WILLS, Powers of Attorney, Personal Directives (Alberta)
What is a will?
A will is a written document that details how you want your property distributed after your death.
Alberta law sets out the requirements for a valid will. A will is valid only when it is in writing. A will is not valid unless:
(a) it is properly signed; and
(b) properly witnessed.
Your will must be signed by you before two or more witnesses who must also sign the document in the presence of you and each other.
You must be mentally competent, and at least 18-years-old. There are some limited circumstances where a person younger than 18 may make a valid will. If you are under 18 or if you are unable to sign your will by yourself, special rules apply. You should discuss your will with a knowledgeable lawyer.
In addition to disposing of your property you may also name your 'personal representatives' in your will. A personal representative is also known as an executor, administrator or trustee. Your personal representative is the person or trust company legally appointed to represent your estate after your death. Duties for personal representatives include carrying out the wishes that you have stated in your will, gathering your assets, paying your debts and distributing your property according to your wishes.
Why Make a Will?
A will ensures that your wishes are carried out with a minimum of expense and delay after your death. A properly prepared will can save time and expense for your family and beneficiaries.
You may make a valid will wholly in your own handwriting, signed and dated by you. This is called a holograph will. Your signature must be placed on the holograph will in such a way that it is apparent on the front of the will that you signed this document as your legal will.
There are numerous disadvantages to writing your own will which may include the following:
- Your will may not clearly state your intentions;
- Your will may not be discovered after your death;
- Your will, if discovered, may be destroyed by a disgruntled beneficiary.
A lawyer can help you overcome all of the disadvantages with a properly stored and drafted will.
You can make as many changes to your will as you want. You can either rewrite the entire will or make changes by a document called a 'codicil'. A codicil is a testamentary document which has the same power as your will. It must be drafted and witnessed with the same care as your will. It is important to note you cannot just cross out things in your present will and write in the changes.
You should update your will from time to time as circumstances change. If you divorce after you have signed a will, that will is not automatically canceled. However, if you have a will and marry or remarry without preparing a new will, the will is automatically canceled.
The following circumstances should prompt you to review your will:
- Changes in your financial circumstances
- The death of a family member
What Happens When There is No Will?
If you choose not to make a will, your property will be dealt with in accordance with the Intestate Succession Act (Alberta). Your personal representative will be appointed by the court. This person will have limited discretion in how to deal with your estate. The court will not know your intentions. You will not be able to choose a guardian for your minor children. Your beneficiaries will not be named by you. They will be stipulated by the provisions of the Intestate Succession Act.
The provisions of the Intestate Succession Act provide for the distribution of your estate if you die without a will. Many different circumstances are contemplated by the legislation. Just a few examples are:
If you die intestate leaving a spouse but no children, your entire estate goes to your spouse.
Similarly, if the net value of your estate does not exceed $40,000 your entire estate goes to your spouse.
If you die intestate leaving a spouse and one child, the first $40,000 goes to your spouse and the balance is divided into two parts. One of these parts is distributed to your spouse and the other part is distributed to your child.
You should consult a lawyer to obtain further information about how the Intestate Succession Act may affect your personal situation if you die without a will.
With some restrictions, you may dispose of your property as you wish. However, if you fail to adequately provide for your spouse or dependent children they may have the right to apply to the court to change the terms of your will. The court may make an order which it determines to be fair and just in the circumstances.
Why Not Just a 'Simple' Will?
Lawyers are often asked to prepare a 'simple' will. To most people, this means a document of one or two pages. Sometimes this may be accomplished with little difficulty. Occasionally, however, it is difficult for all of your concerns to be addressed in a short document. Every situation is different. Accordingly, your will may be longer or shorter as the circumstances dictate.
'Issue' is a term used to describe your children and their direct descendants such as grandchildren and great grandchildren. In Alberta, the term 'issue' includes legally adopted children, but this may not be the case in other provinces or countries. An illegitimate child is treated as the legitimate child of his or her mother.
If you own property in joint tenancy and you die, the other person automatically becomes the property owner. Jointly held property does not form part of your estate. However, if all other joint tenants predecease you then the property does form part of your estate. Accordingly, it is still necessary for you to have a will.
Joint ownership of property may be a beneficial aspect of estate planning. It should be noted, however that while a will may be changed as often as you wish, a joint tenancy creates a legal title in the other joint owners and changes may not be so readily accomplished.
You should seek legal advice to determine whether any of your property should be placed in joint tenancy.
