Guide to Wills and Estates Section I 1 OVERVIEW

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1 Guide to Wills and Estates Section I 1 OVERVIEW This Guide covers two areas of practice which are closely related: Wills and Estates. Section II Wills covers: what a Will is; the purpose and, therefore, importance of a Will; what happens if a person dies without a Will; the flow of the file; and the documentation and correspondence from initial instructions to the preparation of a simple Will. Section III Estates (i.e. what happens after a person dies) covers: what an estate is; the duties of the personal representative and the lawyer; the flow of the file; the correspondence; and documentation; relating to the administration of an estate, the applications for Letters Probate or Letters of Administration, as well as the distribution of the estate. Section IV contains a compilation of helpful information. In this Section you will find: a handy list of addresses and phone numbers; a glossary of terms used throughout this Guide; Wills and Estate checklists; an applicable fee schedule; Electronic Filing System (EFS); as well as other information like the Law Society of B.C.'s ruling on what a legal secretary, working in the area of Wills and Estates, can and cannot do. It is advisable to review in detail the glossary and Law Society ruling before proceeding further. Some parts of the main Statutes (or Acts) are covered in this Guide as they relate to or explain the reasons for certain requirements in the area of Wills and Estates. As the legal secretary starts working in the field of Wills and Estates, it is recommended that she or he becomes familiar with those Acts, including: 1. Wills Act which governs some of the requirements for making a valid Will; some contents of the Will (such as gifts); who can make a Will; and how it should be signed (executed) and witnessed; 2. Wills Variation Act which provides that a spouse or a child of the Testator may apply to vary or contest a Will and apply to the Court for maintenance and support which, in the Court's opinion, is adequate in the circumstances (please note that the definition of spouse includes a person married to another person, or a person who is living and cohabiting with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, and that person has lived and cohabited in that relationship for a period of at least 2 years); 3. Estate Administration Act which refers to the Grants (Probate and Administration); covers the rules for intestacy; deals with the duties and powers of the Courts, Executors and Administrators, and generally, with the administration of an estate;

2 2 OVERVIEW Guide to Wills and Estates 4. Trustee Act which governs the powers and obligations of Trustees. 5. Probate Recognition Act which sets out the procedure to reseal (bring into British Columbia) a foreign grant. (Note: A list of jurisdictions declared to be reciprocating Canadian provinces, states, and countries for the purposes of this Act is attached to this Act). 6. Probate Fee Act which governs the amount of fees payable to obtain the issuance of a grant or resealing. 7. Family Relations Act which, among others, governs the entitlement to matrimonial property. In addition, the legal secretary should be familiar with Rule 21-5, Administration of Estates (Non-Contentious), of the Supreme Court Civil Rules which governs the procedure and the forms required to apply to the Supreme Court for Letters Probate or Letters of Administration. WILLS A Will is a written document in which a person (the Testator) expresses his or her wishes on the disposition of the Testator's property (assets) after death. It is made during the Testator's lifetime, but only takes effect upon the Testator's death. To be legally effective, a Will must be in writing, must be signed by the Testator, and witnessed by at least two witnesses. To make a Will, a person has to be of the age of majority which, in British Columbia, is the age of 19 years. There are several exceptions to the age requirement. A person who is not yet 19 years can make a Will if that person: is or has been married; or is a member of the Canadian Forces on active service under the National Defence Act, or a member of the naval, land or air force of any member of the British Commonwealth of Nations or any ally of Canada while on active service; or a mariner or seaman at sea or in the course of a voyage. Furthermore, a person must have testamentary capacity, that is, be of sound and disposing mind and must understand the content and intent of the Will. There are no standard words or phrases necessary in a Will, provided that the intentions of the Testator are clear and the Will is sufficient to dispose of the assets belonging to the Testator at the time of death. This is not as simple as it may seem. Unless the Testator's wishes are accurately and clearly set out, the Will may be subject to different interpretations by different people. If a person dies without having made a legally binding Will, that person dies intestate. A partial intestacy occurs when a Testator, while having made a Will, fails to give instructions concerning particular items or assets. Intestate estates, or partially intestate estates, are distributed pursuant to the Estate Administration Act. If a person dies intestate and has no heirs or living relatives, the estate will revert to the Crown by operation of law. In other words, it escheats to the Crown. This happens very rarely. 1/12 EVIN ROSS PUBLICATIONS Ltd. All Rights Reserved

