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Everyday Legal Problems
Our Work It Out pages offer in-depth, step-by-step guidance for dealing with a legal problem from start to finish.
Easy-to-read Need to Know pages offer tips and highlights.
Learn the importance of making a will.
A will is a legal document that says what the person making the will wants done with their property and obligations after they die. By making a will, you can ensure the things you own go to the people you want to have them. As well, your loved ones can feel confident they are carrying out your wishes.
Why you should make a will
"I've decided I need to make a will. Both my sisters want me to leave my opal ring to them. The ring originally belonged to our mother, and is a family heirloom. I can now see that unless I'm very clear in my will about who should have the ring, there will be family conflict later."
– Maria, Nanaimo
When you die, your property and obligations form your estate (with some exceptions explained below). Making a will gives you some control over what happens to your estate after you die. With a will, you can make sure the things you own go to the people you want to have them.
A will can also help the people who outlive you. They can feel sure that they are carrying out your wishes. Putting your intentions into a will can help save your family members and those you leave things to time, effort and money.
If you die without a will, what happens to your estate
If you die without a will, there is no way to prove what your wishes were. The law dictates how your estate will be divided. The rules are set out in the Wills, Estates and Succession Act.
For example, if you have a spouse and no children, your estate passes to your spouse. If you have a spouse and you had children together, your spouse gets the first $300,000 value of your estate and half the balance; the other half of the balance is divided equally among your children.
There are further rules depending on the combination of relatives alive at the time of your death. The estate goes to the government if no relatives can be found.
Another result if you die without a will is that the court has to appoint someone called an "estate administrator" to deal with your estate. That person, usually a spouse or child, needs to file documents in British Columbia Supreme Court that ask the court to appoint the person to administer the estate.
If there is no one who applies to administer the estate, then the Public Guardian and Trustee takes responsibility.
How a will is different from a power of attorney or representation agreement
A will takes effect only after you die. A power of attorney and a representation agreement are ways to plan for the handling of your affairs during your lifetime.
With a power of attorney, you can give someone the legal power to take care of financial and legal matters for you while you are still alive. (Learn more.) With a representation agreement, you can give someone the legal power to take care of health care and personal care matters.
Both a power of attorney and a representation agreement cease to have effect when you die.
You don't have to make a will
The law does not say that you have to make a will. However, by making one you can make sure that your wishes about inheritance are respected.
"My sister Susan died without a will. A year before, she told me what she wanted done with the things she owned. Her wishes included giving her car to me. But without a will, the law says how the estate is divided. In Susan’s case, everything in her estate will go to her only child, Amy."
– Janet, Vernon
What a will should include
A will doesn't deal with everything you own. A will generally doesn’t cover property that you don’t own exclusively. For example, a joint bank account or a house owned in joint tenancy has a "right of survivorship". When you die, any jointly owned properties will automatically become the exclusive property of the other joint owner. This property doesn’t form part of your estate.
Also, property where you have designated a beneficiary doesn’t form part of your estate. The beneficiary is entitled to receive the proceeds on your death. Common examples include a life insurance policy or a retirement benefit plan.
If you decide to make a will, learn the steps involved in making a will.
Learn how a power of attorney can help with personal planning.
A power of attorney is a legal document in which you authorize another person to take care of financial and legal matters for you. It is one of several options for “personal planning”, which involves making arrangements for while you are alive but may need assistance.
Learn how a power of attorney can be a simple and inexpensive way to arrange help with your financial and legal affairs.
What a power of attorney allows you to do
A power of attorney is a legal document. When you make a power of attorney, you give someone the authority to take care of financial and legal matters for you. This might include paying bills, depositing or withdrawing money from your bank account, investing your money, or selling your home.
The person you give this power to is called the "attorney". (In this case, attorney does not mean lawyer.)
You are called the "adult".
A power of attorney does not give the attorney authority to make decisions about your personal care or health care. It covers financial and legal matters only.
A power of attorney is different from a will, which provides for the distribution of the things you own after your death. A power of attorney is a way to plan for the handling of your affairs during your lifetime.