Life insurance is one of the many kinds of property you may own. It is an important part of estate planning. It does not take the place of a will. The prudent person will have a lawyer, a life insurance agent and, in some cases, an accountant work together on a proper estate program. Life insurance may be an important source of funds to provide for the payment of debts or taxes.
In Alberta, there are no estate taxes. Income and capital gains taxes may be payable upon your death. These taxes may often be kept to a minimum through careful tax and estate planning.
Young children will need to have an appropriate trustee and guardian if you and your spouse die. If you are an unmarried parent of a young child this concern is equally important. You may select a guardian under the terms of your will.
Any guardianship appointment must be confirmed by the court at the time the guardian wishes to act. However, in the absence of special circumstances, the court will give effect to the guardianship appointment stated in a will since it is a clear expression of the parent’s desire in the matter.
Enduring Power of Attorney “EPA”
An EPA is a document you sign authorizing another person to manage your legal and personal affairs. It is valid even though you lose mental capacity through a stroke or other disability. A court order is not required to make it valid. At your choice, an EPA can take effect immediately or only when you lose mental capacity. The powers associated with it are generally very comprehensive and may include the ability to transfer property out of your name. The named attorney must ensure your property is used only for your benefit or for the benefit of others you have specifically named. It is critical you exercise great care in choosing the person who will be your attorney since you are placing a great deal of power and trust in them.
Personal Directive 'Living Will'
Personal directives are written statements directed to your chosen agent (generally a spouse, child or trusted friend) and health care providers which state your wishes pertaining to your medical care if you become seriously ill and unable to make those decisions for yourself. The personal directive is signed at a time when you have sufficient mental capacity to make sound decisions and should be done in the presence of a lawyer. The personal directive can be shown to your health care providers and those persons would be obliged to follow the lawful wishes stated in the directive.
An EPA and a personal directive are documents which express your choices. When you do not choose, the government has put in place a program to deal with your financial and personal care. The result is significantly more expensive than the EPA and personal directive.
When an adult lacks mental capacity to make decisions regarding their financial personal affairs, the Dependent Adults Act authorizes the court to appoint a person, who is usually a relative, to become a trustee (financial) and/or a guardian (personal affairs). Once appointed, the trustee and guardian are required to apply to the court to have it review the financial and personal affairs of the dependent adult at regular intervals to ensure the finances are being properly maintained and the needs of the dependent adult are being met.
Checklist for Executors
The following is not a complete list of the duties and responsibilities of an executor or executrix, but it does provide a good overview of the principal tasks:
- Make all funeral arrangements.
- Identify all savings and chequing accounts of the deceased. Notify all financial institutions about the death and obtain up-to-date information about the balances on deposit.
- Locate all insurance policies and obtain information about the amount payable on each. Notify the insurer of the death.
- Access and list the contents of the deceased's safety deposit box.
- Review the deceased's personal papers to determine all assets and liabilities (debts).
- Prepare a detailed statement of assets and liabilities.
- Arrange for storage and insurance of any assets that require it.
- Notify the beneficiaries of the death, if necessary, and advise them of their entitlement under the Will.
- Redirect mail and cancel any subscriptions or charge accounts. Return or destroy credit and charge cards.
- Obtain all unpaid wages and other benefits from former employer.
- Apply to the court for Letters of Probate.
- Advertise for creditors, if necessary.
- File income tax returns for year of death and any outstanding from former years.
- Apply for Canada Pension Plan benefits, if any. (If the deceased ever worked outside Canada, foreign social security benefits may also be payable.)
- Apply for any amounts payable to the estate under insurance policies.
- Pay funeral expenses, income taxes payable and all debts of the deceased.
- Pay money bequests and distribute specific gifts of property according to the instructions in the Will (be sure to obtain receipts and to retain sufficient cash to carry out the final steps).
- File the estate's income tax return and pay any tax owing (i.e., if the estate earned any income following the deathof the deceased).
- Pay legal fees and any outstanding fees related to administering the estate, including compensation for personal representative(s).
- Determine residuary beneficiary preferences for distributions and arrange sale or transfers of the estate assets to the rightful beneficiaries.
- Apply for Tax Clearance Certificate for final distribution from the CCRA.
- Have Beneficiaries sign Final Releases before making a final distribution.
- Prepare and distribute a final report to the beneficiaries.
Being an Executor
The purpose of this document is to provide some basic information about being an executor. It does not contain a complete statement of the law in the area and laws change from time to time. If somebody has asked you to act as an executor and you have specific questions about your role you should contact a lawyer.
What is an executor?
An executor is the person or trust company named in a will to administer an estate. The person who made the will (called the testator) expects the executor to settle the estate and distribute the property to the beneficiaries according to the instructions set out in the will.
