Did you know?
For many, making a will is a critical step to plan for their passing (here, learn the main reasons to make one). But for some people, a will may not be needed. There are practical alternatives to take care of many of the things a will covers. We walk you through them and offer examples of who may not need a will.
Examples of who may not need a will
Dev and Sophie, mid-life couple with no children
Now in their 50s, Dev and Sophie have been married for 15 years. Early in their marriage, they bought a condo together as joint tenants. They jointly own their one vehicle, and have a joint bank account. They each have an RRSP, where they have designated the other as their beneficiary. They’ve each recorded their wishes for their cremation and a memorial service, and shared those wishes with the other. They don’t have any children.
Dev and Sophie may not need a will
For Dev and Sophie, all their assets of value are owned in joint tenancy or have designated beneficiaries. The result is none of these assets would be covered by a will. If one of them dies, their jointly owned assets will pass directly to the other. Because each of them designated the other as a beneficiary in their RRSPs, the plan would automatically transfer or pay out to the surviving spouse. In recording their wishes for their cremation and memorial service, and sharing those wishes with the other, they’ve covered off that aspect of what a will can help with.
Yin, retiree who gifted away her only asset of value
In her late 70s, Yin recently transferred her home into joint ownership with her daughter, who moved in to help with day-to-day chores. Yin had a lawyer help with the paperwork for the home, which made it clear Yin would continue to control ownership while she was alive but she was gifting her daughter the home on her death. Yin made a preneed funeral contract to set out her wishes for her burial and funeral.
Yin may not need a will
Yin has gifted away her only asset of value, her home. She doesn’t own a vehicle or anything else the law describes as having marketable value (common household items and personal belongings such as clothing are considered to have “no marketable value”). In making the preneed funeral contract, she has arranged and paid for her burial and funeral service.
Rob, on the eve of a fixed income retirement
In his mid-60s, Rob is within a year or two of retiring from his job in a hardware store. He’s single, and lives by himself in a rented apartment. He owns a 20-year old Toyota pickup with 250,000 kms. His bank account fluctuates between $5,000 and $10,000. Once he retires, he will be relying fully on government programs, as he has no retirement savings or work pension. He’d like his son Todd (his only child) to get whatever money he leaves behind on his death. He has left a letter for Todd to this effect, where he also set out his wishes to be cremated and have his ashes scattered at his favourite fishing spot.
Rob may not need a will
Rob is an example of where a will may not be needed due to his estate being small and simple. The only thing he owns of value is his bank account. (His truck has nominal value, and common household items and personal belongings, such as clothing, are considered under the law to be “of no marketable value.”)
Because Rob’s estate is likely to be worth less than $25,000, probate would not be required. Under BC law, his son Todd, being his only descendant, would inherit whatever property remains after Rob’s debts and taxes are paid. Todd could present the bank with the death certificate and sign a guarantee and indemnity form saying he is the rightful heir. (Most banks use a form of this type, though Todd will need to check with the bank on what they require.)
Rob’s letter to his son setting out his wishes for cremation helps with that aspect of what a will typically covers.
What you should know
A will deals with a person’s estate. Someone’s estate includes all the property and belongings they own on their death, with a few exceptions. A notable one involves property owned jointly with others. Another involves insurance policies or investment plans that name specific beneficiaries. We explain these exceptions in some detail here.
For now, the key point is that when someone dies, there’s often some property that isn’t included in their estate. It instead goes directly to a designated person (or people). In this way it’s said to pass outside the will.
A simple will can help you take care of four things. In it, you can set out:
your wishes for burial or cremation, and for your funeral
what will happen to your personal belongings and any real property you own
what will happen to any money and investments you leave behind
how any minor children will be looked after
Let’s set aside the last point. If you have young children, you absolutely should prepare a will. But otherwise, there are practical alternatives for each of the other areas. Let’s unpack them one at a time.
There are other ways, besides a will, to arrange for your funeral and what will happen to your body.
Preneed (prepaid) funeral contract
While you are alive, you can arrange and pay for your burial or cremation and your funeral service. This involves making a preneed contract with a funeral home. The contract provides for cemetery or funeral services, or both. The cost is typically fixed at the current rate, even if the funeral takes place many years later. Your money is placed in a preneed trust account. Consumer Protection BC explains how these contracts work.
In your preneed funeral contract, you can set out your preference for burial or cremation. That preference is legally binding on the person responsible for arranging the funeral (except if following it would be unreasonable, impracticable, or cause hardship).
Who, you may be wondering, would that be? BC law sets out a priority order for who is responsible for arranging the funeral. Where there’s no will, the responsibility falls on your spouse. If there’s no spouse or they’re not willing to take on the job, next up are any adult children, then adult grandchildren, then a parent, and so on.
In a preneed funeral contract, you can also set out your wishes for your funeral or memorial service. Be aware that those wishes aren’t binding on the person responsible for arranging your funeral. (The same is true if you set out your wishes for your funeral service in a will.)
Organ and body donation
You can also make arrangements in advance to donate organs and tissue. BC Transplant oversees all aspects of organ donation and transplantation in BC. Register with their BC Organ Donor Registry to be an organ donor. (It used to be that you simply signed your driver’s licence, but now you have to actively register to be an organ donor. Happily, it’s online, easy, and you only have to do it once.)
