Wednesday, July 10, 2013

Limits on the Authority of Notaries Public to Draft Wills in British Colulmbia

In British Columbia, only lawyers and notaries public are permitted to draft wills for others. The purpose prohibiting others from doing so is to protect the public from people who are not qualified to draft wills from doing so for others. It is quite legal to draft your own will, whether or not you are a lawyer or notary, but it is unwise to do so.

There are different rules on what types of wills notaries may draft from what lawyers are allowed to draft. I pause to note that all lawyers in B.C. are also notaries, but when I write of notaries public here I mean members of the Society of Notaries Public, as opposed to members of the Law Society of British Columbia. Both lawyers and notaries public are required to have certain educational attainments, and meet professional standards, but the requirements are different. For example, notaries do not need a law degree.

The difference between the types of wills notaries may draft in B.C. when compared to lawyers is highlighted in a recent decision, The LawSociety of British Columbia v. MacDonald, 2013 BCSC 1204. The Law Society sought an injunction against a notary public prohibiting her from drafting wills with trust provisions in them.

One of the issues in the case was whether a notary public is permitted to draft a will that creates a life estate for one person, with a remainder interest for another. As an example, you may want to give your interest in your house to your spouse during her lifetime, but then provide that on her death, your interest in your house goes to your children. A couple of sample clauses were considered in this case, the simplest reading as follows:

I give my property at 123 Anywhere Street, Vancouver, BC, to Brian, subject to a life estate in favour of Jane.

The notary argued that the above clause was one she would be permitted to draft in a will, while the Law Society of British Columbia argued that only lawyers were permitted to include such a clause.

The Legal Profession Act defines certain activities as the practice of law, which only lawyers are permitted to do, among them in section 1,

(b) drawing, revising or settling...
(iii)              a will, deed of settlement, trust deed, power of attorney or a document relating to a probate or letters of administration or the estate of a deceased person….

An exception is carved out in the definition for notaries:

but does not include...
(j) the lawful practice of a notary public,...

Section 18 of the Notaries Act sets allows a notary to

(b) draw and supervise the execution of wills 
(i)  by which the testator directs the testator’s estate to be distributed immediately on death, 
 (ii)  that provide that if the beneficiaries named in the will predecease the testator, there is a gift over to alternative beneficiaries vesting immediately on the death of the testator, or 
 (iii)  that provide for the assets of the deceased to vest in the beneficiary or beneficiaries as members of a class not later than the date when the beneficiary or beneficiaries or the youngest of the class attains majority;...

Does the clause quoted above giving property to Brian subject to a life estate to Jane fall within one of the provisions of section 18(b)? Madam Justice Maisonville found that it does not.

In this example, Brian has an interest in the property on the death of the will-maker, he does not get possession until Jane’s death. The distinction is between vested in interest and vested in possession. Madam Justice Maisonville held that vested in interest is not the same thing as distributed. In the example, no distribution would be made to Brian immediately on the will-maker’s death if Jane were alive. He would be vested in interest but not in possession.

Nor does the sample clause meet subsection (ii) or (iii). Subsection (ii) refers to a gift to one person, with a provision that if that person has died before the will-maker, another receives the benefit. Subsection (iii) refers to a gift to a class of beneficiaries (such as my grandchildren) who are alive when the youngest attains the age of 19.

It should be noted that “distributed immediately” does not literally mean immediately at death, but rather distributed when the executor is legally permitted to do so. For example, under the Wills Variation Act if the will-maker is survived by a spouse or children, no distribution may be made until six months following probate without their consent. Madam Justice Maisonville wrote at paragraph 100:

Under the circumstances, it seems clear that the term “immediately” does not refer to an instant distribution, but rather means “immediate” within the limitations of estate administration, including provisions of income tax statutes and the Wills Variation Act.
Madam Justice Mainsonville wrote that it was unnecessary to conclude whether all provisions creating life estates were outside the authority given to Notaries.

The Court granted the Law Society the injunction.

The implication of the distinction between the types of wills that lawyers and notaries are permitted to draft in British Columbia is that notaries do not have the authority to draft wills that meet some circumstances where a trust in a will is appropriate. In those cases, only a lawyer has the authority to draft the necessary clauses. Examples include:

          a.    if one of the beneficiaries has a disability that is such that he or she cannot manage his or her own finances, or if he or she is in receipt of provincial disability benefits that would be jeopardized by an immediate distribution of his or her share of the estate;

          b.    if one of the beneficiaries has financial problems and the will-maker wishes to protect that beneficiary’s inheritance from creditors through a trust;

          c.   second marriages if the will-maker wishes to create a trust for his or her spouse, with the children receive assets on the spouse’s death; and

          d.    young children if the will maker wishes to delay the time at which a child has control over his or her inheritance until that child reaches a specified age that is over 19.

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