Estate Planning: Wills and Probate
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Questions and Answers

What is the role of the executor in a will?

  • To contest the will if it is challenged
  • To pay off debts and distribute the estate as per the will (correct)
  • To act as a witness during the signing of the will
  • To receive the inheritances of the beneficiaries

Which of the following statements is true regarding beneficiaries of a will?

  • Beneficiaries can only be direct descendants of the testator.
  • Children under 18 must have their inheritances held in trust. (correct)
  • Beneficiaries must be over the age of 21 to inherit.
  • Unborn beneficiaries cannot be included in a will.

What is a key element that invalidates a will?

  • If witnesses are not present during the signing
  • If it is typed instead of handwritten
  • If there are multiple executors named in the will
  • If the testator is not at least 18 years old (correct)

What happens to an estate if there is no valid will?

<p>The court appoints an administrator to distribute the estate based on provincial laws. (B)</p> Signup and view all the answers

What is a preferential share concerning a surviving spouse's inheritance?

<p>It entitles the spouse to claim a specific portion of the estate before anyone else. (A)</p> Signup and view all the answers

Which of the following is NOT a key component typically included in a valid will?

<p>Appraisal of assets (D)</p> Signup and view all the answers

What is the significance of detailing age requirements for beneficiaries in a will?

<p>To ensure that minors do not receive their inheritance too early (A)</p> Signup and view all the answers

What critical issue may arise when a will is contested?

<p>The testator's mental competency may be questioned. (B)</p> Signup and view all the answers

What is required for a will to be considered valid for Indigenous peoples living on reserves?

<p>It must be written and signed by the testator. (D)</p> Signup and view all the answers

In the case of an Indigenous person's death without a will, what happens if the estate is worth $80,000?

<p>The spouse receives $75,000 and the remaining $5,000 is divided among the children. (D)</p> Signup and view all the answers

What characterizes a holograph will?

<p>It is written entirely in the handwriting of the testator. (C)</p> Signup and view all the answers

What is the main purpose of a letter of last instruction?

<p>It summarizes the testator's wishes and helps family locate important information. (B)</p> Signup and view all the answers

What automatically cancels any previous wills in most provinces upon marriage?

<p>The act of marrying itself. (A)</p> Signup and view all the answers

What is the role of a trustee in a will?

<p>To manage assets in trust for one or more beneficiaries. (C)</p> Signup and view all the answers

What is a bequest?

<p>A gift stipulated in a will. (B)</p> Signup and view all the answers

What happens to reserve land if a beneficiary is not a band member?

<p>The land can only be sold to a band member. (A)</p> Signup and view all the answers

How often should a will be reviewed and potentially updated?

<p>Every two to three years. (C)</p> Signup and view all the answers

What is a residual estate?

<p>The amount remaining after all obligations have been fulfilled. (A)</p> Signup and view all the answers

What is required for a notarial will in Quebec?

<p>It must be created in the presence of a notary. (C)</p> Signup and view all the answers

Who typically does not inherit any assets if they witness a will?

<p>The witness themselves. (C)</p> Signup and view all the answers

What can trigger a review of a will aside from death or adoption?

<p>Relocation to a new province. (A)</p> Signup and view all the answers

What can protect a trustee from legal liability for honest mistakes?

<p>A clause ensuring no blame for honest mistakes made in good faith. (C)</p> Signup and view all the answers

What happens if you do not update your will after getting married?

<p>Your estate is distributed according to intestate succession laws. (D)</p> Signup and view all the answers

Which statement accurately describes the probate process?

<p>The executor submits all required forms and assets to the probate court. (C)</p> Signup and view all the answers

What are probate fees based on?

<p>The overall value of the entire estate. (A)</p> Signup and view all the answers

Which tax must be filed with the Canada Revenue Agency when someone dies?

<p>Final tax return. (B)</p> Signup and view all the answers

What defines deemed disposition at the time of death?

<p>The deceased is treated as if they sold all assets at death's date. (D)</p> Signup and view all the answers

Which of the following statements about taxes and probate fees is correct?

<p>Taxes are based on deemed disposition while probate fees are based on estate value. (B)</p> Signup and view all the answers

What can significantly influence the estate's overall taxes owed after the death?

<p>Gains from the principal residence which are not taxed. (C)</p> Signup and view all the answers

How can an executor reduce the estate's tax burden?

<p>By filing separate returns for unpaid income or rights owed. (D)</p> Signup and view all the answers

When is the final tax return due after a person's death?

<p>Within six months or by April 30 of the following year, whichever is later. (B)</p> Signup and view all the answers

Flashcards

Will

A legal document outlining how a person's assets (estate) will be distributed after their death. It allows the deceased to ensure their wishes are followed.

Executor

The person appointed in a will to manage the deceased's assets, pay debts, and distribute the estate to beneficiaries.

Beneficiaries

The individuals who will receive assets from the deceased's estate as outlined in the will.

Estate Planning

The process of planning how one's assets (estate) will be managed and distributed before or after death.

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Probate

The legal process of distributing a deceased person's assets according to their will.

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Preferential Share

A fixed amount of money or property that a surviving spouse receives from the deceased's estate before any other distribution.