3 Guide to Wills and Estates Section I 3 The most important reasons for having a Will are to: 1. ensure that the Testator's estate is distributed according to the Testator's wishes (remember: if a person dies without a Will, the assets are distributed in accordance with the Estate Administration Act); 2. appoint a person or persons (called the Executor[s]) as the personal representative of the Testator. (The Executor is responsible for carrying out the Testator's instructions. If a person dies without a Will, the Estate Administration Act comes into effect and the Courts will appoint an Administrator as opposed to an Executor.); and 3. appoint a guardian or guardians for any child under 19 years of age, referred to as a minor or infant. If both parents die, or there is no surviving parent who has legal custody of the minor or infant, and no guardian is appointed: the Public Guardian and Trustee of British Columbia will become the guardian of the estate of the infant (the Public Guardian and Trustee is the government agency who will manage the inherited property until the child is 19); and the director of Child, Family and Community Services will become the guardian of the person of the infant (the director will look after the infant's upbringing, health and education). Note that the word infant is used in the legal sense and includes children under 19, even though they may not be babies. In other words, an infant may be 13 or 18 years old, legally speaking. As mentioned above, a Will is a document which comes into effect only on the death of the Testator. Although the Testator has made a Will, he or she is free to subsequently cancel (that is revoke) the Will, change it, or dispose of any property mentioned in the Will in any way the Testator sees fit. Usually, a Will is drawn up by a lawyer after close consultation with the Testator. During such consultation or meeting, the lawyer should be informed of the Testator's personal and family circumstances, as well as of all matters that relate to the Will and the manner in which the estate should be distributed upon the Testator's death. The flow of the file, or the main chronological steps in handling a typical Will file, are set out below. Note that this is simply a brief synopsis for general interest only. For detailed procedural information, refer to Section II. Take instructions from client Instructions are usually taken by the supervising lawyer. At a meeting between the lawyer and the client, the lawyer interviews the client and obtains instructions regarding the preparation of the Will. The lawyer should also ascertain that the prospective Testator has the necessary legal capacity ( testamentary capacity ). It is good practice for a law firm to have a Wills Instructions form (see Section II A-3) which is completed by the lawyer and remains a permanent record of the client's instructions.

4 4 OVERVIEW Guide to Wills and Estates Prepare the Will document The supervising lawyer then dictates the Will for transcription. Where the legal secretary is sufficiently experienced, the secretary may prepare the Will directly from the Wills Instructions form, thereby eliminating the need for dictating the Will. Attend on execution Signature of the Will by the Testator occurs either in the office or at another prearranged location. Prepare and file a Wills Notice In order to enable the Executor to locate the original Will promptly after the death of the Testator, a Wills Notice is filed with the Wills Registry (Division of Vital Statistics). This Notice is a document which identifies the Testator and advises the Registry of the date and location of the Will. Arrange for the safekeeping of the Will Once the Will is signed, it must be stored in a safe and easily accessible place. Some law firms have a policy of storing the signed Wills in a fire-proof vault or other on-site storage facilities. In certain cases, the Will is delivered to clients for safekeeping at home or in the client's safety deposit box at a financial institution. Report to client Close file This usually consists of a form letter which encloses a copy of the Will and the law firm invoice for services rendered. Once all matters have been attended to and the account has been paid, the file can be closed (following the law firm's procedure) and then sent to storage. 1/12 EVIN ROSS PUBLICATIONS Ltd. All Rights Reserved

5 Guide to Wills and Estates Section I 5 ESTATES Once a person dies, the total of all property owned (or that person had a right to a share of), as well as all debts incurred, constitute the Deceased's estate. Such property is usually referred to as the assets or the assets of the estate. After death, the assets are still in the name of the Deceased and, as the Deceased is no longer around to handle them, they have to be transferred to someone who will be able to deal with them. The person who will look after these affairs is sometimes referred to as the personal representative of the Deceased. The personal representative (as explained in more detail below) is either the Executor or the Administrator of the estate. Section III of this Guide covers the handling of an estate, whether or not the Deceased died testate (i.e. left a valid Will) or intestate (i.e. left no valid Will). In either case, certain documents must be prepared and filed with the Supreme Court of British Columbia B Probate Registry B in the applicable Court Registry locations to appoint either the Executor named in the Will, or an Administrator where no Will exists. If the Deceased left a valid Will, the person appointed in that Will is called the Executor. The Executor acts as the personal representative and administers (or manages) the estate. Upon being so satisfied, the Court will prove or certify that the Will submitted to the Court is the genuine last Will and Testament of the Deceased and will confirm the appointment of the Executor by issuing a Grant called Letters Probate. The Deceased's assets are then distributed by the Executor in accordance with the Will. If the Deceased died without leaving a valid Will, the Court will appoint someone to act as the personal representative and to administer the estate. That person is called the Administrator, and the Grant is called Letters of Administration. The Deceased's assets are distributed by the Administrator pursuant to the Estate Administration Act. If the Deceased left a valid Will, but failed to appoint an Executor (which is less common), or the Executor(s) named in the Will was unable or unwilling to act, the Court will appoint someone to act as the personal representative to administer the estate. That person is called an Administrator and the grant is called Letters of Administration with Will Annexed. The assets of the Deceased are distributed in accordance with the wishes of the Testator as expressed in the Will. Not all estates go through the Court process, such as small estates where the total value of the assets is less than $25,000. In any event, the supervising lawyer will decide whether or not Probate or Letters of Administration will be applied for. Section 112 of the Estate Administration Act requires that, upon a person's death, certain people who have, or may have, an interest in the estate, must be provided with Notice that the Executor or Administrator is applying for a Grant. The purpose of this Notice is to advise people of their entitlement, if any, to the estate. Even when there is a valid Will, all those who could make a claim against the estate (for instance spouse and/or children under the Wills Variation Act) or who could contest the Will, must be notified. Generally, the Executor (or Administrator) hires a lawyer to handle all matters pertaining to the estate which includes: research as to the nature and value of the assets;

