Design Book

Estate Planning Glossary

This is an alphabetical list of terms or words found in, or relating to estate planning, with explanations.

Abatement

Reduces the value of gifts provided to your beneficiaries in your estate. This occurs when your gifts, debts, fees associated with the disposition of property exceeds the amount of assets in your estate.

Ademption

Occurs when a gift in a will has been destroyed or disposed of, making it impossible to distribute the gift to the designated beneficiary. Courts may rewrite the will to follow the intention of the testator.

Administrator

An individual appointed by the court as the representative of an estate when an individual passes without a will (intestate). An administrator has the same duties as an executor but cannot conduct the duties of an executor until a court provides permission.

Administration

The management and distribution activities undertaken by an executor or administrator. This includes the collection of assets, the settlement of debts, and the distribution of the remaining estate.

Administration Bond

A bond to ensure that a non-resident executor faithfully executes the duties of an executor. It acts as protection for the interests of the estate’s beneficiaries in the event of mismanagement.

Advanced Healthcare Directive

See power of attorney for personal care.

Affidavit

A written statement confirmed by oath or affirmation, for use as evidence in court.

Affidavit of Execution

A statement by a witness to a will confirming that they were present for the singing of the will. The document is sworn to be true.

Age of Majority

The age when individuals can create a power of attorney document or execute a will. 18 in Alberta, Saskatchewan, Manitoba, Ontario, PEI, and Quebec. 19 in BC, New Brunswick, Newfoundland and Labrador, Nova Scotia, and all three territories. Note that in BC, one can make a will at 16, prior to reaching the age of majority. Similarly, an individual in Newfoundland can make a will at 17 prior to the age of majority.

Agent

See attorney.

Ancillary Letters Probate

Court order which authorizes an executor to administer an estate in a jurisdiction other than the jurisdiction where probate was granted. Probate must be granted in the first jurisdiction before an application for an ancillary letter probate will be granted.

 

Assets

Items owned by the testator. Can be tangible or intangible and includes items such as bank accounts, property, and cash. Increasingly digital assets such as cryptocurrencies are forming a larger part of estates.

 

Attorney

An individual who you trust to manage your affairs and make decisions on your behalf for financial, health, and personal care decisions. Appointed using different forms of power of attorney.

 

Beneficiary

A beneficiary is a person receiving estate assets under the will or on intestacy (no will). It may also refer to the person who is to receive the funds from RRSPs, RRIFs, TFSAs, insurance policies and pension plans

 

Bequests

Real and personal property specifically listed and gifted to individuals in a will. These are typically used for sentimental items or items which a testator does not want to be divided or sold to form a part of their estate.

 

Capital

The portion of an estate or trust that provides income. Could be investments (stocks or bonds) or rental properties.

 

Charitable Trusts

A trust funded like any other, with cash or securities that has a charity as the beneficiary. All funds generated from the trust are used for a charitable purpose.

Codicil

A legal document added to a will. Used to keep wills up to date without having to rewrite the entire will. For a codicil to be valid, they must be executed using the same formalities as a regular will.

 

Contest

A formal challenge to the validity of a will. The challenge can dispute the validity of the entire will or just a section.

 

Contingent Beneficiary

A beneficiary that only receives a gift from the disposition of an estate if the primary intended beneficiaries are unable to receive the gift. Essentially a backup beneficiary.

Contingent Interest

A gift in an estate that depends on the occurrence of an event. These gifts are not absolute. If the event which the gift relied on does not occur, the gift would fail and would not pass to the beneficiary.

Corporate Trustee

A trust company serving as trustee.

 

Court Passing

An estate trustee must keep an accurate record of the accounts of the estate that the trustee is administering. Court passing is the process by which the court will approve of the administration of an estate by a trustee.

 

Devise

Leaving real estate to a beneficiary in a will.

 

Digital Assets

Can include social media accounts, cloud storage, electronic communications, loyalty programs/points, accounts with retailers, online photo storage, email storage, search history, location data, private messages. More recently digital assets have also come to include NFTs (non-fungible tokens) and a growing number of cryptocurrencies.

 

Encroachment

Occurs when the capital of an estate or trust is partially disposed of to provide for a beneficiary.