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Administrator

A person appointed by the court to manage the deceased's estate if there is no will.

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Age of Majority

The legal age at which a person is considered an adult and can create a valid will.

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Indian Act Will

A legal document for Indigenous people on reserves in Canada, where provincial intestate laws don't apply.

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Residue

The portion of an estate that is left after all debts, taxes, and bequests have been paid.

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Bequest

A gift specified in a will.

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Trustee

A person or organization responsible for managing assets held in trust for beneficiaries of a will.

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Holographic Will

A will written entirely in the testator's handwriting and does not require witnesses.

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Notarial Will

A will prepared and signed in front of a notary, common in Quebec and often eliminates probate.

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English Form Will

A will that includes the signature of the testator and two witnesses present during signing.

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Clause

A legal statement in a will that protects trustees from liability for honest mistakes if they act in good faith.

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Letter of Last Instruction

An optional, non-legally binding letter that outlines personal wishes and provides guidance for family members.

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Estate Management

The process of managing an estate after someone dies.

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Will Review

The process of updating a will after a significant life event.

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Effect Of Marriage on a Will

In most provinces, getting married automatically cancels any wills made before the marriage.

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What is probate?

The legal process of confirming a will is valid and ensuring assets are distributed as intended.

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Steps in probate

The executor submits paperwork to a probate court, provides a copy of the will and asset list, pays debts, sells assets if needed, and may manage a dedicated bank account for the estate.

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Guardianship in probate

The court assigns guardians for minor children as per the will, but can appoint someone else if there's a family dispute.

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Probate fees

Fees vary by province and are based on the estate's value; for instance, in Ontario, a $5 million estate incurs a probate fee of $74,250 (1.5% of value). In Ontario, these fees are called "estate administration taxes."

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What is the final tax return?

The final tax return filed with the Canada Revenue Agency after someone's death. The deceased's assets are treated as sold on the date of death (deemed disposition) for tax purposes.

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Tax responsibility at death

The estate pays taxes on the deceased's income, investment income, and capital gains. These taxes are separate from probate fees.

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Deemed disposition for taxes

The deemed disposition rule can create gains or losses based on asset value changes. Tax deferral options exist but require planning.

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Tax calculation at death

Taxes are calculated based on the difference between the fair market value of assets at death and their original purchase cost.

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Deadlines for final tax return

The final tax return for a deceased person is typically due six months after death or April 30 of the following year, whichever is later.

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Optional tax returns after death

The executor can file additional tax returns to reduce taxes on items like unpaid debts, business income, or income from trusts. By separating income, the overall tax owed can be reduced.

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Study Notes

Estate Planning: Wills and Probate

  • Estate: A deceased person's assets after paying debts.
  • Executor: Person in the will who pays debts and distributes assets.
  • Beneficiaries: Individuals who receive assets, cannot receive inheritance if younger than 18 without a trust.
  • Estate Planning: Planning how assets are distributed after death.
  • Will: Legal document detailing estate distribution at death.
  • Testator/Testatrix: Person creating a will.
  • Beneficiary/Heir: Recipient in a will.
  • Administrator: Court-appointed person distributing assets if no will.
  • Intestate succession: Laws governing distribution of assets without a will.
  • Preferential share: Set portion of estate given to surviving spouse.
  • Age of majority: Minimum age for creating a valid will (18-19, varies by province).
  • Mental capacity: Must be mentally competent when creating will.
  • Indigenous Peoples' Wills: Governed by the Indian Act, simpler requirements on the reserve.

Types of Wills

  • English Form Will: Signed by testator and two witnesses.
  • Notarial Will: Signed by a notary public (Quebec).
  • Holographic Will: Entirely handwritten by the testator.

Key Components of a Will

  • Trustee: Manages assets for beneficiaries.
  • Bequest: Gift of assets in the will.
  • Residue: Remaining assets after debts and bequests.
  • Clauses: Detailed instructions for estate management.
  • Letter of Last Instructions: Non-legally binding document with wishes or details.
  • Will Changes: Regular reviews and updates are necessary.
  • Effects of marriage on a Will (Most Provinces): Marriage will revoke wills created earlier unless updated in a new one.

Probate Fees and Taxes at Death

  • Probate: Legal process to validate a will and distribute assets.
  • Probate Fees (Estate Administration Taxes): Fees to the government based on estate value. Fees vary by province.
  • Final Tax Return (CRA): Filed with the Canada Revenue Agency (CRA) within six months of death or April 30th of the subsequent year.
  • Deemed Disposition: Treating deceased as having sold all assets on their death date for tax purposes.
  • Capital Gains/Losses: Tax implications based on the difference between assets' market value at death and their original cost.
  • Exemptions: Principal residence and retirement accounts (RRSPs) may be exempt or have deferred taxes.
  • Optional Tax Returns: Additional returns can reduce tax burden.

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Description

Test your knowledge on essential concepts of estate planning, including wills, probate, and the roles of executors and beneficiaries. This quiz covers key terms such as intestate succession and the importance of mental capacity. Understand how assets are distributed after death and the legal requirements for creating a valid will.

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