6 6 OVERVIEW Guide to Wills and Estates preparation of the documents required by the Court to formally appoint the personal representative as Executor (or Administrator) of the estate; transmission of the assets from the Deceased to the personal representative; payment of the Deceased's debts (if any); transfer of certain assets directly to the persons named in the Will (legatees); The end result of this rather lengthy and involved procedure is to distribute all assets of the Deceased to the persons entitled to them either pursuant to the Deceased's Will, or pursuant to the intestacy provisions of the Estate Administration Act. The steps, procedure, correspondence and documentation to accomplish such distribution are as set out in the Estate Section. The flow of the file or the main chronological steps in the handling of a typical estate file are set out below. Note that this is simply a brief synopsis for general interest only. For detailed procedural information, refer to Section III - Estates. Take instructions from personal representative Instructions are usually obtained by the lawyer from the personal representative during a meeting, at which time, the lawyer completes a Master Information Checklist form. This form is then used by the legal secretary in compiling and verifying information. Verify entitlement to the estate If the Deceased died testate, the Will is reviewed in detail by both the lawyer and the legal secretary in order to be able carry out the instructions of the Deceased. If the Deceased died intestate, both the lawyer and the secretary must become familiar with the Deceased's family situation in order to understand how the assets are to be distributed. Search of Wills Notice A search for Wills Notices must be carried out in the Registry of Wills Notices of the Division of Vital Statistics. This is done in order to ascertain that the Will is, in fact, the Deceased's last Will. In the case of intestacy, this is done to ascertain that there is no Will. It is important to keep in mind that if the search comes back stating that there is no Wills Notice on file, this does not mean that there is no Will. It only means that a Wills Notice has not been filed. Prepare inventory of assets and liabilities An inventory of the Deceased's assets and liabilities must be prepared. Much of the basic information is obtained directly from the personal representative of the Deceased. Various searches and letters of enquiry will often be required (e.g. to banks or other financial institutions where the Deceased held assets, or to insurance companies). It will also be necessary to ascertain the fair market value of all assets at the time of death. This is usually done by the secretary. For an illustration, where the Master Information Checklist shows that the Deceased: 1/12 EVIN ROSS PUBLICATIONS Ltd. All Rights Reserved

7 Guide to Wills and Estates Section I 7 had an account with a bank. A form letter must be written to the bank in question asking for confirmation regarding the status of the bank accounts; owned real property, a Land Title Office search must be carried out to determine whether or not the Deceased is, in fact, the registered owner of such property, and the manner in which the property is registered (joint tenancy/ tenancy in common). If a mortgage is registered against the property, a letter must be written to the financial institutions which holds the mortgage asking for confirmation of the balance under the mortgage as at the date of death. The legal secretary will make arrangements to verify the market value of the property. Similar steps will be taken for each and every item owned by the Deceased. The liabilities or debts of the Deceased will be dealt with in the same way. The secretary may arrange to advertise for creditors of the Deceased in the B. C. Gazette and a local newspaper to ascertain that information concerning all debts of the Deceased is on file. Prepare and mail Notice pursuant to Section 112 of the Estate Administration Act A Notice must be prepared and mailed to persons entitled to such Notice under the Estate Administration Act. The legal secretary should obtain the information from the personal representative as to the names and addresses of the persons entitled to such Notice and then arrange to mail a copy to each. Prepare documents Once all information is received, the secretary will prepare all required documents by following the precedents in this Guide. These documents consist mainly of: an Affidavit of the personal representative confirming that Notice pursuant to Section 112 of the Estate Administration Act has been mailed (see above); another Affidavit of the personal representative B sometimes called Oath of Executor; and a Statement of Assets, Liabilities and Distribution, also called Disclosure Statement. For a complete list and description of the required documents for each application, refer to Section III of this Guide. Attend on execution of documents Once the documents have been prepared and checked by the supervising lawyer, they must be signed ( executed ) by the personal representative. This step may prove more onerous than it seems as frequently, there are several personal representatives residing in different places.

