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Planning your Will - Part 3 What to Include
Deciding What to Include in Your Will
Identifying your financial situation
Choosing Your Executor
Payment to an Executor
Deciding What to Include in Your Will
The process of deciding what to include in your Will usually involves addressing the following considerations:
1. Identifying your financial situation, and the property you have to distribute upon your death;
2. Who you want to manage and distribute your estate;
3. Who your primary and secondary beneficiaries are;
4. Is it appropriate to have special arrangements or restrictions regarding distribution of your estate;
5. If you have infant children, who should be the guardian of your children;
6. If you have any special instructions regarding what happens to your body.
In this article, I will deal with the first 2 of these six considerations.
Identifying your financial situation
A Will can be useful even if you do not have very much property to distribute on your death. You should make a brief list of what you own and what you owe. A general inventory is usually all that is necessary. It is not usually necessary to get into specific detail regarding your personal possessions unless there are special items and you want a certain individual to receive them. If you wish to give specific items in your Will, the gift lapses if the item cannot be found or identified upon your death, and the beneficiary receives nothing. Consequently, only give specific items in your Will which you believe you will own when you die.
Only property which is included in your estate will be subject to the provisions of your Will. Property which you own jointly with someone else passes automatically to the survivor and is not included in your estate. The proceeds of a life insurance policy will automatically pass to the designated beneficiary, outside your estate. If you would like to set up a Trust or Life Estate through your Will, and you wish to have your insurance proceeds governed by your Will, you must designate your estate as the beneficiary of your life insurance policy. One financial advantage of keeping your property outside your estate, is that the value of your estate will be reduced, which also reduces the probate fees to be paid at Court Registry, and the legal fees incurred to deal with the estate.
Choosing Your Executor
Who you want to manage and distribute your estate:
Managing and distributing an estate can be a very time-consuming and tedious job. Your Will should appoint the person you have chosen to perform this job (a male is called an "executor", and a female is called an "executrix"). There is no "gender neutral" term for this position, and I will refer to "executor" in the balance of this article. My practice is to have clients appoint a primary executor, and an alternate, in case the primary choice dies, becomes incapable or acting, or refuses to do the job. Some clients appoint a further alternate.
A married person usually appoints a spouse as the primary executor, and a child or close friend as an alternate. If such choices are inappropriate for you, you may consider appointing a Trust Company to be the executor of your estate; however, you should obtain the consent of the Trust Company in advance, to make sure they will do the job. If at the time of your death the appointments in your Will are frustrated for one reason or another, any interested party can apply to the Court to be appointed administrator of your estate, to do the executor's job and distribute the property according to your Will, and no one is interested, the Provincial Government has appointed an official administrator who can do it.
In choosing your executor, it is best to appoint the person who knows you and your affairs best, who can get along with your beneficiaries, and who resides near to your property. This will ease the administration of your estate and the executor's interaction and involvement with the lawyer who probates your Will. An executor can refuse to do the job, so you should make sure that your proposed appointment is aware of what you are doing, and provides you with a preliminary indication that he or she accepts the appointment.
Payment to an Executor
Pursuant to the Estate Administration Act, an executor is entitled to be paid compensation for his work. An executor can claim up to 5% of the value of your estate, as executor's fees. The maximum compensation is usually utilized for very complex estates. If your executor is named as a beneficiary under the Will, the law presumes that your bequest under the Will includes all compensation to which you believe the executor is entitled. If you wish your executor to receive executor's fees in addition to the bequest, you much specifically provide for this in your Will. Once the executor renders his account for executor's fees, the reasonableness of that account can be challenged or confirmed by "passing" (or having approved) the executor's accounts before the Registrar of the Supreme Court of British Columbia. An executor should pass his accounts, or alternatively obtain signed consents from all the estate's beneficiaries to the payment of those accounts, so that the executor can be satisfied that there will not be any problems or complaints cropping up about his fees at a later date.
If your executor also manages an on-going Trust or Life Estate in the course of managing your estate, the executor is also entitled to charge on-going annual Trustee fees in addition to executor's fees. Trustee fees can be up to 2% of the value of the property held in trust and managed by the executor as Trustee on an annual basis. Again, the appropriateness of the amount charged by the Trustee is subject to review and approval by the Court. The fee must be reasonable in light of the job being done and the complexity of management and administration involved.
This article is written by Roy Sommerey, one of our partners who practices primarily in Bankrupcy and Insolvency, Corporate and Business, Civil and Commercial Litigation, and Wills and Estates.
The opinions set out in this article reflect generally on this area of law. The impact of the law on any given situation depends upon each individual's circumstances and the opinions contained in this article should not be relied on for assessing anyone's legal position. Advice should be obtained directly from your own lawyer regarding your personal situation.
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