Un­der­stand­ing Pro­bate: Dual Will Plan­ning En­cour­aged

Pri­vate com­pany shares can be han­dled separately

BC Business Magazine - - Create A Legacy -

Es­tate plan­ning is one of the ar­eas of law that has grown in­creas­ingly com­plex. Plan­ning for B.C. res­i­dents should in­clude a con­sid­er­a­tion of pay­ment of pro­bate fees, be­ing ap­prox­i­mately 1.4 per cent of the value of the es­tate (or $14,000 on ev­ery $1,000,000 of as­sets).

In­grid Tsui, part­ner and leader of Alexan­der Hol­burn Beaudin + Lang LLP’S Wills, Es­tates + Trusts prac­tice, says, “B.C. is a high-tax ju­ris­dic­tion. Con­sid­er­ing our real-es­tate val­ues are ris­ing, the pro­bate fees can be sub­stan­tial—to the point where find­ing money to pay the fees and ob­tain pro­bate is dif­fi­cult.”

That’s why Tsui of­ten ad­vises clients who own shares in a pri­vate Cana­dian com­pany to un­der­take dual Will plan­ning.

Un­der this struc­ture, the same will-maker has one Will for his or her pri­vate com­pany shares, and an­other Will for the re­main­der of the will-maker’s as­sets re­quir­ing pro­bate (such as bank ac­counts and real es­tate).

The end goal is to avoid pro­bat­ing the Will deal­ing with the com­pany, there­fore sav­ing pro­bate fees on th­ese as­sets which would be oth­er­wise payable by the es­tate.

Tsui stresses that dual Will plan­ning re­quires care­ful im­ple­men­ta­tion; for ex­am­ple, it only works if the will-maker en­sures that dif­fer­ent ex­ecu­tors are named in each Will. “This is be­cause the ex­ecu­tor of the Will for as­sets to be pro­bated must swear an af­fi­davit list­ing all of the as­sets that the ex­ecu­tor is deal­ing with as part of the es­tate,” she ex­plains. “There­fore, that ex­ecu­tor needs to swear that the as­sets be­ing dealt with by him/her do not in­clude pri­vate com­pany shares.”

If set up prop­erly, a per­son who owns shares of a pri­vate com­pany (such as a fam­ily hold­ing com­pany), can avoid the pro­bate process al­to­gether and the as­so­ci­ated fees. “This is be­cause the re­main­ing or re­place­ment direc­tors of a pri­vate com­pany may waive the re­quire­ment to ob­tain a Grant of Pro­bate,” says Tsui. “The thing to re­mem­ber is that pro­bate is only re­quired if the in­sti­tu­tion hold­ing the as­set re­quires this; the re­place­ment direc­tors are en­tirely free to waive the re­quire­ment.”

The pro­bate fee sav­ings will typ­i­cally off­set the ad­di­tional le­gal fees as­so­ci­ated with pre­par­ing a sec­ond Will. But there are other ad­van­tages to this strat­egy apart from it be­ing a so­lu­tion to pay­ing pro­bate fees. “Ap­ply­ing for pro­bate also causes de­lays and loss of pri­vacy, be­cause es­tate as­sets and their val­ues are listed in the filed doc­u­ments, which are pub­licly ac­ces­si­ble,” says Tsui.

Dual will plan­ning can be com­plex, and in some cases third wills are rec­om­mended when as­sets ex­ist off­shore. Alexan­der Hol­burn, a multi-dis­ci­pline firm whose 75-plus lawyers are pro­fi­cient in over 25 dis­crete le­gal sub­ject ar­eas, sim­pli­fies the le­gal process for clients, whether it be an in­di­vid­ual or busi­ness.

$30 mil­lion in fund­ing to fam­i­lies and or­ga­ni­za­tions in com­mu­ni­ties through­out the prov­ince.

Phi­lan­thropy and le­gacy giv­ing have be­come a tra­di­tion in the Ar­nish fam­ily. Re­cently Tracey Ar­nish, chair, board of direc­tors for Ron­ald Mc­don­ald House BC and Yukon, shared that she had named RMH in her fam­ily will.

From her per­spec­tive, the mo­ti­va­tion stemmed from her first-hand ex­po­sure to the or­ga­ni­za­tion af­ter her son was di­ag­nosed with leukemia in 2007. “We were for­tu­nate to re­ceive med­i­cal treat­ment in our home city, but dur­ing this time we be­came aware of fam­i­lies [from out of town] who didn’t have any­where to stay,” she re­calls, adding that the forced sep­a­ra­tion of fam­i­lies is com­pounded by the mon­u­men­tal prob­lems as­so­ci­ated with loss of in­come due to hav­ing to re­lo­cate.

But at Ron­ald Mc­don­ald House, Ar­nish, who is also chief peo­ple of­fi­cer for Coast Cap­i­tal Sav­ings, “saw the com­fort and se­cu­rity as well as the sense of relief that those stay­ing [in the fa­cil­ity] re­ceived.”

RMH’S suc­cess in keeping fam­i­lies to­gether com­pelled Ar­nish to join its board in 2013; as for nam­ing the or­ga­ni­za­tion in her will, she says the mo­ti­va­tion “was know­ing we can con­tinue to pro­vide fam­i­lies across B.C. and Yukon with a home away from home.”

