction and ensure that the terms of the Will are consistent with these rules.
Rules of Professional Associations
The Notary must ascertain whether any property owned by the client is subject to statutory restrictions prohibiting its ownership by a person who is not a member of a specified professional body.
Property of this kind includes the businesses of such professionals as Notaries, physicians and surgeons, charted accountants, lawyers, dentists, architects, and engineers.
Resulting and Constructive Trusts
On occasion, although a client is registered as the legal owner of property, they will be subject to an equitable obligation imposed by the Court in favour of another person, and thus will not be able to dispose of the property through their Will.
A constructive trust is a trust imposed by the courts as a remedy for unjust enrichment.
Restrictions Based on Contractual Obligations
The terms of contractual arrangements entered into by a client during their lifetime may have the effect of preventing the client from being able to freely dispose of property that appears to belong to the client.
It is the Notary’s duty to review copies of any such arrangements and orders to that their effect can be taken into account when assisting a client in formulation an estate plan.