 

Enduring Power of Attorney 

A type of power of attorney which provides the attorney with power to make financial decisions on behalf of the donor even if the donor is incapacitated.

Estate

An estate consists of the individual’s assets and liabilities at the time of death that passes through their will or intestacy laws if there is no will. It may include their bank accounts, investments, real properties, vehicles, etc.

 

Estate Planning

The process of coordinating, while you are alive, the distribution of your wealth once you pass.

 

Estate Settlement

Carrying out the final wishes of someone who has passed.

 

Estate Assets

Assets which the deceased held that now form the estate. Includes real and personal property.

 

Executor

An executor is a person named in a will, to administer an estate. Where multiple people are named, they are considered ‘co-executors’.

Fiduciary

In terms of estate planning, a fiduciary is someone who is appointed to take legal control over assets for the benefit of another person (the beneficiary). This is commonly an executor or a trustee. It is a fiduciary's legal responsibility to act in the beneficiary's best interest.

Guardian

A person who assumes legal responsibility for a minor or for someone who has been declared incompetent.

 

Grant of Probate

Document that confirms the will is valid and that the executor has the authority to act on the will.

 

Healthcare Directive

Document that tells your family or medical caretaker what care you would like in the event of incapacity due to serious illness or injury.

 

Holographic Will

A handwritten will. This method often results in the will being challenged on validity. It is generally recommended to consult a lawyer when drafting your will.

Incapacitated

A temporary or permanent state of physical or mental impairment that renders an individual unable to make rational decisions about their personal care or assets.

Income Beneficiary

The recipient of a trust which provides income from the return on assets held in that trust.

 

Incompetent

An individual incapable of managing their affairs due to mental impairment.

 

Inheritance

The gift/gifts provided to a beneficiary when an individual passes.

 

Inter Vivos

The passing of property while living versus the passing of property through a will which occurs upon death of the willmaker.

 

Inter Vivos Trust

A trust created while someone is alive. Utilized for tax planning efficiencies.

 

Intestacy

The state of passing without a valid will or having portions of your will be declared invalid. Intestacy means your assets will be distributed according to provincial statute.

Intestate

When an individual passes without leaving a valid will that disposes of their property.

 

Irrevocable Trust

A trust that the settlor (provider of the trust) cannot change the terms of or revoke.

 

Issue

All of a person's lineal descendants, including children, grandchildren, etc.

 

Joint Tenancy

A form of property ownership by two or more persons where each owner has an identical interest and holds an equal right to use the whole of the property.

 

Last Will and Testament

The final legal document that outlines how you want your assets to be distributed to your beneficiaries.

 

Legacy

A gift in a will.

Letters of Administration

Court order that provides an individual (administrator) with the authority to administer the estate of a deceased individual who passed without a will.

Letters Probate

See grant of probate.

Life Estate

A gift of a life estate would provide the recipient with the right to use or benefit from a property or asset held in trust while they’re alive. When the recipient of the life estate passes away, their life interest would terminate and return to the grantors estate to be distributed.

Life Tenant

A person who has a right to use real property for the duration of either that person's lifetime, or the lifetime of another person. Also known as the holder of a life estate.

Living Will

See personal directive or power of attorney for personal care.

Minor

Individual who has not reached the age of majority.

Mirrored Will

Two wills, typically written by a married couple that are identical to each other. The wills contain reciprocal terms that leave their Estates to each other, and then if one of them predeceases the other, to their children or other beneficiaries.

 

Non-Estate Assets

Includes assets that were owned by the deceased individual but do not form a part of their estate. This could include property held in joint tenancy, life insurance policies, and certain financial instruments.

 

Notarization

The process of a notary public authenticating a document. An authenticated document confirms that the signature is valid, that the signatory had capacity to sign the document and was not under duress when signing.

 

Notary

An individual authorized to witness and confirm the authenticity of documents required to undergo notarization.

 

Notice to Creditors

During probate, the executor or administrator of an estate is required to post a notice to creditors of the testators passing. This ensures that claims of creditors are resolved before distributing the estate.

 

Original Investment

Initial amount deposited into the trust or investment account.

Passing of Accounts

Approval by the court and estate beneficiaries that the executor properly managed the estate.

