Pre-Retirement Planning Seminar April 24, 2012 by v1jQ0W3u


									     Will & Estate Planning
Pre-Retirement Planning Seminar
          April 24, 2012
                     Wills, Estates & Trusts
                       Vancouver Group
                      Paul Beckmann, Q.C.    Michelle Isaak
                      Lauren Blake-Borrell   Paul Lailey
                      Peter Bogardus, Q.C.   Roger Lee
                      Rhys Davies, Q.C.      Will Todd
                      Emma Ferguson          Sadie Wetzel
                      Mary Hamilton
•   What happens if you die without a Will?
•   Why do you need a Will?
•   What is a Will?
•   Can your Will be challenged?
•   Which assets pass outside your Will?
•   Tax on death
•   Executors
•   Estate Planning
Topics, cont’d

•   Other Planning documents:
    •   Powers of Attorney
    •   Nomination of Committee
    •   Representation Agreement
    •   Advance Directives
    •   Living Wills
Topics, cont’d
            Wills, Estates & Succession Act
                 S.C.B.C. 2009 Ch. 13
What happens if You Die Without a Will?
    If you die:
•     Spouse (including common-law)
      • life interest in residence
      • household furnishings
      • first $65,000
      • ⅓ of residue
      • “Common Law Spouse” cohabit in marriage-like
         relationship (including same gender) for at least 2
         years immediately before death

•     Children
      • ⅔ of residue
Effect of Separation on Spousal Entitlement to Estate if
Die Without a Will

•   Legally Married Spouses
    •   Divorced
        •   no spousal share
    •   Separated
        •   less than one year – spousal share
        •   more than one year – no spousal share
        •   No entitlement to estate once divorced
Effect of Separation on Spousal Entitlement to Estate if
Die Without a Will, cont’d

•   Common Law Spouses
    •   separated with intention to end relationship – no spousal
    •   separated less than one year (no intention to end
        relationship) – spousal share
If You Die Without a Spouse or Children

           •   Grandchildren
           •   Parents
           •   Brothers & sisters
           •   Nieces & nephews
           •   Next of kin
           •   Government
New W.E.S. Act

•   Spouse
    • Married
       • not separated for at least 2 years with ‘intention to live
         separate and apart permanently’
       • no triggering event under FRA

    •   Common law for at least 2 years
        • neither has terminated the relationship
New W.E.S. Act
 •   Spouse (or spouses)
     . household furnishings
     . $150,000 or $300,000
     . right to buy spousal home
     . Court can make orders if financial hardship
        to purchase spousal home
     . ½ of the residue

 •   Child or children
     . ½ of the residue
If You Die Without a Spouse or Children

 •   Descendants – grandchildren, etc.
 •   Parents
 •   Brothers & sisters
 •   Nieces & nephews
 •   Next of kin
 •   Government
Why do you need a Will?
     •   Appoint a Guardian
     •   Appoint an Executor
     •   Avoid Intestacy Laws
     •   Choose your Beneficiaries, e.g.
         • who
         • what
         • when
         • how
     •   Minimize taxes at death
     •   Save other costs at death
     •   Set up Trusts
Spousal Trust

 • Trustee holds all or part of your estate in trust
   during spouse’s lifetime, and
   • pays income to spouse
   • may encroach on capital
   • on death of spouse, balance to other
Children’s Trust
 • Trustee holds a portion of your estate in trust for
   children or grandchildren
    •   discretion as to income and capital until 28
    •   at 23, ⅓ of balance
    •   at 25, ½ of balance
    •   at 28, balance
        (or 30 or 35 or 40?)
Child’s Sprinkling Trust

   •   Trustee holds for life of child
   •   Trustee has discretion to pay for child and his/her
       children and, maybe his/her spouse
   •   Child may replace trustees?
   •   Child may appoint ultimate beneficiaries
Trusts in Wills
•   Some advantages
    •   some control
    •   creditor proofing
    •   access to other benefits – eg disability benefits
    •   tax rates / Income splitting
    •   next generation succession planning
    •   spendthrift protection
•   Some disadvantages
    •   ongoing administration – tax returns, trustee fees
    •   cost
What is a Will?

•   Wills Act

•   Document in writing
•   Signed
•   Dated
•   Witnessed
Can your Will be Challenged?

  •   Validity
  •   Marriage
  •   Divorce
  •   Wills Variation Act
Is the Will Valid?

