Have you ever felt lost in the maze of wills and estates terminology? Don’t worry; we’re here to demystify it all. Whether you’re planning your estate or simply curious, this glossary is your ticket to clarity.
Administrator: The individual or entity appointed by the court to manage an estate when you pass away without a valid will. An administrator may also be appointed when a will does not specify an executor or when the designated executor is unable to act, and there is no alternate executor named.
Agent: The person authorized to make decisions on your behalf through a personal directive.
Attorney: The person or corporation (e.g., a trust company) granted authority to act on your behalf under an enduring power of attorney. Note that this is not a lawyer.
Beneficiary: The person or organization named to receive a gift in your will or benefit from a trust, life insurance policy, or RRSP/RRIF/TFSA designation.
Bequest: A gift of property specified in your will for a particular beneficiary.
Canadian Registered Charity: An organization registered with the Canada Revenue Agency, operating exclusively for charitable purposes such as helping those in need, education, health, recreation, environment, arts, and culture. Gifts to Canadian registered charities in a will, life insurance policy, or RRSP/RRIF/TFSA designation can result in significant tax savings, allowing you to allocate more of your estate as desired.
Codicil: A legal document used to amend a will.
Contingent Bequest: A gift in your will that takes effect only if your primary choice is not possible, such as when a named beneficiary passes away before you.
Deemed Disposition: A tax term indicating that property is treated “as if” it were sold, often used for tax purposes when a person passes away.
Donor: In the context of an enduring power of attorney, the donor is the individual who designates another person (the “attorney”) to act on their behalf. The term “donor” can also refer to someone who makes a gift to a charity during their lifetime or in their will or estate documents.
Enduring Power of Attorney (EPA): A legal document created by you (the “donor”) to grant someone else (the “attorney,” who is not a lawyer) the authority to manage your financial matters during your lifetime. An EPA can be immediate or “spring” into effect when you become unable to handle your financial matters. It becomes void upon your death.
Estate: All the property in which you have a legal right or interest.
Executor / Executrix (F): See “personal representative.”
Holograph Will: A will entirely written in the handwriting of the testator, dated, and signed by the testator but not witnessed. Holograph wills can be problematic due to errors or omissions.
Intestate: When a person passes away without a valid will, they are said to have died “intestate.”
Joint Tenancy with Survivorship: A form of property ownership where the property passes directly to surviving owners and does not form part of the estate distributed according to the will.
Last Will and Testament: See “will.”
Named Endowment: A fund named after the donor or another person chosen by the donor, providing ongoing support to a charitable cause. Edmonton Community Foundation (ECF) offers fully operational endowment funds that can be created during your lifetime or in your will with gifts totaling $10,000 or more. These funds can support any Canadian registered charity or charitable work described by the donor.
Personal Directive: A document that appoints one or more agents to make personal nonfinancial decisions on your behalf when you are incapable of making them yourself. It can include decisions related to palliative care, residence, and activities.
Personal Representative: The person or corporation (e.g., trust company) named in the will to administer the estate, also known as an executor or executrix.
Probate: The court process of validating a will and administering an estate according to the will’s terms.
Probate Fee: The fee charged by the courts to complete the probate process.
Power of Attorney: A legal document created by a person (the “donor”) to grant someone else (the “attorney,” who is not a lawyer) the authority to manage specific or general financial matters. For the document to remain effective after the donor loses mental capacity, it must be an enduring power of attorney.
Residual Bequest or Residue: A gift in a will that consists of all or a percentage of what remains in your estate after taxes, expenses, and specific bequests have been paid.
Specific Bequest: A gift in a will of a specific amount of money (a “legacy”) or particular property (e.g., a car).
Tax Credit: The amount subtracted from the tax owed. Gifts to Canadian registered charities during one’s lifetime or through a will generate a generous tax credit.
Testate: When a person passes away with a valid will, they are said to have died “testate.”
Testator: The person who passes away with a valid will.
Trust: An arrangement in which an individual (the “settlor”) transfers property to a person or institution (the “trustee”) for the benefit of one or more beneficiaries. A will may include one or more trusts, such as those for minor children.
Trustee: The person or institution (e.g., a trust company) responsible for holding legal title to property in a trust and managing it on behalf of others.
Will: A legal document that specifies how a person’s property should be distributed after their death. It only becomes effective upon the person’s passing. In Alberta, it must be in writing and adhere to specific signing requirements. Incorrectly prepared or signed wills can lead to unintended consequences.
Whether you’re securing your legacy, preparing for the future, or simply satisfying your curiosity, we trust that this glossary has been a reliable resource. Gaining familiarity with these terms gives you the confidence to manage your financial and personal matters.
If you’ve found this guide helpful, consider sharing it with your loved ones to assist them in navigating the intricate world of wills and estates. And always keep in mind that as life evolves, revisiting and adjusting your plans ensures they stay aligned with your desires.