What is a will? General information about wills
What is a will?
The dictionary defines a will as the legal statement of a person’s last wishes about how to divide his or her property after death. The property that is distributed following the instructions in a will is known as the estate. When you make a will, you are known as the testator. The person you put in charge of carrying out your wishes as expressed in the will is called a personal representative.
A will does not take effect until you die. Therefore, if you specify in your will that you leave certain property to someone — for example, a diamond bracelet to your sister or a lake lot to your brother — you can still dispose of that property during your lifetime. You can sell it or mortgage it or deal with it in any way you choose. Of course, you can also change your will at any time.
In Alberta, and in every province in Canada, a will must be in writing. Other requirements differ, depending on the type of will.
There are two different kinds of wills, each with its own rules and requirements:
- The “formal” (or “attested”) kind, which is witnessed by two witnesses. This kind of will needs to be completely typewritten or printed (not in handwriting).
- The kind that you hand write completely. Handwritten wills are called holograph wills. They are legal in Alberta, Manitoba, Saskatchewan, Ontario, Quebec, New Brunswick and Newfoundland and Labrador but they are not allowed in other provinces.
What is an estate?
The property that you own at the time of your death, including land and possessions, which is distributed following the instructions in your will is known as your estate. The property in your estate is first used to pay debts and taxes, and then it is distributed in accordance with the instructions in your will.
Property that does not flow through your will does not form part of your estate. For example:
- Property such as land, a house and bank accounts for which the registered owners are described as joint tenants. This kind of property transfers to the remaining joint tenant(s) when you die.
- RRSPs, pensions, and life insurance policies for which you have designated a beneficiary other than your estate.
Note: On the other hand, property for which the registered owners are described as tenants in common does flow through your estate.
Consider the following scenarios:
- In 1999, you signed a designation of beneficiary form leaving the death benefit of your pension plan to your sister. Then in 2006 you wrote a will but did not mention your pension plan. The death benefit will go directly to the named beneficiary (your sister) and will not form part of your estate. No part of the funds can be used to pay the debts of your estate.
- On the other hand, in 1999, you signed a designation of beneficiary form leaving the death benefit of your pension plan to your sister. Then in 2006 you wrote a will and in that will you did make other arrangements for this benefit (you left it to your brother). The death benefit will form part of your estate, meaning that it can first be used to pay debts, and what remains of it will go to your brother.
As a result, it is very important to be careful and stay consistent when dealing with property for which you can designate a beneficiary.
What is a personal representative?
A personal representative is the person named in a will to carry out the directions contained in the will (formerly known as an executor). The personal representative is responsible for settling the person’s affairs after death. The person’s estate passes temporarily to the personal representative.
The personal representative locates all of the person’s assets (everything he or she owned), pays the funeral costs, debts and taxes, and then distributes the remaining money and property according to the instructions in the will. The personal representative is accountable to the beneficiaries in the will.
For example, the personal representative must let the beneficiaries know if or when he or she is applying for probate (a legal procedure that confirms a will) and must keep records and give all beneficiaries a final statement of accounts. If the will is probated, the personal representative is also accountable to the court.
NOTE: This person was formerly called an executor or executrix and these terms will continue to be in use for some time. However, the Alberta Estate Administration Act (2015) has changed the name of these roles to personal representative.
Do I have to make a will?
No, it is optional and voluntary. While it is very important to consider making one, you don’t have to, and no one can make you sign one if you do not want to do so. Making a will just makes things clearer when you die as it helps to ensure that the things you own go to the people you want to have them. A will is also useful for the people who outlive you, as they can feel certain that they are carrying out your final wishes.
Why should I make a will?
It is a good idea for everyone to have a will, even someone who is young and healthy. Illness or accident could claim any of us at any time. People often have more assets than they think. For example, life insurance and pension benefits may be payable to an estate. Sometimes credit card contracts include accidental death benefits. Even if you don’t have many assets, a will is the only way to control who gets what you do have.
Anyone with children should make a will so that they can recommend a guardian for their children. Parents can also list their intentions for their children’s upbringing and financial needs.
