Will Planning Definitions
Assets
Everything a company or person owns or is owed, such as money, securities, equipment and buildings.
Beneficiary
A person who receives a benefit or gift under a Will, or a person for whose benefit a trust is created.
Bequests
If there are things you own that you'd like to pass along to someone specific when you die, or items that you know your children would like to inherit, you can ensure these wishes are fulfilled through clear and specific bequests, which are provisions in your Will for passing things along.
Estate Planning
The process of planning the transfer of all your personal assets at death to chosen beneficiaries.
Executor
Naming an executor (or executors)† in your Will is an important decision as this person will manage and assume control of your assets when you pass away. Your executor is also responsible for settling your liabilities and ensuring that your financial obligations continue to be paid.
†In Quebec, an "executor" is called a "liquidator" and in Ontario, an "estate trustee."
Formal Will
This is a typed document signed by you in the presence of at least two witnesses (who cannot be beneficiaries or spouses of beneficiaries). Also see Notarial Will. It is wise to have a formal Will prepared by a lawyer or notary. The cost is well worth it when you consider the potential problems you'll avoid if improper wording is used or the document is not properly signed.
Guardian
Your Will should name the person you want to serve as your minor children's guardian should something happen to both you and your spouse. This person would be responsible for your children's physical care, health care, education and general well-being until they reach 18 years of age.
Holographic Will
This is a Will prepared entirely in your handwriting and signed by you with no witness necessary. Experts advise against holographic Wills because they are subject to misinterpretation and challenge. Additionally, some provinces do not even recognize holographic Wills as legal documents.
Intestate
In Canada, if you die without a Will you are considered to have died "intestate." Simply put, this means that your provincial government decides how your assets will be divided—and not you.
Legacies
If you would like to leave something to certain people or organizations, the legal term for your gift is a legacy. And if you'd like to give to more than one person or organization, your Will can include as many legacies as you want. It's possible that a legacy to a charity could result in a tax benefit for your estate.
Life Interest Clause
This clause will be used in you Will to create a trust when you want to give someone the income or enjoyment of an asset without giving the asset itself.
For example, a cottage or piece of art that's been in the family for years could be enjoyed by one individual during their lifetime and passed on to another individual for ultimate ownership.
Another example is a trust fund that generates income paid to a person for life. A life interest clause protects the asset to ensure it will be there for future generations.
Living Will
A Living Will provides instructions regarding your medical care if you were to become very ill or incapacitated and unable to state your wishes. Through a Living Will, you may indicate types of treatment you may or may not wish to receive. You may also appoint someone to make your health care decisions if you are unable to make them.
Notarial Will
Similar to the formal Will, the notarial Will is only used in Quebec. It is prepared by a notary and signed before the notary and generally one witness.
Power Clause
Many actions of an executor and trustee require court approval. Power clauses give them the authority to do certain things in managing the estate without court approval, for example, to borrow funds on behalf of the estate.
Power of Attorney
A Power of Attorney gives the individual(s) you name the authority to manage your affairs. It can be broad reaching in scope—covering all the things you would normally do—or it can be narrow (limited to bank accounts or investments only, for example).
Probate of Will
Formal proof before the proper officer or court that the Will offered is the last Will of the testor and confirming the identity and authority of the executor(s) named.
Trust
A trust lets you transfer the ownership of assets such as bank accounts, investment portfolios or real estate to a trustee, but still retain control over how the assets are managed and distributed.
For example, if you are concerned about one of your children spending money carelessly, you could create a trust that gives control to your executor and trustee to manage the inheritance and pay in instalments over time rather than in one lump sum.
Trustee
A trustee is a person or company that is responsible for managing and administering your assets in the best interests of your beneficiaries, which can include you.
Will
A Will is a very flexible legal document. With a Will, you can assign a person(s) or a financial institution to manage your estate after your death (your executor), specify who you want to leave your assets to (your beneficiaries), and identify guardians for your minor children.
In addition, a Will helps to ensure that your estate is distributed as you wish, that your children or other loved ones will have the care and resources they need, and that your death doesn't create a legal and administrative burden to your family.
Please keep in mind that this information on Wills is in no way complete. It is simply an overview and does not deal with many of the legal issues involved in creating a Will. This content does not replace the need to contact your professional advisors, such as your lawyer, notary or other qualified advisor.
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