• Of Age?
• Formalities of execution?
    • writing, signed, witnessed, etc.
•   No beneficiary (or spouse) as witness?
•   Testamentary capacity?
•   No undue influence or coercion?
New W.E.S. Act

•   Age: 16 or older or married
•   Curative provisions if Will doesn’t exactly comply with
    requirements but will-maker’s intention is clear
    •   can be electronic record (eg email)
    •   can be markings on a Will
•   Gift to witness can be saved by Court

• Marriage revokes your Will
  unless your Will is
  expressly written in
  contemplation of that
New W.E.S. Act

•   Marriage will no longer revoke a Will
 • In the event of:
   • a decree of divorce
   • a decree of nullity
   • a judicial separation
 • Your Will takes effect as if your spouse (of a legal
   marriage) predeceased you, unless a contrary
   intention appears in your Will
   . CL spouse will receive gift in Will even
     if separated
Wills Variation Act

  • Adequate provision for the
    proper maintenance and
    support of spouse and
Wills Variation Act - Spouse
 •   Spouse
     • Legally married
        •   separated or not
 •   Common Law
        •   cohabiting in marriage-like relationship
        •   (including same gender) for at least 2 years
        •   must be cohabiting at date of testator’s death

        = more than one “Spouse” can claim
Wills Variation Act - Children

   • Children
     • in or out of wedlock
     • includes adopted children
     • whatever age
Wills Variation Act, cont’d

• 6 months of Probate
• Estate passing by Will
• Court can order proper maintenance and
Assets Passing Outside of Will
• Joint tenancy
• Life insurance to a named beneficiary
• RRSP to a named beneficiary
• CPP survivor’s pension
• Annuities or pensions payable to a named
• Assets held in a trust
Kim Lee & Pat Campbell

House                          ($500,000)
(Mortgage)                       $500,000

Vacation Property                $300,000
Company assets                  $2,000,000
Pension/RRSP                     $100,000
Household Goods                    $20,000
Life Insurance
                         Total: $3,000,000
Kim Lee & Pat Campbell, cont’d

House                                        joint Tenancy
Vacation property                           Joint Tenancy
Pension/RRSP            Kim, with Pat as named beneficiary
                                            Joint Tenancy
Household Goods
                                            Joint Tenancy
Life Insurance
                          On Kim’s life and payable to Pat
Kim dies
Kim’s Estate

•   Residence and Vacation Property passes to Pat as joint
•   Pension and life insurance goes to Pat
•   Company goes to Pat
•   Household goods to Pat
•   Car passes by Will:           $5,000
•   Total estate passing by Will: $5,000
Benefits of Assets Passing Outside of Will

•   Assets transferred immediately on death
•   Reduce probate fees and other estate costs
•   Privacy
•   Creditor protection
•   Limit Wills Variation Act exposure
Tax Consequences on Death

•   Capital gains tax (~22%)

•   Income tax on RRSP’s and RRIF’s (~44%)

•   Probate filing fees (~1.4%)

•   No other estate taxes, gift taxes, inheritance taxes,
    succession duties or other death taxes
Capital Gains

• Capital Gains Tax

  •   deemed disposition of all capital property (real estate,
      shares etc.) on death
  •   ½ of gain is taxable
Capital Gains, cont’d

•   principal residence exemption
•   estate freeze during lifetime (limit but not eliminate tax)
•   rollover to spouse
•   rollover to spousal trust
•   $750,000 active small business exemption
•   gift to charity

• rollover to spouse
• possible rollover to disabled child or grandchild or
  trust for that child or grandchild
• gift to charity
• spend it before you die
Probate Fees
• Approx. 1.4%
• Payable when applying for Grant
• Assets situate in British Columbia at death
  and intangible assets anywhere
• Only assets passing to executor or
Probate Fees, cont’d
• Calculation:
    •   Court filing fees - $208
    •   1st $25,000 of assets exempt
    •   next $25,000 at $6/$1,000
    •   beyond$50,000, at $14/$1,000

• e.g.: for a $400,000 estate  $5,258
• e.g.: for a $3 million estate $41,658
Probate Fees, cont’d

•   Not payable on assets which do not form part of the estate
•   Estate Plan
    • joint tenancy
    • designated beneficiary
    • tangible assets outside British Columbia
    • second Will or multiple Wills
    • assets held in an inter vivos Trust
    • no assets (spend or give away)
Caution – Why you might not want to put assets in
Joint Tenancy

•   Disposition now of ½ interest in property
    • Tax consequences – now and in the future?

