This article was written by Jisoo Vis of Lawson Lundell LLP. The author would like to thank Dylan Robertson, student at law, for his valuable research and contributions to this article.
Estate planning can be one of the most emotional things a family has to go through. Preparing for the end of a life, however remote in the future, can be stressful as well as confusing. But this preparation is necessary to prevent these matters from devolving into conflict, confusion, and even court actions. We asked Jisoo Vis of Lawson Lundell LLP to walk us through the basics of estate planning and how it can prevent costly and damaging litigation if done carefully and correctly.
What are some of the routine and avoidable mistakes that clients make when it comes to their estate planning? What advice can you offer clients who are just beginning to prepare their options for the future disposal of their assets?
One of the most common mistakes that one can make is assuming that their estate is too simple or too small and that estate planning is therefore unnecessary. It is strongly recommended that the client meet with a lawyer specializing in trusts and estates law, so that the lawyer can collect relevant information from the client from a trusts and estates perspective, and identify any needs for specialized advice, such as family law advice or tax planning.
Another common mistake occurs when clients fail to keep their estate plan up to date. Testamentary instruments run the inherent risk of becoming inaccurate or irrelevant with the passage of time; as beneficiaries pass away, and as assets fluctuate in size and variety. These changes can have unintended consequences for the estate, such as increased tax exposure, decreased cash flow, lapse in gifts (which takes place when a beneficiary under a will predeceases the testator, and is therefore unable to receive the gift that the testator intended for them), and ademption in gifts (which takes place when a will contains a specific gift, like a particular vehicle, but the testator has disposed of that gift before their death). Lawyers should inform their clients of the importance of routinely reviewing, and if necessary, updating, their estate plan.
How is domicile determined, and how important is it during the estate planning process?
Laws relating to personal matters of individuals, including laws of succession, are typically decided on the basis of the laws of the place where the individual has their permanent home (i.e. their “domicile”), whether that be in the jurisdiction in which they were born (their “domicile of origin”) or in a jurisdiction to which they have physically relocated, after attaining the age of majority, with the intention of residing there indefinitely (their “domicile of choice”).
Domicile determines, amongst other things, the laws which govern succession to a person’s moveable property and potentially affects whether a deceased’s family members may successfully bring dependent relief claims against the deceased’s estate in a particular jurisdiction. If a client resides in multiple jurisdictions, it is crucial that they understand the applicability of each such jurisdiction’s testamentary law to their estate, and engage professionals to render legal, tax and accounting advice as appropriate.
What are the most common causes of estate-related litigation? When a person dies testate, on what grounds can a person or persons challenge their will or its provisions?
Estate-related litigation often arises out of disputes over the testator’s intentions. An improperly drafted will, for example, may allow interested parties to assert that the will does not reflect the testator’s actual intentions. Depending on the law of the applicable jurisdiction, interested parties (such as disinherited family members) may successfully apply to court to have the will revoked or varied. In British Columbia, for instance, a child or spouse of a testator may apply under the Wills, Estates and Succession Act for a court to vary a will if it does not make adequate provision for their proper maintenance and support.
Litigation may also be commenced on the grounds that the testator was under undue influence or had diminished capacity when the testator made the will. Certain situations, such as the testator disposing of their assets in an unforeseen fashion or a proposed beneficiary becoming heavily involved in the estate planning process, may support a claim of undue influence or diminished capacity.
COVID-19 has brought to the forefront of many clients’ minds the importance of having a plan in place to provide for their loved ones. Because of the potential for estate-related litigation, it is important to appreciate the plethora of considerations that are involved in devising and implementing an effective estate plan.
Jisoo Vis is an associate in Lawson Lundell’s Vancouver office practicing in the Business Law Group, with a particular focus on trusts and estates law and corporate commercial law. She assists clients with a variety of matters, including the organization of family trusts and implementation of tax planning for trust-related matters. She also often regularly drafts and reviews wills and other estate planning instruments.