8 8 OVERVIEW Guide to Wills and Estates File documents with Registry to apply for Grant The Grant can be applied for when all documents have been signed. The executed documents are filed with (i.e. submitted to) the appropriate B. C. Supreme Court Registry at which time the necessary fee is paid. It can take two to six weeks to obtain the Grant depending on the Registry and their workload. Transfer assets to personal representative Pay debts Once the Grant is issued by the Probate Registry and received by the law firm, the assets of the Deceased are transferred into the name of the personal representative. The procedure for transferring and dealing with the assets of the estate is often quite lengthy and can take several years. Once funds are available, payment of all debts of the Deceased (or incurred on behalf of the Deceased B such as funeral expenses) must be attended to either directly by the personal representative or by the law firm acting on behalf of the estate. Arrange to prepare and file Income Tax Returns While the assets are being so transferred, the secretary (in conjunction with the personal representative) arranges for the preparation and filing of the requisite Income Tax Returns for the Deceased in order to obtain a Clearance Certificate from Canada Customs and Revenue Agency. This procedure may take quite a while. The Income Tax Returns are usually prepared by an accountant and the law office serves only as an intermediary supplying information and documentation to the accountant. Assemble the estate assets Once the assets have been transferred from the Deceased to the personal representative, they have to be dealt with. For example, the title to a real estate property which was registered in the name of the Deceased is transferred into the name of the personal representative. The personal representative may then decide to sell and the proceeds received from such sale will form part of the assets. Another example, bonds or stocks will be transferred into the name of the personal representative, and then transferred into the names of the beneficiaries. There are several ways of handling the assets: one way is for the law firm to receive all assets and deposit all cash to a special interest bearing trust account on which the interest is earned for the benefit of the estate (this is often the most practical way); another way is for the personal representative to collect all assets and open an account in the name of the estate; or sometimes, an arrangement is made whereby some assets are collected by the law firm and some by the personal representative. 1/12 EVIN ROSS PUBLICATIONS Ltd. All Rights Reserved

9 Guide to Wills and Estates Section I 9 Notwithstanding who administers the estate, careful accounting records have to be kept of all assets and moneys received and disbursed. Distribute assets Once the assets have been transferred into the name of the personal representative, and are available for distribution, they can be transferred to the persons entitled to them (beneficiaries and heirs-at-law). The assets cannot be distributed until: the following limitation dates have been complied with: o o in the case of Probate and Letters of Administration with Will Annexed: six months from the date of the Grant; in the case of Letters of Administration: one year from the date of death; There are other limitation dates depending on the family circumstances of the Deceased. a Clearance Certificate has been received from Canada Customs and Revenue Agency. if a Notice to Creditors has been published, 21 days have elapsed after the date of the last publication. If an estate is large enough and the beneficiaries request their shares of the estate, a partial distribution may be made before the Clearance Certificate is received. In certain cases, mostly depending on family circumstances, the lawyer may advise to waive the limitation dates. A time will come when the personal representative is finally in a position to distribute the assets. However, before doing so it is usually recommended that the following documents be prepared and forwarded to the beneficiaries for their approval and signature: a reconciliation statement of the assets and moneys received and disbursed; a Release from the beneficiary to the personal representative (and often the law firm). In the case of an estate, a Release is a document in which the beneficiary gives up the right to claim against the estate, the personal representative and often the law firm from the job as an Executor or Administrator of the estate. By this document the beneficiary also acknowledges receipt of his or her share of the estate or of a particular asset. All beneficiaries must sign and return the above documents before any moneys are paid out. In other words, if one beneficiary refuses or neglects to sign a Release or Statement, the other beneficiaries cannot receive their share until such reluctant beneficiary signs and returns the signed documents. If there are several distributions, a statement of assets is prepared at each distribution and, depending on the lawyer's advice, a Release is also prepared for each distribution.

10 10 OVERVIEW Guide to Wills and Estates Report to client Close file When all matters with respect to the estate have been completed, the lawyer will report to the personal representative, attaching an invoice for legal services rendered, disbursements incurred and all applicable taxes. In case of large and complicated estates, the law firm often provides the personal representative with periodical reports and billings. Once all matters have been attended to and the account has been paid, the file can be closed (following the law firm's procedure) and then sent to storage. 1/12 EVIN ROSS PUBLICATIONS Ltd. All Rights Reserved