Thank you for your patience suffering through five columns in a row about how to obtain an estate grant! I鈥檒l conclude that topic with a brief kudos to the folks at the 琉璃神社 Court Registry. They issued estate grants on three of my last four applications in 3 陆 weeks which is an incredibly fast turnaround.
Next up is my follow through with a commitment I made months ago at the end of a four-column series about a disinherited child contesting your will.
Thank you to Wayne in Victoria who reminded me of this commitment at the end of my column published August 11, 2024:
鈥淭here are ways to completely sidestep a child鈥檚 ability to challenge the way you choose to pass on your wealth, even if everything points to a strong moral duty to that child. I feel it鈥檚 time to leave the unpleasant topic of disinheriting children for a while though, and will cover those ways at some point in the future.鈥�
I invite you to read that four-column series if you鈥檙e interested in this subject matter. If you have any difficulty accessing those columns, let me know and I鈥檒l help you.
Put simply: the way to sidestep your disinherited child鈥檚 right is to structure your assets so that you won鈥檛 have an estate.
I鈥檝e written about what it means not to have an estate in previous columns, but it can be tricky to get your head around so I鈥檓 happy to explain it again.
My column published August 18th, 2024, explained it in the context of not having to pay estate debts.
An important difference is that taking steps to structure your assets for the purpose of stiffing your creditors is unlawful under British Columbia鈥檚 Fraudulent Conveyance Act. It鈥檚 not unlawful to take those same steps for the purpose of disinheriting your child.
Jointly Owned Assets
When assets are owned jointly by two or more people and one of them dies, the deceased ceases to have any interest in the asset, leaving the survivor(s) as the owners.
Those assets do not form part of the estate.
This assumes that the asset is owned in true joint tenancy, which includes the 鈥渞ight of survivorship鈥� (the right of the surviving joint tenant to own the entirety of the asset on the other鈥檚 death).
That鈥檚 important, because there are different types of joint tenancy.
If you have two children and want to disinherit one of them, you might transfer title to your house from your name alone to be held in joint tenancy with your favoured child. But if no money changes hands, there is a legal presumption that the favoured child doesn鈥檛 have the right of survivorship and rather will hold the asset in trust for your estate.
That presumption can be overcome if you simply 鈥減aper鈥� your intentions at the time the asset is transferred, but it must be done properly.
Registered Assets
I am referring to Registered Retirement Savings Plans (RRSPs) and the other registered assets (RRIFs, TFSAs, LIRAs and LIFs) that allow for a beneficiary to be named.
If you don鈥檛 name a beneficiary, the proceeds of those assets get paid into your estate. If you do, the proceeds are paid to your named beneficiary and do not form part of your estate.
You can name your favoured child as beneficiary, excluding the one you want to disinherit.
Transfer Before you Die
Assets transferred out of your name and out of your possession while you鈥檙e alive do not form part of your estate and therefore cannot be included in a will variation claim.
A Trust
A trust is a legal arrangement where you transfer ownership of assets to a trustee to manage those assets for the benefit of a beneficiary.
There is a cool type of trust available to those age 65 and older called an 鈥渁lter ego鈥� trust (an extension of yourself) where you get to be both the trustee and th beneficiary while you are alive. You also include provisions in the trust about who gets your assets on your death, the same as you would in a will.
There is a version for couples called a 鈥渏oint partner鈥� or 鈥渏oint spousal鈥� trust that works similarly.
Assets in a trust don鈥檛 form part of your estate and therefore cannot be included in a will variation claim.
A trust is typically the best option for sidestepping a disinherited child鈥檚 claim, but it comes with some expense to set up and maintain.
Each of these options prevent assets from forming part of your estate. If there鈥檚 no estate, then your will is meaningless and your child鈥檚 right to challenge that will becomes meaningless as well.
Please get legal advice if you want to disinherit a child. My columns are not legal advice. I provide legal information which can lead you astray if you take steps without having a proper consultation with a lawyer.
I鈥檝e been writing this column for over 14 months and I鈥檓 nowhere near running out of material, but I welcome your questions because it鈥檚 more fun writing a column around an actual reader question.
Paul Hergott
You are encouraged to contact Paul directly at paul@hlaw.ca with legal questions and issues you would like him to write about.
