What You Need to Know About Estate Planning

Elyssa Lockhart, partner at McQuarrie Hunter LLP, says that some people feel they are streamlining the legal process and saving money by taking steps to avoid the need to probate their estate. But sound advice can help them in the long run.  

 

Trying to save money may cost you dearly in the end

It’s not uncommon for people to try to avoid the perceived expenses associated with retaining lawyers, at least with regards to estate planning; but taking matters into one’s own hands by establishing joint property ownership can ultimately be costly, as well as ruinous to relationships, according to Elyssa Lockhart, partner at McQuarrie Hunter LLP.

 At face value, joint ownership seems attractive because if one owner dies it gives the last surviving joint owner title to the asset without delay. Also, “people feel they are streamlining the legal process and saving money by taking steps to avoid the need to probate their estate,” says Lockhart.  

However, after the death of a spouse, surviving partners often add one or more children as joint owners of their assets—and that’s when the trouble begins.  Trouble often stems from what Lockhart refers to as differing “investment time horizons.” She explains: “With spouses, jointure is successful because—in addition to truly being owners of the assets—you have similar life plans and lifespans; but siblings understandably have different financial ambitions, timelines and needs.”

 Over time, children can become proprietary about assets held in their names—preventing parents from selling and using them freely. Often children do not share these assets with siblings after the death of their parent, as was anticipated by the parent. And, “Jointured assets aren’t confined to property: they can also be vehicles, banking and certain investment accounts—a multitude of things,” says Lockhart. “Incidences of proprietary behaviour seem to be increasing, and while legal steps can be taken to rectify the financial situation, litigation doesn’t resolve the bitterness created within the family.” 

 The legal team at McQuarrie, which is currently marking its 50th anniversary, is especially motivated to helping clients avoid the hazards stemming from substituting simple solutions for comprehensive legal advice. “In terms of the legal landscape, the public generally does not fully appreciate its intricacies,” says Lockhart. 

One example of something not commonly known by lay people is that jointures don’t necessarily save families money, even in the absence of litigation.
“If you list a child who doesn’t live on your property as a joint owner, it is treated as an investment in their hands and growth in value can be taxable as a capital gain—a much higher rate than the approximate 1.4-per-cent probate fee,” says Lockhart.

 Yet more difficulties can result if a couple opts to draft their own wills.  “So-called ‘simple wills’ have their own set of hazards. Instead, we strive for ‘suitable wills’ to best protect our clients.” For example, simple wills generally don’t protect step-children because, in law, a stepchild has no claim to the estate of a step-parent. If the parent dies and leaves all assets to his or her spouse, that spouse may later disinherit the step-child with impunity.

 “By contrast, a will from a lawyer can be structured to acknowledge both the spouse and the child.” Plus, law firms such as McQuarrie take the time to explain complicated legal processes in fine detail to clients, so they gain a firm understanding of their obligations and the planning strategies available to them. 

 Lockhart concludes: “Consulting with an experienced lawyer is always the best option when you have to make important personal asset and business decisions. In the long run it saves you time and money—and possibly a lot of heartache.” 

McQuarrie is a multi-practice, Surrey-based law firm that serves the needs of businesses, individuals and institutions in the Lower Mainland and throughout B.C.
www.mcquarrie.com