•   Concerns about creditors or others who have claims against
    your co-owner

•   Need to have co-owner approve any decisions including
    signing all sale documents
Executor / Trustee Duties

 •   Funeral arrangements
 •   Inventory & safeguard assets
 •   Probate Will
 •   Realize assets
 •   Pay debts
 •   File income tax return
 •   Carry out testamentary wishes
 •   Administer trusts
 •   Wind up estate/trusts
Considerations when choosing Executor / Trustee(s)

•   Willingness
•   Age
•   Residency
•   Number
•   Trustworthiness
•   Impartiality
•   Expert abilities
Remuneration of Executor / Trustee(s)

   • Provision by Will
   • By law
Remuneration of Executor / Trustee(s) cont’d
•   5% of capital (maximum)
    • 5% of $400,000 = $20,000 one time only
    • Over the lifetime of the estate/trust
    • 5% of income (maximum)
    • e.g.: $400,000 trust earned income at 6% =
       $24,000 x 5% = $1,200 annually
•   4/10ths of 1% annual care and management fee
    • If average value of trust is $412,000 x .4% =
       $1,648 annually
Remuneration of Executor / Trustee(s), cont’d

 • Portion of maximum awarded depends on many
   factors, including size of estate, complexity,
   duration, etc.
 • Divided among executors and trustees
 • Need Court approval if all beneficiaries do not
   agree, or are not of age, or lack capacity
What Happens If I Lose Capacity?

•   Powers of Attorney
•   Representation Agreements
•   Nomination of Committee
•   Advance Directives
•   Living Wills
Powers of Attorney

•   Scope:
    • Only for “financial affairs”:
        •   business
        •   property; and
        •   conduct of legal affairs
    •   Some overlap with Representation Agreement, but
        Powers of Attorney are preferred tool
    •   Not court supervised, but PGT may respond to “reports”
New Provisions

•   Existing Powers of Attorney continue in effect

•   Donor and Attorney must sign before effective

•   Attorney entitled to information and records of Donor and
    must maintain records of Donor’s property and actions taken
New Provisions, cont’d
•   New test of capacity; Donor must be aware:
    • of property and its approximate value
    • of obligations owed to dependents
    • Attorney has broad power regarding financial affair, only
      restricted from making a Will and as limited in Power of
    • business and property may decline, if Attorney is not
    • Attorney may misuse authority
    • Power of Attorney may be revoked
Timing of Effectiveness

•   Immediate (once duly signed by Donor and Attorney)

•   Springing    (only   following   satisfaction   of   condition):

    •   Statutory declaration by 2 doctors that Donor is incapable
        of managing financial affairs by reason of mental or
        physical infirmity

    •   Other?
What’s in a Name?

•   Land titles and banks can be “fussy”:
    • a.k.a.s.
    • initials
    • matching filings or identification
Standard Forms

•   Statutory form of limited use
•   Detailed provisions to allow:
    •   payments to family members and charitable giving;
    •   acts beyond interests of donor or where the Attorney has
        an interest;
    •   tax and estate planning transactions
    •   restrictions or granting additional powers
    •   fees to Attorney for acting
    •   replacement by alternate Attorney
Endurance and Termination
•   Not terminated by:
    • loss of capacity; or
    • expiration of time under Land Title Act
•   Suspended by:
    • terms provided in Power of Attorney; or
    • appointment of Committee (public action)
•   Terminated by:
    • death
    • appointment of Committee (private action); or
    • revoked with written notice to Attorney
    • attorney divorce with Donor, incapable, bankrupt, corporate
       dissolution, or crime against Donor
Danger: Private Company Shares

•   The Income Tax Act deems person with the power to
    vote shares “under a contract, in equity or otherwise” to
    own those shares when determining:
    •   who is a “related person”;
    •   whether a company is a CCPC; and
    •   whether two companies are “associated”
•   Can result in negative tax consequences
Danger: U.S. Reporting Obligations

•   If the Attorney is a citizen or resident of the U.S., the
    Attorney must report to the U.S. on any bank or
    investment accounts of the Donor, if the Power of
    Attorney grants the Attorney signing authority of such

•   Penalty for failure to report by June 30 of the year
    following can be $10,000 per unreported account
Representation Agreements

•   What is a Representation Agreement?
•   Capacity – s. 7; s. 9
•   Who can be a representative?
•   Areas of authority
•   Monitors
•   Drafting issues
•   Execution
Representation Agreements, cont’d
•   Decide in advance how, when and who should make
    decisions about:
    •   health care and personal care
    •   routine management of financial matters
    •   legal proceedings
•   Avoid need for Committee
Reasons to have Representation Agreement