It can help if you physically can't take care of matters
There are several reasons you might make a power of attorney. A power of attorney can be a good option if you are physically unable to look after your affairs due to travel or injury.
"I want to spend the summer visiting my grandchildren in France. I'll be gone for several months, and I'd like to enable my niece to pay my bills while I'm away. I learned I can do that by making a power of attorney that is limited. In it, I authorized my niece to access my bank account only to deposit my pension cheques and pay my bills, and only until I come home from my trip."
– Helga, Victoria
A power of attorney enabling someone to look after your affairs while you are traveling would be an example of a "limited power of attorney". This is also called a "specific power of attorney". Your attorney’s powers are limited to a specific task or a specific period of time. For example, you give someone power of attorney to sign the papers on the sale of your home while you’re out of the country on vacation.
It can help if you become mentally incapable
"My husband William had an accident at work. He is in hospital in a coma. We have a joint bank account, so I can pay the bills. But our car is in William’s name and the insurance is due. William can’t sign. I wish William had made an enduring power of attorney appointing me as attorney. That way I could renew the insurance."
– Anita, Burnaby
Another reason you might make a power of attorney is to prepare for the chance you become mentally incapable due to age, accident or illness. With an "enduring power of attorney", you can name someone to act on your behalf for financial and legal affairs, and make the appointment continue in effect—or endure—if you become incapable of making decisions. (With a "general power of attorney", the appointment ends if you become mentally incapable.)
See our page on enduring powers of attorney for more on this type of power of attorney.
A power of attorney can also be set up to come into effect only when something happens to trigger it. This is called a "springing power of attorney". You can appoint someone to act on your behalf if the triggering event happens. The triggering event can be if you become mentally incapable. For example, the appointment can be worded to come into effect “when two physicians have determined that I am no longer capable of managing my affairs”. Such a springing power of attorney is not active until you are incapable.
The types of power of attorney are not mutually exclusive. For example, an enduring power of attorney or a springing power of attorney can be limited to a specific purpose or time period.
For health care and personal care decisions, there are other planning options
A power of attorney deals only with your financial and legal affairs. It does not enable your attorney to make decisions about your health care and personal care. For example, a power of attorney would not allow your attorney to consent to surgery on your behalf or to make decisions about where you will live.
Under BC law, if you want to have someone of your choice make decisions about your health care and personal care when you no longer can, you can make a representation agreement. In a representation agreement, you name a "representative" to make health and personal care decisions for you, or assist you in making decisions. You can name whoever you want as your representative—a friend, relative, spouse, or adult child.
Another option for health care planning is an advance directive. It allows you to write instructions to your health care provider about what kind of health care treatment you want and don’t want, including life support or life-prolonging medical interventions. No one will be asked to make a decision for you when the advance directive applies.
With a “section 7 representation agreement”, your representative can be authorized to handle “routine management” of financial affairs and most legal matters, in addition to health care and personal care. This would allow them to pay your bills, deposit your pension and other income, and make investments for you. However, they can not handle financial matters beyond the routine, such as buy or sell your real estate or take out a new loan in your name. See Nidus Personal Planning Resource Centre for more on representation agreements.
By planning, you will make things much easier for your loved ones
If you become incapable of making decisions independently, and you do not have an enduring power of attorney or another planning tool in place, your loved ones may need to go to court to get the legal authority to handle your affairs. This is called getting "committeeship". Going to court is an expensive and time-consuming process. There is no guarantee the court will decide to grant the legal powers asked for.
An enduring power of attorney is the most common way to ensure the person of your choice is able to step into your shoes and handle your finances if you become incapable of doing so.
But there are other planning options to be aware of.
In a trust agreement, you can put all your property and income in a trust. You can name someone of your choice to be the trustee, and spell out terms of how the property is to be managed. The trust continues if you become incapable. It can even survive death, ensuring that your affairs continue to be managed in a way that is consistent with the terms in the trust.
