In your will, the executor is the person you name to settle your estate after your death. The executor is responsible for, among other things, determining what your assets and liabilities are at the time of your death, safeguarding those assets until they are distributed to the beneficiaries, paying your debts and filing your tax returns. They are also required to gather information about your beneficiaries and family members, including confirming legal names and addresses and identifying anyone under the age of 19. Your executor will apply for a grant of probate if one is required and ultimately distribute your assets according to your wishes.
It is important to choose your executor carefully to make sure your estate is settled efficiently and effectively. An ideal executor is someone who is organized, will deal with your assets and relatives objectively, and has loads of patience. Having an executor who lives in the same area as you is helpful but not necessary. It is also important that your executor survives you and has capacity at the time your will comes into effect.
Before appointing someone as your executor in your will, it is good practice to confirm that he or she is able and willing to take on that role. An alternate executor should be appointed in case the first executor can’t act.
There are a few circumstances where the intended executorship might fail:
1.    If you die before you have prepared a will, it is called dying intestate. The court must appoint someone to administer your estate. The court will look to who has the most interest in the estate – typically your closest surviving family member. (For more information on dying intestate, see Dying Without a Will

2.    If the executor named in your will declines, dies or is incapable of taking on the role, and you have no surviving or willing alternate executors, the court must appoint someone to administer your estate in accordance with your will. This person might not be permitted to act as administrator without posting an estate bond to protect creditors and beneficiaries who minors or incapable in the event the estate assets are administered improperly.

3.    If your sole or last surviving executor (“Your Last Executor”) received a grant of probate and then becomes incapable or dies before finishing his or her duties, the executor appointed by Your Last Executor in his or her will may be in a position to take over the administration of your estate. This is called the “chain of executorship” and it will not apply to all cases where Your Last Executor can no longer act before the administration of the estate is completed.

4.    The chain of executorship is broken if Your Last Executor left no will or did not appoint an executor or has no surviving willing and able executors. In those circumstances, the person with the most interest in your estate – typically a beneficiary – can apply to be substituted as the administrator of your estate.
Be sure to review your will regularly and be aware of the health and personal circumstances of your primary and alternate executors. If one or all of your executors are no longer able to act, make arrangements to update your will.

Krystin Kempton is a Partner at Nixon Wenger LLP where she has a general solicitor’s practice, advising corporate and individual clients on corporate and commercial transactions, lending and borrowing, wills and estates and real estate matters.
 

Probate fees are fees paid to the province to obtain a Grant of Probate from the British Columbia Supreme Court when a person dies. The fee is based on the value of the deceased person’s assets and can be generally estimated at 1.4% of the value of the assets. There are some adjustments, but the 1.4% provides a small overestimate of the fee. A Grant of Probate is generally required to enable the Executor to sell or otherwise deal with the deceased person`s assets.

However, not all of a person`s assets while alive may form part of that person`s estate and require a Grant of Probate to enable transfer. For example, an RRSP, RRIF, or TFSA that designates a beneficiary who survives the deceased person, will transfer directly to that beneficiary and not form part of the deceased`s estate that is subject to probate. Life insurance naming a beneficiary will go to the named beneficiary and not become part of the estate. And assets that are owned with one or more other persons as joint tenants can pass to the surviving joint tenants rather than to the estate.

Owning assets as joint tenants is a common circumstance for spouses. Most couples will own their home as joint tenants, have joint bank accounts, and often own vehicles jointly. For most couples*, it makes sense to also name the spouse as beneficiary for life insurance, RRSPs, RRIFs, and TFSAs. Consequently, upon the death of one spouse, all assets may transfer to the surviving spouse without the need to obtain a Grant of Probate.

Given the savings of time and money in avoiding a need for probate when the first spouse dies, we find that many surviving spouses are interested in adding children to title to a home or recreational property, or to bank accounts, in an effort to avoid future probate fees. While that can be effective to avoid probate, the transfer of ownership has many consequences that may not be intended.

Adding another person to title, or to a bank account, is a transfer of ownership. If the asset were a recreational property or an investment account, the transfer will be a disposition for income tax purposes and may trigger an obligation to pay capital gains tax. If you add a child to title to your principal residence and that child does not live in the residence, capital gains tax could become payable on part of the future increase in value of the home as part of the principal residence exemption may be lost. Once ownership is changed, control is lost, such that any future decision regarding a home or recreational property, including whether or not to sell or mortgage it, will require agreement of all owners. The asset would also be at risk of a claim by any creditors of the person that was added as an owner as well as claims by that person’s spouse in a family law claim.

Notwithstanding the consequences of adding a joint owner to an asset, there are circumstances where it is a good planning option. It is most important to clearly understand both the intended and unintended consequences of any change of ownership of any asset, and to clearly document the intent of any change. If one child is added to a bank account, should the balance of that account go to that child upon your death or do you intend that the balance be split among all your children. Future disputes can be avoided or minimized if intentions are well documented. A failure to properly document intentions often results in lengthy disputes that are expensive and permanently damage family relationships.

Probate fees are significant enough that it makes sense to at least consider options to avoid the need to obtain a grant of probate. But any changes in ownership should only be undertaken after careful consideration of the consequences of such change within the context of a person`s overall estate plan, and taking into account family dynamics that may create greater risks. All of these factors require a good conversation with your legal advisor to ensure any effort to save probate fees does not create problems that will be much more expensive and damaging to address.

*There are exceptions as each family is unique. You should seek legal advice that reflects your individual circumstances when planning for the eventual disposition of your assets upon death.

Tom Christensen, Q.C., has a general solicitor’s practice, assisting clients with business matters, wills and incapacity planning, the administration of estates, and real estate conveyancing and financing matters. He has a particular interest in assisting families with the transition of assets from one generation to the next through effective personal and business succession planning as well as resolving estate disputes outside of court.