Posting about legal issues affecting British Columbians.
Personal Representative vs. Executor
A “personal representative” is simply the legal term in BC for a person who has been appointed as executor and trustee in someone’s last will and testament. Historically, personal representatives were referred to as executors. The legal terminology formally changed to “personal representative” in 2014 when the Wills, Estates and Succession Act came into force. Since the historical term is still commonly used in BC, we will use the term “executor” to refer to personal representatives throughout the article.
Generally speaking, an executor manages the assets, debts and taxes of the deceased and their estate. They are also responsible for distributing the deceased’s assets in accordance with the deceased’s will. In many cases, the executor must also apply to the Supreme Court of British Columbia for probate of the deceased’s will.
Sometimes, a person’s last will appoints more than one executor. The co-executors are typically called on to carry out their duties as executors jointly. In most cases, the will-maker will also appoint one or more alternative executors, who are authorized to act when the will-maker’s first choice is unable or unwilling to act.
In some circumstances, the deceased may die without a will. This is called dying intestate. In these circumstances, the individual seeking to act as executor must apply to the court to be appointed to administer the estate. This is known as obtaining a grant of administration.
Duties of the Executor
The duties of an executor can be time consuming and burdensome. There are general duties imposed by law, and additional or modified duties may be expressed in the will. Thus an executor’s specific duties will vary from estate to estate. The general duties that apply to executors typically include: safeguarding the deceased’s assets, paying the deceased’s debts and making provisions for preparing tax returns for the deceased and the estate, searching for assets and creditors, notifying beneficiaries, managing the deceased’s investments and insurance, continuing or initiating legal actions on behalf of the estate, and keeping proper accounting of all of the money that comes in and out of the estate.
The executor may also be required to obtain probate for the estate. Essentially, a grant of probate validates the will and provides third parties (such as banks, insurance companies or land registries) evidence of the executor’s legal authority to deal with the deceased’s property. In practice, many third parties will refuse to deal with a executor until a grant of probate has been obtained.
If you are uncertain as to whether or not the estate you are administering requires probate, you may wish to speak with an Estates Lawyer.
Deciding to take on the Role of Executor
The fact that a person appointed you to be their executor does not legally require you to take on the role. An executor who does not wish to act, or is unable to do so, may be able to legally renounce the appointment, allowing a remaining co-executor(s) or alternate executor(s) the opportunity to take on the role. However, you can be deemed to have accepted the role of executor (and the corresponding personal liability) merely by acting in a manner that shows intention to assume that role. Conversely, if you are not appointed as an executor and you would like to take on this duty, you may be able to challenge the appointment of another person as executor.
If you have been appointed as executor in a deceased individual’s will, and are uncertain as to whether or not you wish to take on the role, you may wish to seek legal advice prior to commencing.
Executors take on personal liability, including liability for breach of trust in connection with administering the estate, and for errors or omissions in managing the assets and liabilities of the deceased. Complications in estate administration often arise if the will includes ongoing trusts which must be administered and in situations where the deceased has a complex investment or asset portfolio, where the executor is not familiar with the deceased’s financial affairs, or where there are disputes among estate beneficiaries or the executor.
Depending on the estate, there may also be estate variation and litigation considerations that arise as part of the estate administration. Very generally, the Wills, Estates and Succession Act permits spouses and children to make an application in court to vary a will that does not, in the court’s opinion, make adequate provision for their proper maintenance and support. The potential for wills variation claims often prompts executors to engage a lawyer to assist even at the earliest stages of the estate administration process. A lawyer will be able to discuss in greater detail the duties involved in acting as executor, and assist you in limiting your personal liability throughout the process.
Before taking on the role of executor, it is important to consider the duties, time, effort and potential for person liability involved in accepting the role, and to understand that in some cases, renouncing the role may be a preferable option.
After you make the decision to incorporate, one decision you may be facing is whether to set up your company as a provincial or federal corporation.
In British Columbia, provincial corporations are subject to the Business Corporations Act. This provincial legislation governs the incorporation of, and regulation of companies in British Columbia. On the other hand, federal corporations are governed by the Canada Business Corporations Act, which is a federal statute of Canada.
There are many factors to consider when determining whether to incorporate as a provincial or federal corporation. Below, we discuss a couple of the considerations for choosing one form of incorporation over the other.
1. Where my company will do business after incorporation
A starting point is typically to consider where your company is currently doing business, or will do business. Will your business be primarily in British Columbia, or will it carry on business across Canada or even outside Canada?