NOTE: The naming of a guardian in a will is not binding. Someone else can still apply to be the guardian of your children, and only the court has the final say. Naming a guardian in a will, however, does ensure that a court will hear your opinion.
Only you know what you want done with your estate when you die and simply telling someone, or even more than one person, does not suffice. Your wishes need to be in writing. This is especially true if you are leaving the bulk of your estate to non-family members. Where there is no will, the Wills and Succession Act presumes the deceased intended to leave the estate to his or her family.
Finally, your estate may end up being more complicated and expensive for your family to handle if you don’t leave a will, as a family member may need to apply to the court to appoint him or her as administrator.
When should I make a will?
Anyone over the age of 18 with mental capacity can make a will at any time (a person under 18 may make a will with the court’s permission). You should make a will if you marry (or enter into some other type of committed relationship), start a family, or divorce (or end some other type of committed relationship).
You should also make a will if you have a particularly complicated set of wishes. Even if you are not in one of these situations, it is still a good idea to write a will so that you can leave your belongings to whoever you want.
In addition, you should make a will when you are still in good health. In order for a will to be valid, you must be mentally capable (i.e. have the appropriate mental capacity) when you make it. Your mental capacity can be affected by illness, accident, or drug treatment.
What happens if I die without a will?
If you die without a will, you are said to die intestate. Two immediate problems arise:
- Because there is no personal representative appointed, there is no one to take charge of the handling of your estate.
- There is no formal written record of what you wanted done with your estate.
In this situation, the Estate Administration Act (the Act) deals with the first problem by providing for the appointment of a personal representative to handle the gathering together and distribution of your estate. This can only be done after someone applies to take on the job and the court issues an order appointing him or her, as such there may be some initial delay.
The Act addresses the second problem by setting out a schedule of relatives who may inherit the estate.
- if you have a surviving spouse or adult interdependent partner, and any surviving children who are also children of that survivor, the whole of the estate goes to those individuals (except in specific circumstances of separation and cases of dependent adult children);
- but if you have surviving children from a different spouse or partner, the surviving spouse or adult interdependent partner only receives a portion of your estate (the greater of the amount stated in the law at the time of death or 50% of the estate), with the rest to go to your descendants;
- if there is a surviving spouse and a surviving adult interdependent partner, all or some of the estate will be divided between the two (depending on whether there are also children and/or grandchildren involved);
- if there is no surviving spouse or adult interdependent partner, but you have children, the estate will be divided among your surviving children, and potentially also your grandchildren (if the parent – a child of the deceased – died before the deceased); and
- if you have no spouse or adult interdependent partner and no children, then the estate will go to other relatives in an order set out in the Act.
If you do not have a spouse or any blood relatives, then another Alberta law comes into play: the Unclaimed Personal Property and Vested Property Act.
According to this law, if you die without a will, two years after the date of the grant of administration, the personal representative must give the provincial government any portion of the estate not claimed by a valid heir. The provincial government must keep this unclaimed personal property, or its equivalent value, for ten years.
During the ten-year period, a valid heir could still come forward to claim the property. After the ten-year period has passed the property belongs to the government.
The result: If you die without a will, your estate may not be divided up as you would have wished. Only you know what you want done with your estate when you die and simply telling someone, or even more than one person, is not enough. Your wishes need to be in writing.
If I make a will, can the government take some of my money as estate tax?
No. There are no estate taxes of any kind in Alberta, regardless of whether there is, or is not, a will.
If you write a will and the will needs to be probated, there will be filing fees to get a grant of probate. The exact amount depends on the value of the estate. However, probate may not be required; the need for probate is related to the kind and amount of property involved, not the existence, or non-existence, of a will.
Choosing not to write a will may lead to court fees for your family if they need to file for a grant of administration.
What is the cost of preparing a will?
There is no exact answer to this question. It will vary from lawyer to lawyer, and it will also depend on the complexity of the will and the expertise needed to draft it.
Often, lawyers will quote a single price for separate wills done for two spouses (or common-law partners) at the same time.
Similarly, a lawyer may quote a single price for a package including a power of attorney, personal directive, and a will for each spouse. The price may increase if the lawyer needs to use his or her expertise in complicated tax planning measures, the creation of trusts, or very large estates.