On March 31, the Wills, Estates and Succession Act (WESA) will come into effect. Designed to modernize the very old law in this area, the Act will change most aspects of the legal environment around Estate planning, Will making, and handling of Estates. The Act will not invalidate existing Wills, but the new law will apply to them.
It’s therefore useful to look at some highlights of the new legislation and examine our changing situation.
The Act uses more plain English. The Testator is replaced by “Will maker,” and the Executor is now the “Personal Representative.” A separate person can be appointed to handle a person’s digital assets, such as a Facebook account.
The term “Descendant” replaces the old term “Issue” (referring to someone’s children and other lineal descendants born after her/him). This term will be significant in distributing intestate Estates, where there is no Will.
The term “Spouse” is also important. It will now be defined as two people who were married, or in a marriage-like relationship for two or more years. They cease to be Spouses if they live separately and apart for two years, with at least one of them intending the separation to be permanent. In a marriage-like situation, one of them simply ends the relationship.
WESA defines a Will as “a Will, Codicil, Testament” or other document deemed by a Court Order to be effective as a Will. This definition is very broad, much more so than under the old law. If a guardian of minor children is appointed in a Will, the Family Law Act, including any relevant Court Orders, must be taken into account.
The mandatory five-day survivorship rule (Sec. 10) is a radical change. If a couple (married or married-like) jointly own an asset and die within five days of each other, the asset is deemed to be owned half by each person, severing the joint tenancy.
Each member of the couple is deemed to survive the other, and their half-interest in the asset will be distributed under their Will. This new rule may cause the couple to reconsider transferring an asset from one of them to both, as sometimes happens in a subsequent relationship. And of course, both Wills need to be probated.
If a person has donated or stored reproductive material, posthumous children may be born. Under WESA (Sec. 8.1), such a child inherits as if born conventionally. There are, however, conditions that may delay the distribution of the deceased’s Estate.
The distribution rules for intestate Estates have dramatically changed. The system will now be “Parentelic,” and based on Consanguinity.
This shift will be noticeable when a person is not survived by a spouse or children. They will inherit if they do survive, but the spouse, instead of receiving the first $65,000 of the Estate, will now get the first $300,000. If there are children from the deceased’s previous relationship, they will receive $150,000. The remainder of the Estate will be divided half to the spouse and half to the children.
It is possible for a person to be survived by two “Spouses.” Here, if the Spouses cannot agree on a division, a Court hearing will be set.
The spousal home is also treated differently. A surviving Spouse no longer has a life interest in the home. Instead, the Spouse has the opportunity to buy the house, and must make that decision within 180 days of a grant of Probate. If the surviving Spouse and the Personal Representative cannot agree on a valuation, a Court hearing will be set.
If a Spouse is unable to buy the house, but wants to live in it (especially where there are children), the Spouse can apply to Court. The Court can order that the interests of the inheriting people be a charge on title to the property, while the Spouse lives in it.
WESA will apply to deaths occurring after March 31, 2014. Since so many things will change, you should (without panic!) review your Will, and perhaps your Estate plan. Don’t assume that your Will automatically has to change, but assume that it might.
More important, if you have not yet made a Will, you should if you have a Spouse and/or assets (unless you don’t mind the new distribution rules). In my opinion, anyone in a subsequent relationship, particularly homeowners, should make a Will. Generally, everyone should take time to learn a little about this new legislation.
This column ran in the Richmond Review on January 8, 2014.