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Everyday Legal Problems

Why Make a Will

Learn the importance of making a will.

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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.  

Understand Powers of Attorney: What’s the Right Fit For You?

Learn about the different types of powers of attorney, and how they can be used.

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A power of attorney is a legal document. With it, you can give someone you trust the power to look after your financial and legal affairs. This might include paying bills, depositing or withdrawing money from your bank account, investing your money, or selling your home. Learn about the different types of powers of attorney, and how they can be used.

There are different types of powers of attorney

A power of attorney is a simple and inexpensive way to plan ahead. There are different types you can prepare. Which one is right for you depends on your needs and circumstances. With each type, you decide:

  • What your attorney can and can’t do. The power you give your attorney can be limited to a single decision or task. Or it can extend very broadly. 
  • When your attorney can act. For example, you may want your attorney to manage your affairs only while you’re out of the country. 

The person you give this power to is called the attorney. In this case “attorney” doesn’t mean “lawyer.” It simply means the person you’ve chosen to be your financial decision-maker. 

Here we explain some power of attorney basics, and explore the different types you can prepare.

Powers of attorney cover financial affairs and legal matters

You can authorize your attorney to make decisions on your behalf, or do certain things, in relation to your financial and legal affairs.

Financial affairs include paying bills, dealing with bank accounts and income, applying for benefits, selling assets, paying taxes, paying off loans, applying for insurance, and dealing with your business, if you have one.

Legal matters include dealing with legal issues, getting legal advice and services, instructing a lawyer, and commencing legal proceedings on your behalf.

A power of attorney is different from a will. A will helps others distribute what you own after your death. A power of attorney helps you plan out the management of your financial and legal affairs during your lifetime. This includes what happens to your assets.

You can still make decisions with a power of attorney

You needn’t worry that drawing up a power of attorney will immediately strip you of the ability to run your own life. Your attorney can’t override decisions you make while you’re mentally capable of making them yourself. And even if you become incapable, your attorney has a legal duty to encourage your involvement, as much as possible, in any decision-making that affects you.

You need to be legally capable to sign a power of attorney

The law says you must be capable when you sign a power of attorney. You’re presumed capable, unless it’s demonstrated that you don’t understand the nature and consequences of making the proposed document.

It’s important to appreciate “capability” in the following two contexts:

  1. You must be capable at the time you sign the power of attorney. The law says you have to understand that you’re giving your attorney the power to deal with your financial and legal affairs, and the consequences of doing so. A medical diagnosis is relevant, but not decisive. For example, someone in the early stages of Alzheimer’s might be experiencing some level of cognitive decline, but still be legally capable of preparing a power of attorney, because they understand the nature and consequences of doing so. Capability is time and task specific. Are you capable at the time you sign the document? Do you understand this specific document?  

    There is a specific six-part capacity test and special rules for signing an enduring power of attorney.

  2. Mental capability also matters at the moment the power of attorney is used. For example, enduring powers of attorney are designed to be used even after you become mentally incapable. On the other hand, a general power of attorney can no longer be used if you become incapable.

A general power of attorney may be used if you’re physically unable to manage your affairs

“I was diagnosed with chronic fatigue syndrome in the fall. Sure, I could still calculate how much I owe the credit card company, if you asked me to. But I just don’t have the energy to juggle my everyday finances. Now is a time to focus on my health.”

– Akira, South Burnaby

A general power of attorney can be used when you’re still mentally capable of managing your own affairs, but for some other reason are unable to do so. The attorney’s authority stops if you become mentally incapable.

This may be a good option if you’re finding it difficult to handle your own financial affairs if have an illness, injury, or mobility issues. 

You can give your attorney broad powers to do almost anything with your finances and property. But how much power you give to your attorney is up to you. The law says you can place conditions or restrictions on the power you give them.

An attorney’s power can be restricted with a limited power of attorney

“My house is on the market. My father got sick and I had to make a last-minute trip to Germany. I prepared a limited power of attorney so my friend Sara could sign the papers if my home sells while I’m gone. The authority ends when I come home from my trip."
— Walter, Victoria

You can choose to restrict your attorney’s powers to a specific task or time period. This is called a limited power of attorney. Sometimes it's called a specific power of attorney.

These are often used when someone temporarily can’t manage their financial affairs. A common example is when someone is away travelling.

With an enduring power of attorney, you can plan in advance for any future incapacity

“My husband’s in a coma — he had an accident at work. We have a joint bank account, so I can still pay the bills. But the car insurance is due and the insurance company won’t let me renew it. They say it’s because our car is in his name. So, on top of everything else, I’ve got a car I can’t drive and two young kids. If we’d thought to prepare enduring powers of attorney, I could have easily renewed the insurance."
 — Anita, Burnaby

Preparing an enduring power of attorney is one of the simplest and most powerful ways to plan for your financial future. With it, your attorney’s authority to act for you can start right away and then continue — or “endure”  — if you are incapable of managing your own affairs, whether due to illness,  accident, or age-related decline. 

Enduring powers of attorney are:

  • Commonly used. They’re simple and relatively cheap to prepare.
  • Flexible. They can be as general or specific as you like. They can cover financial situations from simple to complicated.
  • Far better than no document at all. If you lose your mental capacity and haven’t put plans in place, the court may need to appoint someone to manage your money and property. This is expensive and time-consuming. And there’s no guarantee it’ll be the person you would have chosen. 

For more information and guidance on how to prepare one, see our page preparing an enduring power of attorney.

A springing power of attorney becomes active when it’s triggered

An enduring power of attorney can be set up so that it doesn’t become active until a specified event happens. This is called a springing power of attorney. For example, the event might be that two physicians have declared you mentally incapable. At that point, the attorney you’ve chosen in advance can take over your affairs.

There are other options to plan for future incapacity

For financial and legal affairs

An enduring power of attorney is the most common way to plan for who will take care of your finances if someone happens to you. But there are other options. See our page on your options for planning your future financial and legal affairs.

For health care and personal care decisions

A power of attorney only deals with your financial and legal affairs. It doesn’t give your attorney the authority to make decisions about your body and what happens to it. For example, your attorney can’t consent to health care on your behalf or make decisions about where you’ll live.

A representation agreement lets you name someone who can support you to make health care and personal decisions. You can choose whoever you want as your representative – a friend, spouse, or adult child. 

See our page on your options for planning for your future health and personal care.

Some of the options for free or low-cost legal help may be helpful if you are seeking advice on personal planning options.

Being Asked to Be an Executor

Learn what's involved in being executor of someone's estate.

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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.

Out-of-pocket expenses

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.

Why You Should Avoid Payday Loans

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

14 days

391%

28 days

196%

62 days

88%

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.

Cost of borrowing $300 for 14 days

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. 

(To protect borrowers, the law in BC sets out a number of things payday lenders are not allowed to do. Learn more about how to protect yourself if you are getting a payday loan.)

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.

 

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