One benefit of federal companies is that they may more easily carry on business through Canada under the same corporate name. With a federal corporation, once your name has been approved and granted by the registrar, you do not need to request approval of your name for use in each province. This is often attractive to business owners who are doing business in several provinces, as the corporation can operate with the same name in each jurisdiction. However, it is not necessary to incorporate a federal corporation to protect your name. That may be done very effectively through the use of trademark law.
When a business is incorporated provincially, the name is approved for use within British Columbia only. Therefore, if the business decides to do business in another province at a later date, and there is another company in that jurisdiction operating with a similar name, your business may have to change its corporate name for that province.
In this sense, federal incorporation can often be attractive to business owners who do business across Canada and want to ensure naming consistency across the provinces (noting that alternate protections under trademark law are also available).
If you are concerned with name protection for your corporation, you may wish to speak with an incorporation lawyer about other intellectual property protection options (such as trademark) that can be done in conjunction with incorporation.
2. What laws will apply to my company after incorporation
Companies are subject to the laws of each province where they do business. Thus, if a corporation is carrying on business in a province or territory, then it will be required to register as an extra-provincial or extra-territorial corporation in that jurisdiction. In other words, if a corporation incorporated under the BC Business Corporations Act conducts business in Alberta, it would be required under Alberta corporate law to extra-provincially register and identify an address for service in Alberta. Trade agreements between the provinces may facilitate the process. If your business if operating outside of British Columbia, you may wish to speak with an incorporation lawyer to ensure that you properly register your business in the appropriate jurisdictions.
There are usually additional costs to register a company extra-provincially, as well as additional costs on an annual basis (such as extra-provincial annual reporting) to accommodate government, accounting and legal obligations. One of the unique aspects of a federal corporation is that it must extra-provincially register in every province or territory in which it operates. Therefore, incorporating a federal corporation can sometimes be more expensive and complex than incorporating a provincial company.
These are only a few of the factors to consider when deciding if a federal or provincial incorporation is right for your business. If you are planning on incorporating a company that will do business both inside and outside of British Columbia, or you think a federal company would be right for your business, it would be prudent to speak with an incorporation lawyer prior to moving forward.
In this article we look at 3 different circumstances in which British Columbia real estate is dealt with after a person passes away.
Transmission to Surviving Joint Tenant
Many British Columbians own property in joint tenancy with another person, often with their spouse. A joint tenancy is a special type of ownership that arises when the title to the property specifically states that it is owned in joint tenancy.
If the words “joint tenants” are not specified on title, then ownership will not be in joint tenancy. When two or more people are on title and the words “joint tenants” are not present, the law presumes another type of ownership, called a tenancy in common. For tenancies in common, when one owner dies, that person’s share passes through their estate, not to the surviving owners.
In a joint tenancy, when one joint tenant dies, the surviving joint tenant is automatically entitled to the deceased’s share of the property. Although the right is automatic, it is necessary to file paperwork with the BC Land Title and Survey Authority (LTSA) to make the transmission effective. Generally speaking, this includes filing the original death certificate and accompanying LTSA filing form (typically, a Form 17 Fee Simple) with the Land Title office, along with payment of a processing fee.
After the LTSA processes the application for transmission to surviving joint tenant (this process may take a few weeks or more), the deceased owner’s name will be removed from title, leaving the surviving joint tenant as the sole owner.
If there is a mortgage on title, the surviving joint tenant will normally contact the lender that one of the joint owners has died. Depending on the terms of the mortgage, the lender may have further questions or in some cases, review the mortgage documents. For these reasons it is usually a good idea to speak with a lawyer or notary whenever a joint tenant passes away, to ensure the appropriate steps are taken.
Sale by Estate
Commonly, a person will give their executor the power to sell their property after they die, with the intention that the executor will distribute the proceeds among the deceased’s children or beneficiaries. This power is usually specified in a will.
After a person dies, and before the executor can deal with the deceased’s real estate, the executor must be registered on title as the owner of the property. This requires a grant of probate from the Supreme Court of BC.
Once a grant of probate is obtained, the process to transmit title to the executor is fairly simple and is done by application with Land Titles. After the executor becomes the registered owner of the property, they are able to sell or otherwise deal with the property, subject of course to their duties to the estate as executor and to the deceased’s will, if any.
