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$mart Money - The wills, estate and succession act

Last week I wrote about estate planning,which a lot of people equate to simplywriting a will. It's true that having a current will is animportant part of estate planning, but thereis more to estate planning than just having awill.

Last week I wrote about estate planning,which a lot of people equate to simplywriting a will.

It's true that having a current will is animportant part of estate planning, but thereis more to estate planning than just having awill. I know someone who had a current andlegal will when he died more than 2 yearsago, and his estate isn't settled yet.

On top of that, upcoming legislativechanges are going to antiquate a large numberof wills in BC. In 2009, the new Wills,Estates and Succession Act received RoyalAssent. The intention was to modernize,consolidate and streamline the processesthat occur when someone dies.

The new Act is significantly different thanthe old ways, however, and the changeswere significant enough that, despite beingpassed into law in 2009, the new rulesaren't scheduled to go into effect until2011. It was thought that the legal communitywould need that much time to digestthe changes.

Opinions are mixed as to whether thistransition to a new way to doing things wasthe optimal choice. I recently attended a presentationon the new changes, and theexpert estate lawyer that was making thepresentation repeatedly used the phrase"recipe for litigation."

Now, here's the part you need to payattention to This isn't just a mildly interestingtopic that you can safely ignore becauseit doesn't apply to you. It does apply to you.It applies to every adult in the province ofBC, and the reason for that is that all wills even those that were written under the oldrules are going to be interpreted under thenew rules.

One of the things that has changed iswhat happens if a person dies without awill. Currently there is a formula for dividingup an estate depending on who the survivorsare; spouse, kids, etc. Under the newrules the formula for dividing your estate ifyou die without a will has changed.

If you are survived by a spouse and children,the spouse will receive the first$300,000 and then half of the remainder.But if the kids are from a different relationship,the amount that goes to the spouse isreduced to $150,000 and then half theremainder.

But also we have some brand new situations,such as the surviving spouse having topurchase the family home from the estate ofthe deceased spouse. Let's say that Popspasses on, leaving a $1.1 million estate thatconsists of a million dollar family home and$100,000 in cash. Mom is entitled to thefirst $300,000 plus half of the reminder, andJunior gets the other half of the remainderabove 300,000.

This works out to Mom getting$800,000, with Junior getting $300,000,and if you don't like it then we can go tocourt. Since there isn't enough liquid cashto square up with Junior, Mom gets to buyher own house from Pop's estate. Nice,eh?

Folks, just please finally get your willdone. With a will you can have a voice onwhat happens after you are gone. Without awill your wife might have to "buy" the familyhome off of you. Is that what you want?Probably not.

Another change is with regard to whathappens if you name your common-lawspouse as a beneficiary, but then you splitup with your common-law spouse and notget around to updating your will.

Currently if you are married and nameyour spouse as beneficiary and then later getdivorced, the divorce revokes your will,unless your will indicates that you want tokeep your ex-spouse as a beneficiary. But ifyou are in a common-law relationship, andthen split up, the beneficiary remains yourex- until you update your will.

The new rules are going to bring common-law relationships in line with marriages.Now if you split up, your will is revoked,regardless of whether you were married ornot.

While there will be a lot of people thatare going to be okay with not keeping anex- as a beneficiary, there can certainly besituations where you don't want theautomatic revocation of your will. If yourex- is also the mother of your young kids,for instance, you might very well want tomake sure that she remains a beneficiaryfor the eventual benefit of the youngsters.

Another change is clarification regardinghow gifts made during a person's lifetimeare accounted for after their passing. Let'ssay Fred's will says he's going to give Tommy$100,000, but Fred already gave Tommysome money a little while ago. Was thatmoney an advance on the $100,000, or isTommy to receive an additional $100,000?The new rules state that if you want a gift toaffect an inheritance, you have to specifythis in the will.

These are just some of the changes thatthe new Wills, Estate and Succession Act willbring. Today I have focused on how the newlegislation will affect wills, but I hope thatreaders will understand that a will alone maynot be sufficient and satisfactory when itcomes to estate planning.

A broader definition of estate planning isabout arranging your affairs so that whenyou die the things that are important to youare addressed with a minimum of delay andexpense.

Estate planning is going to be particularlyrelevant if you have a significant assets, or ablended family, or relatives that don't alwaysagree on things, or business partners, or youwant to pay less tax, or you want to leave alegacy, or you don't want things to be tiedup for longer than necessary, or you don'twant to leave a mess behind for your executorto sort out.

A different way of saying this is that, withfew exceptions, there are two groups ofpeople that need to give consideration toestate planning. The first group is men. Thesecond group is women. Please don't put itoff too long.

The opinions expressed are those of BradBrain, CFP, R.F.P. CLU, CH.F.C., FCSI. BradBrain is a Certified Financial Planner withManulife Securities Incorporated, MemberCIPF and with Manulife Securities InsuranceAgency in Fort St John, BC. Brad Brain canbe reached at brad.brain@manulifesecurities.ca or www.bradbrainfinancial.com.

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