If your finances are not complicated, a pension trusteeship can be an option. Let’s say your income is limited to federal income security programs such as Old Age Security and the Canada Pension Plan, and your expenses are just rent, food and utilities. A capable family member or friend can sign up with the income security programs to receive your pension funds as trustee to pay the rent and bills.
If your income is directly deposited into your bank account, you could set up a joint bank account with a trusted relation or friend. That person could help you with paying bills and making withdrawals. (A joint bank account introduces some risks that other planning options don't. For example, any person named on the joint account is able to withdraw money at any time. As well, if one of the account holders dies, the surviving account holder becomes the owner of the account.)
With a power of attorney, you can still make decisions
Making a power of attorney does not remove your decision-making rights. Decision making is not given away; it is shared between you and the attorney whenever possible. Your attorney cannot override a decision made by you while you are capable.
Your attorney has a legal duty, to the extent reasonable, to foster your independence and encourage your involvement in any decision-making that affects you.
The time to make a power of attorney
If you become incapable of making decisions independently, it is too late to make a power of attorney. You have to plan ahead and do it in advance.
In considering personal planning options, be aware there are different "legal capacity" requirements. Legal capacity refers to a person’s ability to make binding decisions or agreements.
Someone who doesn’t have the legal capacity to make an enduring power of attorney may still be able to make a representation agreement. A person can make a "section 7 representation agreement" even if they cannot manage their routine financial affairs or look after their daily needs. This makes a section 7 representation agreement a very useful “last resort’’ document when someone has not made any planning documents and they are starting to lose their capacity.
A lawyer or notary public can guide you on which planning documents best fit your situation.
Learn what's involved in being executor of someone's estate.
An executor is the person named in a will to carry out the instructions contained in the will. If you are asked to be someone’s executor, learn what’s involved in taking on the responsibility. Here are seven common questions about being an executor.
What's involved in being an executor?
When the person who made a will (the will-maker) dies, their property and obligations form their estate. The will names a person—the executor—to deal with or “settle” the estate. The executor locates all of the will-maker’s property, pays any debts and the funeral costs, prepares the final tax return, and then distributes the rest of the estate according to the instructions in the will.
Being an executor takes time, energy and careful attention to detail. An executor can get help from friends and family members and also from professionals such as a lawyer or accountant. However, the executor is the person who is legally responsible. An executor makes the decisions, watches over everything, and needs to keep accurate records.
How difficult is it to be an executor?
Acting as an executor can be relatively straightforward if the estate is modest; for example, if the estate consists of a car, a house, some personal belongings, and a bank account.
But being an executor can become challenging for many reasons. For example, the job may be more difficult if:
- there are many people named in the will to receive gifts of money or property
- the will-maker has extensive investments or debts
- the will-maker owns a business
- the will includes a trust, where part of the estate is set aside to provide ongoing income for someone
- the will is challenged by someone who feels left out of the will
You should only take on this responsibility knowing that the task may be time-consuming and stressful.
If someone asks you, do you have to act as their executor?
No. If someone asks you to be their executor and you don’t want to do the job, you can say no.
You can also decline or “renounce” an appointment as executor after the person has died. However, if you have started dealing with any property of the estate, you are legally bound to continue, and you can only be relieved of being the executor by a court order after accounting for what you have done in the meantime.
Can an executor claim a fee?
"I was executor of my mother’s estate. It was quite simple because she had distributed many of her possessions before she came to live with us. I didn’t take a fee for being executor because it was for family and it didn’t take long to do the job."
– Helen, Richmond
Yes, an executor can claim a fee for their time and effort. Sometimes the will states the executor’s fee. If the will does not set out any fee, the executor may take up to:
- 5% of the gross value of the estate,
- 5% of the income of the estate (money earned by estate property after the will-maker dies), and
- .4% per year, based on the average value of the estate under management, for a care and management fee.
The amount depends on how much work is involved and whether the executor hires professional help or does it all on their own.
Often an executor doesn't accept a fee. This is common if the executor is a spouse, family member, or close friend.