What is included in the estate?
The estate includes everything owned by the testator at the time of his or her death. For example, the estate might include a house, cottage, automobile, bank account and investments. It would also include any property that comes into the estate after the testator's death. Since the testator is not there to administer it, the executor assumes the responsibility for handling all matters associated with carrying out the wishes of the deceased and winding up the estate.
What are the executor's duties?
The executor is responsible for arranging the testator's funeral, taking possession of all the testator's property, documents, and accounts, making a list of them, having the estate probated if necessary, paying the debts of the estate, and distributing the estate to the beneficiaries.
What does the executor do upon learning of the testator's death?
As soon as the executor learns of the death of the testator the executor must decide if he or she is still willing and able to act as executor. Usually, the person named as executor has discussed their role with the testator in advance so this should not be a problem.
The first event that must take place is the testator's funeral. Ideally, the testator's family and executor will know where to find any specific funeral instructions. These should be in a safe place so they can be referred to upon the testator's death. If this has not happened, the executor will have to find and read the will to see whether it contains funeral instructions.
What if the will does not give specific instructions? What if there are no instructions for burial arrangements?
Where the testator has given no instructions, as for example about the place of burial or the type of funeral, the executor has the right to decide the matter as he or she thinks best. If there is doubt about the testator's wishes, the executor should allow the family of the testator to choose an appropriate funeral arrangement. The funeral expenses are payable out of the estate.
When does the executor read the will?
As soon as possible, the executor should find, and carefully read, the original will. It is not advisable to put one's funeral instructions in one's will. Often the will is not read until after the funeral. The will should help the executor verify certain points, such as:
Notice to next of kin and heirs.
Security of properties and other goods.
Special arrangements to be made if perishable goods are involved.
Steps to be taken to meet the immediate financial needs of dependents.
Determination of cash needs for the administration of the estate.
Can I refuse to act as an executor?
You are under no obligation to act as an executor. You can refuse the position when the testator first asks you. Or, if you agree to act as the executor, you may still change your mind at the time of the testator's death. If you are unable to act as executor when the beneficiaries ask you to distribute the inheritances, you can refuse to act. You will automatically lose all rights of executorship.
If I start my duties as executor can I change my mind later?
Once you begin to carry out the duties of an executor, you cannot just walk away. By law your intervention in the estate makes you responsible for the executorship. If you wish to back out after you have taken control of the testator's property, you must formally renounce your position. To do this, you must submit the renunciation in writing to the Surrogage Court.
This does not mean that you cannot ask about the assets and liabilities of the estate. However, your actions may establish you as the executor. You should therefore be careful before taking any actions that may commit you to this position.
Can I be held responsible for mistakes I make while acting as an executor?
It depends on the circumstances. You must act for the estate as if it were your own property. An executor who is reasonably prudent in carrying out his or her duties will probably not be held responsible if things go wrong. However, if the executor is careless, he or she can be held responsible for the losses suffered by the estate. For example, if you make frivolous investments or unauthorized expenditures on behalf of the estate, you may be liable. You might have to repay losses personally.
Can I get help if administering the estate becomes complicated? May I hire a professional?
Yes you may. It is important that you handle the estate properly because you may be held responsible for your mistakes. When you are in doubt about what to do, it is wise to consult a professional. Reasonable fees charged for professional services would be paid by the estate.
When might I need the help of a lawyer?
A lawyer may be able to help an executor in the following ways:
Provide opinions about the meaning of the will;
Offer advice on your duties as executor;
Complete instruments of conveyance;
Apply for probate of the will where necessary;
Prepare and obtain receipts for inheritances delivered, etc.
Arrange for the registration of assets in the name of the executor.
Will I be paid for my services as executor?
The executor has the right to be paid for his or her services. If the testator has made no provision for payment in the will, then you can make a claim for financial compensation before the Surrogate Court. The fees that you receive as executor are taxable (to you). The executor also has the right to be reimbursed for all reasonable expenses made while administering the estate. Family members will often agree to administer an estate without taking a fee. You should discuss this with the testator. Whatever you agree to should be set out in the will.
How long does it take to settle an estate?
A simple estate can take a few months while a complicated estate can take 18 months to several years or more.
When do my duties as executor end?
The executor's duties end as soon as the estate is completely settled. This normally means when all the debts of the estate have been paid, including income tax, and the testator's property has been distributed according to the will.
In rare situations, the executor may be obliged to reopen the estate after it is closed. For example, the discovery of sums of money, even 20 years after the death of the testator, would force the executor to reopen the estate and distribute the money according to the instructions in the will.
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