Gifts and Estate Plans by Committees
Two recent decisions by the British Columbia Court of Appeal address the issues of committees making gifts on behalf of an incapable person as well as the ability to implement an estate plan on behalf of an incapable person.
The decision of Re: Bradley, 2000 BCCA 78, February 2, 2000 involved the issue of making a gift from a patient's estate. The patient's husband was committee of her estate and, on the advise of a tax lawyer in the U.S., wanted to made gifts from the patient's estate which would alleviate some the taxes payable to the U.S. government on her death (she was a U.S. citizen and subject to U.S. tax on her death). The advice was that the gifts ought to be payable to her children and/or grandchildren and to the committee himself as her husband. The patient's estate was to be distributed according to the Estate Administration Act - _ to her husband and _ to her children. Her estate had a value of $2.6 million.
Prior to a suffering a brain hemorrhage that rendered her incapable, the patient had in fact taken some steps to making gifts to each of her sons but had not yet completed them. These gifts were not opposed by the Public Trustee and were completed. It was another set of gifts not planned that were the subject of this Court of Appeal decision.
The patient is 65 years old and may live for a number of years and thus, her cost of care is uncertain. The planned gifts would take her estate from $2.6 million to $809,000 over the next several years. The Court was not persuaded that a reasonable and prudent business person would proceed with the gifts particularly when the size of her estate would be so greatly reduced. The Court did agree, however, that a "large and liberal approach" should be taken to s.18 of the Patients Property Act when carrying out the duties of a committee for the "benefit of the patient and the patient's family, having regard to the nature and value of the property of the patient and the circumstances and needs of the patient and the patient's family."
In the decision of Re: O'Hagan, 2000 BCCA 79, February 2, 2000 the original application involved an estate freeze plan that would again greatly reduce the taxes payable on the deceased's death and avoid the liquidation of the estate to pay for the taxes. The plan, while complex, allowed for the possibility that the patient might recover and wish to reverse the estate plan. In addition, the plan only benefited the patient while the patient was alive. In this case, the patient was 89 years of age and his will left everything equally to his two sons one of whom was the committee. Both of the sons agreed to the plan. Since the proposed plan posed no real disadvantage to the patient and did not deviate from the contents of his will, the Court of Appeal approved it.
If you are a committee of a person's estate in British Columbia and wish to explore gifts or certain estate plans, please contact our office and obtain advice before doing so. If the Public Trustee does not approve of your plan you may want to consider obtaining Court approval prior to the implementation of the plan.
Another recent development is that the Provincial government has passed a Regulation that now exempts up to $100,000 of certain patient's assets for the purposes of qualifying to receive B.C. Benefits. Please contact our office for more details.