If there is more than one executor
If there is more than one executor, the fee is split, but not always equally. The division of the fees depends on who does the most work.
If the executor is a beneficiary under the will
An executor who is named as a beneficiary under the will may claim a fee in addition to what the will gives the executor as a benefit, unless the will says that this cannot happen. Sometimes the will leaves the executor a special gift (such as jewelry, money, or real estate) for doing the job of executor. In such a case, the executor can claim a fee as well, but only if the will says so. The executor may prefer to take a gift rather than a fee because a fee is taxable but a gift under the will is not.
Any out-of-pocket expenses the executor has while administering the estate are paid for out of the estate. Examples of out-of-pocket expenses are search fees, photocopying, and postage.
Can more than one executor be named?
There may be more than one executor named in a will to act at the same time. If there is, the co-executors must act jointly. Neither is the "lead" executor or "main" executor. The co-executors have to agree on many things, from the selling price of the house to who is going to get the family photo albums.
If co-executors cannot agree, the administration of the estate can not move forward. For example, if one executor wants to sell the house and the other disagrees, there can be no sale. If co-executors have serious disagreements, they may need to contact a lawyer or go to court to resolve the conflict.
If the administration of the estate cannot move forward because the co-executors disagree, the beneficiaries may also go to court and seek removal of the executors for failing to act appropriately.
How long does it take to carry out the duties of executor?
In general, it can take about one year to complete the work of executor for a straightforward estate. This is commonly referred to as the “executor’s year”.
That said, there is no set time when the responsibilities of the executor are finished. The executor remains responsible for looking after the estate, even after the estate property has been distributed to the beneficiaries under the will. If assets or debts turn up years later, the executor will still be legally responsible for dealing with them. The executor’s role is only finished when the court formally discharges the executor.
Can the executor get help from professionals?
Many executors do the work themselves, while others hire a lawyer or an accountant to do some or all of the work. Typically, executors hire a lawyer to handle any business interests left behind by the will-maker. Most executors hire an accountant to prepare the tax returns; some hire an accountant to prepare the estate accounts.
Most estates where there is real estate or bank holdings require a legal procedure called "probating the will". This procedure confirms that the will is legally valid and can be acted on. The probate process, explained here, can be difficult and most executors hire a lawyer to prepare the necessary documents and to guide them through the probate procedure.
Professional fees are paid out of the estate, as long as they are reasonably incurred.
If you agree to act as an executor, make sure you have a current copy of the will. Keep it in a safe place where you can find it easily. Also make sure you know where the original will is kept.
A template to help you create a loan agreement.
What you should know before getting a payday loan.
Learn what's involved in cancelling a payday loan.
Not only are payday loans a very expensive way to borrow money, there are other risks.
“Our family was hit with unexpected bills, and we needed some extra money. I went to a payday lender, and was approved for a loan in minutes. They made it seem so easy. And then I learned how much I would be paying in interest. I was shocked. I decided to ask my parents for a loan instead.”
– Allie, Surrey
You have rent coming due, extra bills piling up, and you’re strapped for cash. Taking out a payday loan can be a tempting short-term solution. However, your cost of borrowing is through the roof. And relying on payday loans can get you into deeper financial trouble.
Learn six reasons why you should avoid payday loans.
1. A payday loan is expensive
Payday loans are small, short-term loans. The maximum amount that can be borrowed is $1,500 and usually, they have to be repaid within 14 to 28 days.
They’re also seductively easy to get. Payday lenders don’t ask to see your credit report before lending to you. They just want to see proof you’ve got a source of income and your bank account details.
But you pay dearly for that quick access to cash. Most payday lenders charge much higher interest rates and fees than other lenders.
Under the law in BC, the most a payday lender can charge you for a loan is 15% of the principal amount borrowed. This includes interest and any other fees.
This might not sound like a lot. But it is a very expensive way to borrow money. If you take out a $300 payday loan, that 15% charge will be $45. This translates into a very high annual percentage rate of interest, particularly if the loan is for a short period of time.
