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Glossary of Legal Terms

Administration (of an estate): The process of managing an estate when the deceased has not made a valid Will so there is an intestacy. The Administrator is a person (usually a beneficiary or family member) who has applied and been approved by the court to administer the estate in accordance with the laws of intestacy. The court document approving the Administrator is called Letters of Administration.

Adopted Children: A person who has been adopted as a child of another in accordance with provincial law. Adopted children are children of the decease according to provincial law.

Adult: A person who has attained the age of majority for their province (either 18 or 19).

Affidavit: A written statement of fact, sworn or solemnly affirmed under oath before a lawyer, notary public or commissionaire of oaths.

Attorney: A person appointed to act in place of or represent another pursuant to a Power of Attorney. (not a lawyer like in American television and movies).

Beneficiary: A person entitled to benefit from a Will. Also a person entitled to receive the proceeds of a trust, RRSP or life insurance policy.

Capital Gain/Loss: A capital gain is when you sell something for more than it cost you. A capital loss is what you have if you bought tech stocks.

Child/Children: Includes both the offspring of a parent and legally adopted children.

Codicil: An amendment to a Will. Not recommended considering the ease of doing a replacement Will instead.

Death Taxes: There are currently no taxes on dying in Canada. However, all provinces charge probate fees for approving the validity of wills and there is a deemed disposition of property on death which can trigger capital gains taxes and income tax on RRSPs.

Disinherit: To deprive someone of the right to inherit an estate or portion of an estate.

Escheat: The transfer of property to the government if a person dies without a will, spouse, heirs or relatives.

Estate (Residue): Your Estate is everything you personally own at the time you die. Your Executor will look after your Estate in accordance with the instructions you have provided in your Will.

The Residue of your Estate is the value left over after paying all debts, taxes and expenses. The Residue is your net worth that is given out to the Beneficiaries of your Will.

Execute a Will: The act of validly signing a will (meeting the legal requirements to make a valid will).

Executor: A person appointed in a will to carry out the terms of the will. Sometimes the term Executrix is uses to mean a female executor.

The Executor of your Will is the person you appoint to do the work of looking after your estate. The Executor will usually have to obtain a grant of probate in which the court confirms that the Will is your last valid legal Will. Your Executor has to make funeral arrangements (often delegated to family members), deal with all of you assets (either sell them or transfer them to beneficiaries), make sure all of your debts are paid, attend to filing tax returns and payment of final taxes, and distribute your estate in accordance with your wishes set out in your Will.

Your Executor becomes the legal owner of all of your assets but holds them in trust for the beneficiaries of your estate and your creditors. If your beneficiaries are young, your Executor will hold their inheritance in trust for them until they are old enough to look after their own money. Accordingly, the Executor acts as the Trustee of your estate and so the terms Executor and Trustee are often used interchangeably.

Enduring Power of Attorney: See Power of Attorney.

Gift: A transfer of property without anything in return. The distribution of an estate to beneficiaries.

Guardian: A person who has control or custody of another person. Usually a child but a person can also be a guardian of an adult if that person is not able to look after themselves.

Health Care Directive: A written statement to family and health care providers specifying a persons wishes in the event that they are terminally ill with no chance of recovery. Also known as a Living Will.

Heir: A person who is entitled to inherit an estate.

Inherit: To receive property from a person on their death.

Inter Vivos: During ones lifetime. An inter vivos trust is a trust that can be created by a person while they are alive. A testamentary trust is a trust created by a will on the death of the person making the will.

Intestatacy: The condition or state of dying without a valid will.

Issue in equal parts per stirpes: Your Will contains the following gift to your children:

If I only have one child who outlives me, I direct my Executor to give the residue of my estate (the balance left over after paying all expenses, taxes and debts) to that child. If I have two or more children who outlive me, I direct my Executor divide the residue of my estate equally between/among my children who outlive me. However, if any child of mine dies before me but leaves one or more of his or her own children or other issue (grandchildren, great-grandchildren, etc.) who outlive me, that deceased child will be considered to have outlived me and his or her share of my estate will be divided among that deceased child's issue in equal parts per stirpes (italics added here for emphasis).

