ch 15 - Planning to Pass on the Estate Flashcards
testator
person making the will
Executor / liquidator / trustees
person who settles the estate and distributes the assets
intestate
Having not made a will before dying or having an invalid will
2 MAIN PURPOSES OF A WILL
- Identify the persons whom the testator wants as beneficiaries.
- Appoint an executor.
3 Forms of a will
- Conventional or formal will
- Holograph will
- Notarial will in Quebec
codicil
amendment to a will and is technically considered to be a will on its own.
HOLOGRAPH WILL
will written and signed entirely in the handwriting of the testator.
Witnesses are not required
NOTARIAL WILL
In Quebec, a notarial will is a will that is drafted and attested by a notary.
It is signed by the notary, the testator,
and a witness
GIFTS MORTIS CAUSA
deathbed gift made by a dying person
GIFTS MORTIS CAUSA 3 CONDITIONS
- It must have been made in contemplation, though not necessarily in expectation, of death.
- It must be delivered to the recipient without any encumbrance.
- It can only be complete and perfect upon the death of the donor.
COMPONENTS OF A WILL (5)
- Identity of the testator
- statement revoking all former wills or codicils
- Appointment of the executor
- Instructions to pay all just debts and taxes, as well as funeral and estate-related expenses.
- Identity of the beneficiaries to receive specific assets and the residue of the estate
investment discretion clause
executor or trustee is restricted to making only conservative Investments. The clause allows for more flexibility
discretionary encroachment clause
gives the executor the discretion to use assets for the benefit of minor beneficiaries until they reach the age of majority.
life interest in a specific asset
allows the surviving beneficiary to use, occupy, and enjoy the property during his or her lifetime
guardian appointment clause
appoints a friend or family member as guardian (or tutor, in Quebec) of minor children.
tax election clause
allows the executor to make various income tax elections on the estate’s tax return, where appropriate and advantageous.
survivorship clause
if beneficiary dies before 30 days then will passed on to alternate beneficiaries
2 restrictions on Testator
cannot cut a financially dependent family member that is next of kin
They must provide for their spouse
executor’s duties
- recover the assets
- pay the debts
- identify the legatees of specific assets and residuary beneficiaries
- divide the property among them
characteristics of an executor
- financially stable
- have good judgment
- honesty
- integrity.
Compenation of executor based on three factors
- The value and complexity of the estate
- The time spent
- The skill and degree of care
What is the usual Executor compensation^?
5% of Estate
assets covered by the will
- Assets registered in the sole name of the deceased
- fractional interest of Assets registered as tenancy in common
- Assets registered in the name of the deceased’s Estate
assets NOT covered by the will
- Assets for which there is already a named beneficiary
- Assets that have been gifted before death.
- Assets for which the owners are registered as joint tenants with rights of survivorship
- Assets held in an inter vivos trust.
- Business interests covered by a buy-sell agreement.
- Assets covered by a pre-nuptial, cohabitation agreement, or matrimonial regime.
What is Probate?
Probate is the legal process by which the courts confirm a person’s will to be his or her valid last will and testament.
Probating a will also validates the authority of the executor.
2 Conditions under which a will is valid
- The will has been prepared by a mentally competent person and properly signed and witnessed.
- It has not been revoked by a later will, by marriage, or by destruction of the original document.
Certificate of Appointment of Estate Trustee with a Will
court order identifying the executor and declaring that the will is valid
Certificate of Appointment of Estate Trustee without a Will
document required if person dies with no will
What are probate fees based on?
Total Value of Estate. Debts are not included in the estate except for mortgages
assets excluded from the estate for probate fee purposes
• assets held in joint tenancy with right of
survivorship
• Life insurance proceeds
• Registered accounts with named
beneficiaries designated outside the will
ways to reduce size of estate (list)
- Transferring ownership of property to someone else during their lifetime
- Transferring assets to an inter vivos trust
- Establishing a spousal trust under the testator’s will
- Holding properties jointly with right of survivorship
- Gifting money or assets to family members or to a charity during the person’s lifetime
- Converting personal debt into mortgage on personally held real estate or corporate debt
In Quebec, the liquidator of an estate has the following responsibilities:
- Identify the successors and the property to be partitioned and distributed to each successor
- Recover the succession’s claims and pay its debts
- Distribute assets to the successors
- Prepare a rendering of account
Probate process in Quebec
The existence of the will is publicized and the will is deposited in the record of the Superior Court of Quebec.
• It is established that the will appears to be valid.
• Interested parties are then able to obtain certified copies of the original will.
• The applicant (generally, the liquidator of the estate), a notary, or a lawyer completes the probate of the will.
notice of inventory
notice identifies the deceased and indicates the place where interested persons may consult the inventory of the estate
RENDERING OF ACCOUNT
If the liquidation of an estate lasts more than a year, the liquidator must prepare an account of his or her management to the heirs and creditors at least once per year.
Formalities of Power of Attorney (3)
- Naming the donor and appointing the donee
- Specifying the authority being granted
- Signing of the document by the donor in the presence of two witnesses
personal care power of attorney
allows the donor to appoint someone to make personal care decisions if the donor becomes mentally incapable.
Continuing power of attorney for property
covers the donor’s financial affairs and allows the donee to act for the donor even if the donor becomes incapacitated.
Non-continuing power of attorney for property
covers the donor’s financial affairs, but cannot be used if the donor becomes mentally incapable
living will
provides instructions on the treatment a person wishes or does not wish to receive in the event of a terminal illness or incurable injury