Ron­ald Mc­don­ald House BC and Yukon is one of 14 Ron­ald Mc­don­ald houses across Canada help­ing the fam­i­lies of chil­dren di­ag­nosed with se­ri­ous ill­ness or in­jury when they must travel for their child’s treat­ment.

De­spite its high pro­file, the Make-aWish Foun­da­tion is very much a grass­roots or­ga­ni­za­tion, with the 200 vol­un­teers of its BC & Yukon chap­ter en­sur­ing that 82 cents out of ev­ery dol­lar was used to grant 127 wishes to chil­dren with life-threat­en­ing med­i­cal con­di­tions last year, ac­cord­ing to CEO Ross Hether­ing­ton.

The im­por­tance of grant­ing a child his or her wish can­not be un­der­es­ti­mated. “They hold onto that wish as they un­dergo treat­ment,” says Hether­ing­ton, adding that a special Wish­ing Well le­gacy fund also grants wishes in ex­treme cases: “Some­times, un­for­tu­nately, we have to grant wishes within the space of a day, de­pend­ing on the med­i­cal con­di­tion.”

As an or­ga­ni­za­tion that re­ceives no govern­ment fund­ing, Make-a-wish is con­stantly look­ing down the road for do­na­tion sources: un­der­stand­able, con­sid­er­ing the av­er­age cost of a wish is $10,000 and a Wish­ing Well wish is $15,000. Hether­ing­ton says: “I can’t say enough about our won­der­ful donors, as well as our vol­un­teers who con­tinue to sup­port what we do and pro­vide chil­dren with com­fort, hap­pi­ness, and hope.”

Hos­pi­tals, Plus

Leav­ing lega­cies to hos­pi­tals means so much more than fund­ing new equip­ment and pro­grams.

“Com­mu­nity pro­gram fund­ing is also an in­te­gral part of le­gacy giv­ing,” says Tinu Mathur, board chair of the Burn­aby Hospi­tal Foun­da­tion. “Our donors help fund ev­ery­thing from healthy-lunch pro­grams for school­child­ren to health pro­grams for se­niors; in ad­di­tion to the im­por­tance of hospi­tal equip­ment and op­er­a­tions, this is ex­tend­ing the health care con­tin­uum.”

This is not to down­play the im­por­tance of hospi­tal fund­ing: govern­ments do not fully fund BC hos­pi­tals, and the monies re­ceived are cre­at­ing the base­line for our health-care sys­tem.

For­tu­nately, Burn­aby Hospi­tal donors since 2002 have given close to $19 mil­lion to pur­chase new equip­ment, and the Burn­aby Hospi­tal Foun­da­tion’s pur­pose is to en­sure that the fa­cil­ity is equipped in ev­ery way to ad­vance the health of all gen­er­a­tions as well as main­tain the vi­brancy of the en­tire com­mu­nity (for the record, the most com­mon le­gacy gift op­tions are a be­quest in a will, a gift of life in­sur­ance, and a gift of re­tire­ment funds such as RRSPS and RRIFS).

Mathur says: “Any­one can help us make a dif­fer­ence, and no con­tri­bu­tion is too small. With our foun­da­tion, a do­na­tion is more than a gift to­wards well­ness: it’s an in­vest­ment in your com­mu­nity fam­ily, your neigh­bour, and your­self.”

Jeff Sodowsky, chief de­vel­op­ment of­fi­cer for the BC Women’s Hospi­tal + Health Care Foun­da­tion, stresses: “Ev­ery­one can make a le­gacy gift. So many peo­ple think one has to be a Pat­ti­son or Rock­e­feller to make a pos­i­tive im­pact, and

it's sim­ply not true,” he says.

Through fundrais­ing cam­paigns, sig­na­ture events, and grow­ing sup­port from part­ners in the com­mu­nity, BC Women's Foun­da­tion is poised to sup­port BC Women's Hospi­tal and women's health at un­prece­dented lev­els, with the pur­chase of new equip­ment and tech­nol­ogy; pro­gram and ser­vice en­hance­ments; site re­de­vel­op­ment; and greater re­search, ed­u­ca­tion, and train­ing ca­pac­ity.

Le­gacy giv­ing to BC Women's Hospi­tal may ob­vi­ously ben­e­fit 50 per cent of the pop­u­la­tion, but Sodowsky notes that: “This di­rectly ben­e­fits the other half as well. Plus, as the largest birthing fa­cil­ity in West­ern Canada, the sup­port we re­ceive pro­vides for the safe ar­rival of new de­pen­dents across the board—just as hav­ing a will in place pro­tects any new­born child.” In fact, one of the hospi­tal's new­est de­vel­op­ments is the im­pend­ing opening of its New­born ICU, only one of three in the world which, in ad­di­tion to crit­i­cal equip­ment such as ad­vanced in­cu­ba­tors, con­tains 70 pri­vate rooms so that moth­ers and their babies need not be sep­a­rated af­ter birth.

Given the di­verse needs of BC Women's Hospi­tal, the ways to do­nate are many,

Dual Will plan­ning re­quires care­ful im­ple­men­ta­tion; for ex­am­ple, it only works if the will-maker en­sures that dif­fer­ent ex­ecu­tors are named in each Will.

Lega­cies directed to hos­pi­tals and their foun­da­tions can mean new equip­ment, com­mu­nity fund­ing and pro­grams for chil­dren.

Set­ting up a le­gacy fund can con­trib­ute to the health-care sys­tem for your­self, your chil­dren and your neigh­bour. And there is no do­na­tion that is too small.

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