Understanding Probate: Dual Will Planning Encouraged
Private company shares can be handled separately
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.”
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.