Transfer to Named Beneficiary under a Will
When a person names someone in their will who receive a gift of real estate, additional steps are required before the beneficiary can become the legal owner. Whenever real estate passes through the estate, the executor must first go through the process outlined above, including obtaining a grant of probate and applying to become the registered owner of the property.
If the will names someone to receive a gift of property, the executor is generally obligated to transfer the property to the named beneficiary. This process can take some time, as the law restricts the executor from transferring real estate to a beneficiary for 210 days following the grant of probate. This rule is intended to protect persons who may have a wills variation claim if they were not adequately provided for in the will. There is an exception when all of the beneficiaries consent to the early transfer of the property before the 210 day period expires.
In practice, this means that a person who is named in a will to receive real estate in BC may have to wait a year or more before title can be transferred to them. This is because of the time it takes the executor to obtain a grant of probate (often 4-6 months after death) and the 210 day mandatory waiting period after the grant of probate is issued.
Administering an estate can be complicated work, and executors are often exposed to personal liability when handling estates. Accordingly, it is almost always a good idea to seek professional advice before accepting the role of executor.
Obtaining and reviewing the title of a property is one of the most important steps to be done when buying real estate. This is often a step that will be performed by your realtor, lawyer and/or notary as part of the conveyance engagement. The buyer’s lawyer or notary will usually wish to discuss the items on title with their client to ensure the client understands exactly what they are buying. On the other side, the seller’s lawyer or notary will usually review title to understand which charges they will need to remove, or discharge, from title when the property passes hands.
What is a title search?
Title records for properties in British Columbia are managed by The Land Title and Survey Authority of British Columbia (“LTSA”). Anyone can request a title search for any property in British Columbia by attending the LTSA’s office. Certain professionals, such as lawyers, notaries and realtors, have access to the LTSA’s online database where they make these searches on your behalf. Because this can be done online (as opposed to in person at the LTSA office), it is the most efficient and timely way to obtain the title for a property.
Each parcel of land in British Columbia is identified by a legal description which includes a parcel identifier number (“PID”). The PID is a nine-digit number unique to each parcel of land which is required to search title through LTSA. The PID can usually be found through BC Property Assessment. If you have any questions about how to find this number, your realtor, notary or lawyer will be able to assist you.
Once a title search has been obtained through LTSA, you will be able to see a listing of all the financial and non-financial charges that are registered against the title to the property. Information on each charge can then be obtained from LTSA for a nominal fee.
What information is on title?
In addition to showing who owns the property, the title will also show financial and non-financial encumbrances (i.e. legal interests) registered against the title. These can include:
Loans taken by the owner of the property and secured against the property as collateral.
Statutory Rights of Way
These are interests in land, typically placed on title by public bodies (i.e. government, municipal corporations or utilities) to give these parties access to and rights on the land. These are fairly common to see on title and are often of little concern to buyers. However, certain statutory rights of way can significantly impair the use of the property, and your expectations of how you are going to use the property may not align with the right of way in place.
These are interests in land where the owner of a property has rights over an adjoining property, such as access rights or encroachment rights. If you are buying a property with an easement, it is important to understand how this easement may limit or impair the use of your property.
Certificates of Pending Litigation
These are certificates issued by the court and filed at LTSA. These typically arise if a proceeding has been commenced by the court where there is a claim for an estate or an interest in land. These certificates can affect whether or not title can transfer to a buyer, and therefore if one is on title you should speak with a lawyer to discuss your options.
These are registered on title based on a court request and typically last for 60 days, unless removed. Similar to a certificate of pending litigation, these encumbrances typically prevent any transfers of title and must be addressed before a conveyance can be completed.
In addition to the encumbrances mentioned above, there are a number of other charges that can be found on title, such as statutory covenants, builders liens, leases and various court judgments. Often, particularly with commercial real estate transactions, there may be claims to the property that are not identified on title. Many of these charges can have a significant impact on the use and enjoyment of the property, as well as on the ability to conveyance the property from seller to buyer.
The importance of understanding your title is why a realtor will almost always include a condition in the contract of purchase and sale stating that the purchase is subject to a review of title to the buyer’s sole satisfaction. Before removing subjects and going “firm” on a real estate deal, it is strongly recommended that you have a lawyer or notary review your title and discuss the encumbrances or charges identified.
Today we are looking at what happens when you die without a Will in BC. We have broken this down into two main topics: (1) what happens to your property when you die without a Will in British Columbia; and (2) who will manage and administer your estate when you die without a Will in British Columbia.
What happens to my property if I die without a will?