 

Personal Directive 

A legal document that outlines your wishes for personal care when you are no longer able to manage your affairs / incapacitated.

Personal Effects

Personal property such as jewelry, clothes, collections, and more. Items may have intimate or sentimental value.

 

Personal Property

See personal effects.

 

Personal Representative

A general term for an individual who disposes of an individual’s estate. Includes both executor and administrator.

Power of Attorney

A legal document that appoints an individual to make decisions on your behalf. These can be used to grant individuals power to make financial, health, or personal care decisions on your behalf when you are no longer capable to do so yourself.

 

Power of Attorney for Personal Care 

A legal document that outlines your wishes for personal care when you are no longer able to manage your affairs / incapacitated.

Probate

The legal process whereby the Court confirms the validity of the will of the testator. After probate is granted, the executor may administer the estate.

Protection Mandate

Quebec terminology. See power of attorney for personal care.

 

Proxy

Alternate term for substitute decision maker for health or personal care decisions.

 

Public Trustee

Government appointed position that protects the interest of minors and individuals who lack capacity. Public trustee will also administer the estates of individuals where no executor was named, and no administrator is available.

 

Realty

Real property.

 

Representation Agreement 

Legal planning document that allows you to assign an individual who will make decisions for you if you become incapacitated. Also used to assign decisions makers for individuals who lack the competency to make medical or legal decisions.

 

Residue

Any estate property that remains after the gifts listed in the will have been distributed to the beneficiaries. It is recommended that you include a residual clause in your will, or the residue will be distributed according to provincial statute.

 

Reversion

When an estate interest returns to the grantor. For example, a life estate reverts back to the grantor upon passing of the holder of the life estate.

 

Revocable Trust

A trust that can be terminated by the settlor.

 

Revocation

The cancellation of a will. A will can be revoked by destroying it or by making a new will with an attestation that it revokes your previous wills.

Right of Survivorship

A right present in joint tenancies. When a property is held in joint tenancy and one joint tenant passes, the surviving joint tenant will receive that portion of the property.

 

Settlor

The creator of a trust.

Spendthrift Trust Provision

A trust provision that provides periodic income or requires a trustee to manage distributions of income from the trust. Utilized when trust beneficiaries have spending issues.

Substitute Decision Maker

An individual who makes decisions for you if you are incapacitated for any reason. Can be designated in a legal document. The individual designated in a power of attorney, healthcare directive, or representation agreement will act as a substitute decision maker in instances of incapacity.

Tenancy in Common

A form of holding property by two or more persons in such a manner that each has an undivided interest which, upon their death, passes to their estates (and the designated beneficiaries therein). Does not have the right of survivorship like joint tenancies.

Testamentary Capacity

A sufficient degree of mental acuity required to make a legally recognized will in Canada.

 

Testamentary Trust

A trust established by a will. Created once the testator has passed. Often used for minors or individual’s incapable of managing their financial affairs.

Testate

Passing with a valid will.

Testator

The person that creates a will. Also known as will-maker.

Testatrix

Female terminology for testator. Used in older wills.

 

Trust

The relationship created when one person (the trustee) holds assets for the beneficiary. Assets are provided to the trust by a "settlor".

Trustee

An individual or trust company that holds the legal title to property held in trust for the beneficiary. The trustee manages dispositions of trust income to the beneficiary depending on the nature of the trust established.

 

Trustee Investments

The property that the trust funds are invested in. The trustee manages the investments. The investments could include real property or securities.

Undue Influence

The improper exercise of influence on another individual that results in that individual making a decision that they would not have made if they were acting under their free will.

Vested Interest

An interest that has passed the estate and is in the hands of the beneficiary.

 

Will

A legal document that outlines how you want your assets to be distributed to your beneficiaries.

Will Registration

Documenting the existence of your will and the location at which your will is stored. In Canada, only BC and Quebec have provincial will registries.

Witness

An individual who watches you sign your will or power of attorney documents. They are attesting to the validity of your signature. It is advised that you do not have beneficiaries to your will also witness the signatures.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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We endeavour to provide accurate information, but if you should notice an error, please email us at info@estatebox.ca so we may correct it!

Last updated January 2022