The Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (the “WESA”) was enacted in March 2014. The new Act, WESA, helps to simplify and codify the rules affecting wills and estates. Prior to this legislation, the rules were scattered over various pieces of legislation and in some cases unclear.
Among its changes, WESA affects the rules for beneficiary designations in pensions and other benefit plans. “Benefit plan” is defined to include a variety of plans, and the definition may apply to, among others, a pension plan, a profit sharing fund, a registered retirement savings plan (“RRSP”), a tax-free savings account (“TFSA”) or a registered retirement income fund (“RRIF”).
Designating a beneficiary for a benefit plan can be important for estate planning purposes. It allows the asset or plan that is designated to be paid directly to the designated beneficiary on the death of the holder. This asset is often paid in a timely way following death, so it can be important to the survivors in ensuring they are looked after in the interim period prior to probate. In addition, when a benefit plan is paid directly to the designated beneficiary that asset or plan is kept outside of the estate, which means that there would be no probate fees payable on the value of the asset. In some jurisdictions like B.C., where probate fees can add up quickly, benefit plan designations are an important estate planning tool.
A benefit plan designation can be made directly with the administrator, or done as a part of the Will, or as a separate document. Although the most common way to designate a beneficiary is by doing so directly with the administrator of the benefit plan there are sometimes good reasons not too. Such reasons include having several alternate beneficiaries, or the need to designate a trustee to hold the proceeds of the plan in trust for other beneficiaries (this is done for many reasons, including holding for minor beneficiaries). There are several factors to consider when deciding how to designate a beneficiary, such other factors include:
- The desire to have simple estate plans;
- How many alternate beneficiaries are required?
- Is a trust needed?
- The risk of a separate designation not being updated when the client updates the will;
- Privacy. If a designation is made in the Will, the entire Will shall be disclosed to each of the plan administrators;
- Whether the designation is irrevocable; and
- Whether there is a need for the power of attorney or committee to be able to change the designated beneficiary. Where designations are made in the Will, neither the power of attorney or committee can change this on behalf of the adult.
If you have any questions regarding designating beneficiaries or estate planning in general, please do not hesitate to reach out to one of our lawyers practicing in the area of estate law.
Author: Jennette Vopicka
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of estate planning and estate administration at the following:Jennette Vopicka: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jane Otterstrom: firstname.lastname@example.org