•   Do not want persons set out in legislation to be substitute decision
    maker for health care
•   Want to empower person to consent to serious types of health care
•   Want to empower person to decide personal care
•   Want advocate in health or social service system if lose capacity
•   Want person to have access to all medical records
•   Lack capacity to grant Power of Attorney but need help with routine
    financial matters
Who can be a representative?
•   Individual age 19 + (but not paid caregiver or employee
    of care facility unless caregiver or employee is child,
    parent or spouse of adult)
•   Public Guardian and Trustee
•   Trust company or credit union (but only for financial
    management or legal services)
•   Multiple – concurrently or alternately
•   Unanimous OR majority OR each act separately
•   When does the alternate step in?S
Areas of Authority
•   Section 7 (limited capacity)
    •   Personal care
    •   Health care
    •   Routine Management of Financial Affairs
    •   Obtaining Legal Services
•   Section 9
    •   Personal care
    •   Health care
Section 9 – Personal and Health Care

•   Can authorize rep to do anything they consider
    necessary in relation to personal or health care, or
•   Can specify decisions within rep’s authoirty, including:
    •   Personal: shelter, employment, education, social activity,
        contacts, approvals, diet, dress, etc.
    •   Health: consent to specified health care, withhold life
        support, restrain or move adult over his or her objections,
Section 9 – Tasks Requiring Specific Authority

Unless specifically authorized, rep cannot:
• Consent to serious health care in regulations (e.g.
   abortion, electroconvulsive therapy, psychosurgery,
• Make arrangements for the temporary care and
   education of minor children, or any other persons who
   are cared for or supported by the adult
• Interfere with the adult’s religious practices
Representation Agreement - Remuneration

•   Reimbursed for expenses
•   No remuneration for any health care decisions or action
•   Remuneration otherwise only if:
    •   Authorized in Rep. Agreement and amount or rate set,
    •   Court authorizes payment (but not required if PGT is rep.
        and remuneration in line with regulations)
Representation Agreement - Termination
•   All Representation Agreements end if:
    •   adult dies
    •   court cancels on application of PGT (after receiving a
        notice of objection)
    •   unless rep agreement says otherwise, marriage or
        marriage-like relationship terminates (if adult and rep are
        spouses) and no other representative is named
    •   representative dies, resigns or becomes incapable and no
        other representative is named
    •   adult revokes and gives notice to all reps and monitor
    •   appointment of a Committee – if court so orders

•   Patients Property Act
    •   to be replaced by Adult Guardianship and Planning
        Statutes Amendment Act, 2007??
•   Finances and person
•   Strips patient of legal capacity
•   Requires Court Order
•   Replaces Power of Attorney and/or Representation
Committeeship, cont’d

•   Committee supervised by Public Guardian & Trustee
•   Bonding may be required
•   Can do Nomination of Committee
    •   S. 9 Patients Property Act
    •   Signed like a Will
    •   Court will appoint nominee unless good and sufficient
        reason for refusing the appointment
Advance Directives
Advance Directives

•   What are they?
•   Capacity
•   When do they NOT apply?
•   Interaction between Representation Agreements and
    Advance Directives
What is an Advance Directive?
  • Health Care (Consent) and Care Facility
    (Admission) Act
  • Document in writing
  • Signed
  • Dated
  • Witnessed
Advance Directives
•   Gives or refuses consent to any particular health care in the
•   Not valid if instructions are:
    • to do something contrary to law
    • to omit to do anything contrary to law
•   Can include end of life provisions but not any of the health
    care listed in s. 5(1) of Health Care Consent Regulations
    (abortion, electroconvulsive therapy, psychosurgery etc.)
Advance Directives, cont’d

•   Binding on health care provider,
    representative and substitute decision-maker
•   Provide comfort to family
•   Health care provider can treat you without
    choosing temporary decision-maker
Advance Directives, Capacity

•   must be capable of understanding the nature and
    consequences of the proposed advance directive:
    •    the scope and effect of the health care instructions
    •   that the health care provider may treat without choosing a
        temporary substitute decision-maker
When do Advance Directives Not Apply?

•   Advance Directive does not address particular health care decision
•   Advance Directive is unclear so cannot tell whether adult has given
    or refused consent
•   Adult’s wishes, values or beliefs have significantly changed since
    making Advance Directive
•   Medical knowledge, practice or technology has changed AND:
    •   changes might substantially benefit adult;
    •   Advance Directive did not expressly state Advance
        Directive was to apply even if changes in medical
        knowledge, practice, or technology occur
Advance Directives v. Representation Agreements

•   If rep agreement exists – health care professional
    cannot act without consent of the representative unless
    the Representation Agreement provides that a health
    care provider may act in accordance with an advance
•   Does client really want decisions made without
    consulting representative?
Living Wills or Other Expressed Wishes
•   Health care decisions
•   If no committee or representative, health care provider
    follows advance directive
•   If adult has a representative or if health care provider
    chooses a substitute decision-maker, the representative
    or substitute decision-maker must make decisions
    based on:
    •   current wishes
    •   known beliefs and values
    •   best interests
Health Care (Consent) and Care Facility (Admission)

