A Guide To Wills, Estate Planning, And How To Pass On Your Property
Posted by Niels Madsen on
Planning for what will happen to your assets after you’ve passed is a difficult subject—and one we can understand people being reluctant to approach—but it is very necessary. And once you’re done, you’ll be able to relax knowing everything has been taken care of!
Wills and estate planning are also daunting legal prospects, which is why we’ve prepared this comprehensive guide.
The most important part of any formal will, the definition being a document that must be typewritten and signed in the presence of least two witnesses, neither of whom can be a beneficiary or a spouse of a beneficiary, is that it meets all of the conditions required of a valid will.
It’s executed in accordance with provincial laws
You must be of sound mind at the time of writing it
You understand the consequences of the document
You fully understand the details of and extent of the property and any other assets you own
You are at least 18 years of age, or the age of majority as defined by your provincial laws
It has been signed, dated, and witnessed in accordance with provincial law
Estate Planning Explained
While a will is an essential document—it is not able to function as the sole component of your estate planning needs, especially if you have property and other complex assets to deal with.
You also need a detailed estate plan, created with assistance from a professional.
If you’re searching for a lawyer in British Columbia, this directory is a great place to start.
Estate planning is understandably daunting, which is why we’ve covered some of the need to know areas when it comes to estate planning: taxation, trusts, property, and executors.
Here is a short checklist of the personal details and documents you’ll need before sitting down with an estate lawyer:
A list of everyone in your immediate family with their
Relationship to you
The ages of all your children
The names and addresses of any individuals or organizations you wish to give gifts to
A list of all your assets and their values as well as indications as to how you own these assets (Individually, or with another person/people)
Documents that demonstrate whose name is on the title of any real estate you own
Details of any insurance policies you own
Details of your pensions, retirements savings plans, income funds, and tax-free savings
Details of the structure of any businesses you own
Name, address, and occupation for the executor of your estate
Taxation and Estate Planning
The most important piece of taxation law you need to keep in mind when estate planning is the ‘Deemed Disposition Tax’—this calculation treats your investments as sold at the moment of your death.
The final return also includes any capital gains derived from this sale, as well as the value of any retirement accounts, stocks, bonds, and investments. With a federal tax rate of 33%, as well as any provincial taxation, this can be quite a substantial chunk of your estate.
For more information on probate fees and the rules regarding estate planning in British Columbia, click here.
One way of deferring the federal tax, is to pass the assets to a surviving spouse, even if these assets are held in a spousal trust, however if these assets are sold any deferred tax will apply.
Simplify Your Estate With A Trust
While a will can direct where you want your assets to go and to whom—a trust is a more effective way of making sure the process of transference goes smoothly. The biggest difference between the two options is that a trust allows you to begin the process of transferring assets before you pass.
Appointing An Executor
Appointing an executor for your will is an important step—this is the person you’ll be trusting to oversee your assets and wishes after you’ve passed. This makes it vital that you select someone you not only trust but somehow who will also be able to manage everything.
The executor of your estate will be expected to:
Deal with your funeral and burial arrangements
Safeguard your estate
Collect your assets
Pay any outstanding debts and taxes
Real Estate And Property
For many people, property will be the most valuable and important asset in their estate—and it will also be one of the most complicated and difficult decisions.
When it comes to property, it’s important to have a specific plan in place for what will happen to it. Having a simple estate plan including a will is essential, but this often won’t be sufficient when it comes to the matter of property.
There are a number of options available to you if you wish to pass your home or other property down through your estate, including:
Co-ownership through deed
By adding your heir or heirs as co-owners on the current property title, they will automatically take ownership of the property after your death. However, this approach does have its downsides when it comes to financing and managing the property while you’re alive, and can occur larger tax penalties for your heirs, especially if they ever choose to sell the property.
It is possible to pass your home down as a part of your will, however, this will mean that the property must pass through the potentially lengthy and expensive probate process.
With a trust, you will be able to exercise control over the property while you’re alive and specify exactly what will happen to it once you’re gone, without having to go through a lengthy probate process. As trusts are complicated documents and subject to provincial laws, a legal professional will be required when drawing one up.
No matter what your situation—it’s advisable to regularly review your will and estate planning every five years or less, to ensure it still reflects your wishes and to consider any changes of circumstances for you or your beneficiaries.
Before you plan your estate, it’s important to understand the real value of your property—and that’s where our expertise comes in. For all your property needs, buying, selling, value assessments, and more, contact us today.