The purpose of this last sentence is to make sure that your estate is divided equally among each line of your family as long as the line is represented by at least one child, grandchild, etc. If you have three children and they all outlive you then your estate will be divided three ways. If you have three children but your adult son dies before you (or at the same time as you), his 1/3 share of your estate will go equally among his children if he has any that outlive you. However, if your deceased son does not have any children or grandchildren of his own who outlive you then no share is created for him and your estate is divided 50/50 between your two surviving children.

The words child, children, grandchild, issue, etc. all refer to your descendants who are related to you by blood or legal adoption. Step-children are not included unless legally adopted. Biological children who are adopted out (legally adopted by a new family) are also not included.

Joint Ownership (Joint Tenancy): A way to hold property together. If two or more people own property jointly then when one of them dies, the property automatically passes to the surviving joint tenant(s) and does not become part of the deceased person's estate and is not controlled by their will. The other way two or more people can own property is as Tenants in Common. This is like each person owning a distinct share of the property. Property that is held as tenants in common becomes part of a deceased person's estate and is distributed in accordance with their will.

Letter of Wishes: An informal non-binding document in which a person can express various wishes relating to their estate or funeral. Often used to list who should receive personal mementos and items of sentimental value.

Letters of Administration: See Administration of an Estate.

Living Will: See Health Care Directive.

Minor: A person who has not attained the age of majority for their province (either 18 or 19).

Next of Kin: The person(s) entitled to receive an intestate estate according to provincial law. A person's closest living relative(s) - spouse, children, parents, siblings...

Notary Public: A person authorized by provincial law to take affidavits and declarations under oath.

Personal Property: All property other than real property. Anything you can own that is not land or the buildings on the land.

Probate: The process of proving the validity of a will in court. The court is referred to as the probate court. A will needs to be probated before the executor can use it to transfer or sell assets.

Probate Fees: The fee charged by the probate court for approving the validity of a will. The fee varies from province to province. Alberta is the cheapest while British Columbia and Ontario charge the most. Typically about 1% of the gross value of the estate.

Property: Anything a person can own. Real property (land & buildings) and personal property (everything else).

Power of Attorney: A legal document where a person can appoint another (the attorney) to manage their affairs. An Enduring Power of Attorney remains valid even if the person giving it loses mental capacity. It can be used for a spouse, family member or trusted friend to help a person who has lost the ability to look after their own financial affairs. It must be signed before the person loses capacity.

Public Trustee: A provincial official appointed to look after the affairs of those who have no one else to do so, either during lifetime or after death. The public trustee also administers the inheritance of minors if a proper trust has not been created by a will.

Real Property: Land and the buildings on the land.

Residue, Residuary Estate: See Estate.

Revoke: To cancel a will.

Spouse: Includes legally married spouses and common law spouses.

Tenancy In Common: See Joint Ownership (Joint Tenancy).

Testator: A person who makes a valid will. Sometime the term Testatrix is used to mean a female Testator.

Trust: The situation where a person (the Trustee) holds property for the benefit of one or more people (the Beneficiaries). A will creates a testamentary trust. The executor is the trustee of the estate for the benefit of the beneficiaries.

Trustee: See Trust.

Will (Last Will and Testament): A Last Will & Testament (also referred to as simply a “Will”) is a written document that you make while you are living that will take effect on your death and directs what you would like to do with your estate.

Your Will names an Executor to be in charge of looking after your estate and carrying out your wishes and specifies how you would like your estate divided among your beneficiaries.

You can also name a Guardian for your children who are not yet adults and specify how money will be held in trust for young beneficiaries.

To be legal, you must sign your Will in accordance with the signing rules applicable to your jurisdiction. The normal rule is that you must sign your Will in the presence of two adults acting as witnesses and then the two adults must also sign the Will in the presence of you and each other.

Witness: A person who signs a will in order to authenticate the signature of the person making the will.