Denese Espeut Post
There are many aspects of operating a vineyard or orchard that are important from a legal perspective. We have chatted about everything from written contracts and land leases to trademarks to animal protection. But there is one difficult question that needs to be tackled by all people, whether a business owner or not, "what happens to my business, my possessions and my family if I die without a Will?"
Okay, I can already feel some eyes rolling. I know it's not a question that most people want to ask. Many people do not want to discuss what may happen in the event they should pass away and feel like thinking about death creates unnecessary worries; almost like they are tempting fate if they plan for their passing. Many other people simply put off making a Will thinking that at some point in the future they will "get around to it." Of course, this is not great planning should a person die unexpectedly or as a result of a sudden illness. One factor that procrastinators fail to consider is that, in the event they become mentally incapable (perhaps as a result of a serious accident) and do not regain their mental capacity, they will die without a Will because one must have mental capacity to make a Will.
You may have heard the word "intestacy" or heard that Mr. X died "intestate". This is the legal way of saying that the person died without a Will and the person's estate (which generally consists of the assets the person owned at the time of their death) will be divided and distributed according to the formula set out in BC Law. In a nutshell, if you would like to decide how your estate will be handled and distributed upon your death, you need to have a Will. Not only will your Will allow you to choose how your specific assets are disposed of, you can decide the beneficiaries of your estate and the executor of your estate which is a very important decision and key to preserving family harmony and the proper administration of your estate.
It is clear that people have some misconceptions about intestacy. Many people assume that their spouse will inherit everything if they die without a Will. In British Columbia, if you die intestate with a spouse and children, your spouse will receive a preferred share up to a certain value with the remainder to be divided between your spouse and your children. If you intend for your spouse to inherit all of your estate upon your death, do not rely upon intestacy.
Another common misconception is that a person's assets will pass to their spouse without a Will because the couple owns their assets (i.e. their home, bank accounts, and unregistered investments) jointly with the right of survivorship. Ownership of all assets in joint tenancy without a Will will necessarily result in intestacy on the death of the second spouse. Upon the death of the second spouse, the couple's assets will be distributed to persons related to the second spouse without provision to persons related to the first spouse. This is often an unintended consequence of intestacy. If you intend for your relatives to inherit a portion of your estate upon your death or, if you die before your spouse, upon your spouse’s death, do not rely upon intestacy.
In the unfortunate situation where the couple dies together, each person will be presumed to have survived the other and the joint tenancy will be severed. In this case, without a Will, the jointly owned assets will pass to certain persons determined by the government in accordance with the laws of intestacy.
Taking the time to consider your estate plan has many benefits including the ability to take advantage of strategies which can help you to reduce probate fees and income taxes. For example, you can consider whether you can maximize the spousal rollover for capital property or maximize the use of the capital gains exemption. You can consider joint tenancy ownership or the use of an alter ego or joint spousal trust. The probate fees in British Columbia are amongst the highest in Canada, so considering strategies to reduce probate fees may be worthwhile for you and your estate.
The best time to make a Will and think about your estate planning is when you don't need it. Don't postpone until you are about to go on a long vacation, undergo a medical procedure or some other significant family events. This is an important process; don't rush and risk leaving out critical information or failing to think through the consequences of the instructions you provide to your lawyer or notary. Even though death is not avoidable, the adverse consequences of intestacy are avoidable.
Denese Espeut-Post is an Okanagan-based lawyer and owns Avery Law Office. Her primary areas of practice include wine and business law. www.averylawoffice.ca