Time to repay $300 payday loan (+ $45 charge)
Equivalent annual percentage rate of interest
2. When we say a payday loan is expensive, we mean really expensive
Let’s unpack this a little more. The annual percentage rate of interest tells you how much it costs to borrow for one year. That 14-day payday loan has a heart-stopping rate of 391%. In comparison, the rate on a typical bank credit card is around 20%.
Put another way, taking out a 14-day payday loan is roughly 20 times as expensive as using a credit card, and 50 times as expensive as borrowing from a line of credit.
The costs shown in this example are based on the following:
- The annual interest rate charged on borrowing from a line of credit is typically 7%.
- The annual interest rate charged on making a purchase with a credit card is typically 20%.
- The annual interest rate charged on taking a cash advance with a credit card is typically 20%, in addition to a $5 fee.
- A payday loan costs $15 per $100 that you borrow; for a 14-day loan, that translates to an annual interest rate of 391%.
3. If you’re late repaying a payday loan, the lender can charge even more
If you can’t repay a payday loan on time, the lender can add extra charges to your loan.
The law in BC says that a lender can charge interest at a rate of 30% per year on any amount outstanding after the loan is due.
As well, the lender can charge a one-time $20 fee for any dishonoured cheque or pre-authorized debit.
4. Some payday lenders try to take advantage of you
Some payday lenders will tell you, without being asked, the maximum amount you’re eligible to borrow. (They can't lend you more than 50% of the net income you receive during the term of the loan.) Some will encourage you to borrow to your limit. This will make it harder to pay back the loan. Which can quickly lead to an endless cycle of getting a new payday loan to repay the one you got last week.
Some payday lenders ask for a payment up front before you can borrow money. They aren’t allowed to do this.
Some payday lenders urge you to buy “loan insurance” at an extra cost. They aren't allowed to require you buy this insurance.
5. It's easy to get trapped in a cycle of high-cost debt
Payday loans can be enticing: they provide quick access to cash, at convenient hours and locations, with no credit check. Most people taking out a payday loan intend to pay it back in full quickly, typically in a few weeks. But when you're paying so much in interest, it can be difficult to do so.
Many end up taking out a new loan to pay off the first. Most people who borrow from payday lenders end up taking out multiple loans.
Under BC law, payday lenders aren’t allowed to grant "rollovers". A rollover is where a lender gives you a new loan to pay off an existing loan. But borrowers can seek out a new lender. And many do. Credit counsellors report that clients with payday loans typically have three to five loans when they arrive for counselling, skirting the rules by going to rival lenders for new loans.
The result can be an endless cycle of high-cost debt. It's even got a name: the payday loan cycle.
6. There are other options
There are less expensive ways to borrow money than taking out a payday loan.
One of the best options if you need money right now is a new credit card. Most major banks offer promotional rates for the initial month or two. Paying down your credit before the promotional period ends is a good approach to save money and build your credit score.
If you have bad credit, one option is taking out a secured credit card. Many major banks offer secured credit cards to higher-risk borrowers. The approval process for these cards is much less strict. However, the issuer usually requires a cash deposit as a guarantee of on-time payment.
A line of credit is another good option. Consider opening a small ($10,000 or so) line of credit when you don’t need it and have good credit. (If your credit rating takes a hit later on and you need money, you may not qualify for a line of credit.) Open it, but don’t use it. This will allow you a “safety net” you can use instead of taking out a high-interest credit card or payday loan.
If you’ve already taken out a payday loan, you may have the right to cancel it. You can always do so within two business days of taking out the loan. You may even be able to cancel the loan outside of the two-day cooling-off period if the lender didn’t cross their t’s and dot their i’s. See our guidance on cancelling a payday loan.
If you’ve already taken out a payday loan, you may have the right to cancel it. You can always do so within two days of taking out the loan. You may even be able to cancel the loan outside of the two-day cooling-off period if the lender didn’t cross their t’s and dot their i’s. See our guidance on cancelling a payday loan.
Avoid problems when borrowing from a friend or relative.