You can also register to donate your body for anatomical study and medical research. The University of British Columbia medical school accepts bodies for teaching and research purposes. For more information, see the UBC Body Donation Program website.
Sharing your wishes
It can be useful to record any wishes for your funeral and body, whether in a living will or even a letter pinned on the fridge door. Also consider sharing these wishes with anyone you’ve appointed to make decisions for you during your lifetime, such as a representative under a representation agreement or an attorney under a power of attorney.
Outside of a will, there are ways to make arrangements for your personal belongings and any real property you own.
Gift your property away
One approach is to give your property away as a gift while you’re still alive. This has the advantage of being simple. But there are some disadvantages to consider. For one, you’ll lose control over the property (though you may continue to use it if you document the gift carefully). And there can be tax implications in some situations. For example, if you gift real property to someone other than a spouse, they may have to pay capital gains tax on any increase in value should they decide to sell the property.
Also note that a gift must feature an intent to give. Generally speaking, when something is given for nothing to someone (even an adult child), the law presumes it was not a gift. (It’s different if the recipient is a spouse or minor child. Then, the law presumes it was a gift.) So it’s highly useful to have some evidence of your intention to give a gift. You can do this by making a deed of gift or similar document. This is a legal document you both sign that transfers the property from you to them, out of the love and affection you have for them — with nothing expected in return.
Own property as a joint tenant
Property owned in joint tenancy typically passes directly to the surviving owner when one joint owner dies. (There are exceptions, explained here, such as where someone gives another person a joint interest, but the terms of the gesture are unclear.)
Many spouses own their vehicles and real property as joint tenants. The result is if one of them dies, their share passes directly to their spouse. (Note there is paperwork involved to register the transfer.)
Owning property in joint tenancy has an added benefit: you escape probate fees. Since the property doesn’t form part of your estate, it isn’t included in an application for an estate grant. So no probate fee is payable on it.
Transferring property to joint ownership
If you’re thinking of transferring property from your name alone to joint ownership, it’s important to get legal advice. There are drawbacks to be aware of. For one, you lose control: you no longer call all the shots. For another, you’re taking on more risk. Here’s an example: if a joint owner falls behind in paying debts, their creditors can make a claim against the property. Another example: if a joint owner’s marriage fails, their spouse can make a claim against the property. There can also be tax implications.
As well, a lawyer can advise on how best to make your intentions clear. In transferring property, you’ll want to be clear about the type of ownership involved, whether you intend to keep a beneficial interest in the property during your lifetime, and whether you intend for the other owner to get the property if you die first. Here’s an example of how careful documentation makes a difference.
"A dear friend of mine got sick and asked if I could help out with simple tasks like groceries and paying bills. She chose to add me to her everyday bank account as a joint holder. This made handling the money easier. But she was also really grateful for my help. She wanted me to have the money in this bank account when she passed away. She made her intention clear to the bank. When she died, the money in the joint bank account passed to me.”
– Sara, Powell River, BC
There are also ways, outside of a will, to take care of your bank accounts and investments.
Gift your property away
As with personal belongings and real property, one approach with bank accounts or investments is to give them away while you’re still alive. Again, making a gift is simple; that’s an advantage. But be mindful of the disadvantages, such as losing control of how the money is used. There are also possible tax implications.
Again, whenever you decide to give something away — in this case bank accounts or investments — it’s wise to have some proof of your intention that it be a gift. A deed of gift can achieve this. You’re declaring that you’re transferring the account from you to your recipient out of the goodness of your heart — with nothing coming back in return.
Gifting through a joint account
An intriguing option is a type of joint bank account offered by RBC Dominion Securities. The account features a primary account holder and a successor account holder. The primary account holder retains full ownership of the account during their lifetime. This keeps them in complete control while they’re alive. The terms state their intention to make a gift, at the time of opening the account, of the “beneficial right of survivorship" to someone they name as a successor account holder. When the primary account holder dies, the account goes directly to the successor account holder.
Set up joint accounts
Many people set up a joint bank account with their spouse or a trusted loved one. That way, if one of them dies, the account typically passes directly to the surviving joint owner. The account doesn’t form part of the deceased’s estate, so there are no probate fees to pay.
There are exceptions to this. One scenario that comes up fairly often is where funds are held jointly by an aging parent and an adult child. The law recognizes the potential for abuse here, and will step in if there’s any ambiguity. This case is an example of how, without clear evidence that the parent intended to gift the money to the adult child, the account passes into the parent’s estate.
Transferring funds into a joint account
If you’re thinking of transferring funds into a joint account, it’s important to get legal advice. There are drawbacks to be aware of. For one, you lose control; you’re no longer solely in charge. For another, there are no safeguards: a joint owner can withdraw all the funds out of the account without your permission. A lawyer can also advise on the best way to document the transfer.
Designate a beneficiary
An option with registered retirement plans such as RRSPs and life insurance policies is to designate (that is, name) one or more specific beneficiaries to receive proceeds from the plan or policy. This asset won’t be included in your estate. When you die, the plan or policy holder directly transfers the asset, or pays it out, to the people you designated.
We mentioned this already, but it bears repeating: if you have young children, you absolutely should prepare a will.