•   Lists temporary substitute decision-makers if no
    guardian, committee or representative
    •   spouse, adult child, parent, sibling, other relative
    •   other person authorized by Public Guardian and Trustee
Consent to Health Care – Default Rules for Adults

•   GENERAL RULE: health care provider cannot provide
    health care without patient’s consent or, if appropriate,
    substitute consent (some exceptions apply)
•   “Health Care” includes anything done for a therapeutic,
    preventative, palliative, cosmetic or other purpose
    related to health and includes a course of health care
Exceptions - Emergency
•   Necessary to provide health care without delay to preserve life,
    prevent serious harm or alleviate serious pain
•   Adult must be incapable of giving consent and has no available and
    authorized guardian or representative
•   Where practicable, 2nd health care provider to provide confirmation
•   May not provide health care contrary to adult’s instructions or
•   May overrule guardian/representative if they are statutory non-
    compliant with duties
Substitute Consent
•   First look to authorized and available substitute decision makers (i.e.
    representative or committee)
•   If none, choose first of the following list who is available and qualified to be a
    “temporary substitute decision maker”:
    •   Spouse (includes marriage-like relationship)
    •   Child
    •   Parent
    •   Brother/Sister
    •   Grandparent (NEW)
    •   Grandchild (NEW)
    •   Anyone else related by birth or adoption
    •   Close friend (another adult who has long-term close personal
        relationship involving frequent personal contact, but not receiving
        compensation for providing care) (NEW)
    •   Person immediately related by marriage (NEW)
TSDM Qualifications
•   At least 19 years old
•   Have been in contact with adult during past 12 months
•   Have no dispute with adult
•   Be capable of giving, refusing or revoking substitute
•   Be willing to comply with statutory duties
Public Guardian and Trustee

•   If no one is available or qualified OR if there is a dispute
    about who is chosen, health care provider must choose
    person authorized by PGT
•   PGT may make decision itself
TSDM Authority
•   If TSDM consents to ‘major health care’, health care provider must
    inform adult and any spouse, near relative or close friend who
    accompanies adult of:
    • Assessment re: incapability
    • Name of TSDM
    • TSDM’s decision
•   If adult becomes capable, authority of TSDM terminated and adult
    must give consent before health care is begun/continued
•   Prior acts not invalidated
TSDM Authority, cont’d
•   TSDM may not give or refuse substitute consent to
    certain health care prescribed by regulation, including:
    •   Abortion (with some exceptions)
    •   Electroconvulsive therapy
    •   Psychosurgery
    •   Removal of tissue from a living body for implantation in
        another human body or for research
End of Life Decisions
•   TSDM only has authority to refuse consent to health
    care necessary to preserve life if there is substantial
    agreement among health care providers caring for adult
    •   Such decision is medically appropriate; and
    •   TSDM made decision after having consulted with adult
        and the decision is in accordance with instructions and
        wishes expressed while capable and in adult’s best
TSDM Duties
•   Must consult to greatest extent possible with adult and, for PGT
    representative, with near relative or close friends who want to
•   Must comply with instructions or wishes expressed by adult while
    capable (may include improperly executed Advance Directive)
•   If wishes/instructions unknown, TSDM must act in adult’s best
    interests, taking into consideration:
    • adult’s current wishes and known beliefs and values
    • if adult’s condition will be improved by health care and/or
        likely to improve without it
    • whether expected benefit is greater than risk of harm
    • whether less restrictive or less intrusive form of health care
        would be as beneficial as proposed one
So what should you do now?
•   Make sure you and spouse have up to date Wills
•   Do you have a Nomination of Committee?
•   Think about doing a Power of Attorney (maybe name two people to
    act jointly)
•   Do you need a Representation Agreement or should you do a Living
•   Do you need more advice?
•   Will Planning information booklet
•   Will instruction questionnaire
Thank you for your interest

 Sadie Wetzel   604.643.6499
                                                                                                          Wills, Estates & Trusts
                                                                                                               Vancouver Group
                                Thank you for your interest

      Kate Bake-Paterson     R. Paul Beckman, Q.C.    Lauren Blake-Borrell   Rhys Davies, Q.C.      Tim Duholke F.C.A.       Emma J. Ferguson

Mary B. Hamilton     Michelle L. Issak       Paul D. Lailey         Roger D. Lee       Shane Onufrechuk C.A.     Will Todd          Sadie Wetzel

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