When you die without a Will, you are said to have died “intestate”. When people refer to “intestacy”, they simply mean the state of dying without a Will. In BC, the rules of intestacy are governed by Part 3 of the Wills, Estates and Succession Act (WESA).
When you die without a Will in BC, the general rule is that your property will be distributed to your family in the following priority:
- Grandchildren and their descendants
- Brothers and Sisters
- Nieces and Nephews and their descendants
- Uncles and Aunts
- Cousins and their descendants
- Great-grandparents and their descendants
If there are survivors in any one category, then the distribution typically stops at that category—in other words, if you die without a spouse or children, but have grandchildren alive, your parents will not get anything (there will be no further distribution to the next category). There are exceptions. For example, between categories 1 (Spouse) and 2 (Children) there are specific rules for splitting the estate between your spouse and children who are alive when you die. These rules are discussed briefly in Examples 4 and 5 below.
Another exception is where a person who would have been entitled to your estate dies before you but leaves children behind. In this case, that person’s children would share in whatever entitlement their parent had in the estate.
Note: if you encounter an estate where there is no Will, it is always a good idea to contact a wills and estates lawyer to seek legal advice. The rules of intestacy can be complicated. There are many variables that can change the way an estate is distributed, and the outcome can vary widely from what you might expect from the examples set out below.
These are a few examples of what can happen when a person dies “intestate” or without a Will in BC, according to Part 3 of the WESA:
Example 1: die intestate with no kids and no spouse
If you die with no spouse or kids, the WESA provides that your estate will be split equally between your parents. If only one parent is alive when you die, everything goes to your surviving parent.
If your parents are not alive when you die, the estate is distributed (in the following order):
- equally among your siblings who are alive when you die,
- if none of your siblings are alive when you die, equally among your nieces and nephews who are alive (and so on down the chain of your siblings’ descendants),
- if you don’ t have any siblings, nieces or nephews, then your estate would be split between your grandparents, or if they are dead, among your uncles and aunts and their descendants.
The chain of intestate succession continues until all avenues have been exhausted to the 4th degree of separation—in other words, the process continues until there is no one alive among your great-grandparents or any of their descendants. If all of these avenues are exhausted without locating a living relative, everything you own reverts to the Government.
Example 2: die intestate with a spouse but no kids
- Entire estate goes to your spouse.
Example 3: die intestate with kids but no spouse
- Everything split equally among your children.
Example 4: die intestate with a spouse and kids (where the children are yours and your spouse’s)
- The first $300,000 of your estate, your household furnishings, and the right to purchase your family home goes to your spouse.
- The remainder, if any, is split into 2 parts: 1/2 to your spouse and 1/2 split equally between your children.
Example 5: die instate with a spouse and kids (where all the children are yours—i.e. your spouse does not have any children)
- The first $150,000 of your estate, your household furnishings, and the right to purchase your family home goes to your spouse.
- The remainder, if any, is split into 2 parts: 1/2 to your spouse and 1/2 split equally between your children.
The above scenarios are examples of how your property might be distributed when you die without a Will in BC. However, a number of variables can change the outcome. For example, circumstances such as the presence of adopted children or blended families have created uncertainty as to who inherits when a person dies without a Will.
Of course, the easiest way to avoid uncertainties or any unwanted outcomes of dying intestate is to visit a lawyer or notary and prepare a Will.
Who will be my executor if I die without a Will?
When you die without a Will, generally speaking any person can apply to the court to administer your estate. However, the court must give priority among applicants according to section 130 of the WESA in the following order:
- Your spouse or a person nominated by your spouse.
- Any of your children, with the consent of a majority of your children.
- Your child’s nominee, with the consent of a majority of your children.
- Any of your children, without the consent of a majority of your children.
- Any other person entitled to your estate, with the consent of the successors representing a majority interest in your estate.
- Any other person entitled to your estate, without the consent of the successors representing a majority interest in your estate.
- Anyone else the court considers appropriate, including the Public Guardian and Trustee.
Contrast this with a will, where you are free to choose who you want to be your executor.
It is easy to see why Wills are such an important part of a good estate and succession plan. When you make a Will, you have tremendous freedom to decide how your property will be dealt with when you die. Conversely, if you die without a Will, provincial legislation (the WESA) will dictate who administers your estate and to whom it will be distributed. In many cases, the WESA’s default rules of intestacy will not align with your personal goals and wishes.
Disclaimer: This article is not a substitute for legal advice. If you have questions about the distribution of an estate you should contact an estates lawyer.