Quick Answers to Questions About Wills, Personal Directives, Powers of Attorney and Estate Planning

  • How can I ensure my Will is valid?


    There are two kinds of Wills, each with separate requirements to ensure validity:

    • Holograph Wills are written entirely in the hand of the Testator and signed at the bottom of the Will. Though Holographic Wills were quite common in the past, they are rarely used now.
    • Non-Holograph Wills are dated and signed at the bottom by the Testator and two witnesses, all of whom must be present and observe the Testator and the other witness sign the Will.
  • What is the effect of a Will that is not valid or only partially valid?


    • Your entire Estate or a portion of your Estate will be distributed according to the Wills and Succession Act (Alberta).
    • Your Estate may be divided among people you would not otherwise name as beneficiaries in your Will.
    • If there are no beneficiaries as determined by the Wills and Succession Act, your Estate will be transferred to the Provincial Government.
  • Why should I update my Will?


    • To ensure that the bequests are current.
    • To ensure that the beneficiaries are current.
    • To ensure that new assets do not fall into the residue of the Estate.
    • To ensure your Estate is administered in a cost-efficient manner and maximizes the inheritance received by the beneficiary(ies).
  • Do I need to execute a completely new Will to update distribution of my Estate?


    No, you can execute a Codicil to your Will which lists any changes or additions to your Will.
  • What is a Personal Directive?


    Personal Directives ("PD") are also frequently referred to as "Living Wills" or "Advance Medical Directives". Typically, this a document in which you name an Agent with authority to make decisions related to your personal and medical care, and in particular, the continuation or termination of medical care, when you are incapable of making or communicating that decision. Normally, you will discuss these decisions with your agent before you are in a situation where the PD comes into effect. In Alberta, the Personal Directives Act describes how a PD is to be prepared and what may or may not be contained in a PD. One of the primary benefits of executing a PD is that your spouse or family will avoid the inconvenience and expense of making an application in the Court of Queen's Bench to appoint a Guardian on your behalf under the Adult Guardianship and Trusteeship Act.
  • What is an Enduring Power of Attorney?


    An Enduring Power of Attorney ("EPA") is a document in which you name a trusted person to act for you and make decisions with regard to your finances and property in the event that you lose your ability to make competent decisions at some time in the future. Typically, two doctors must make an objective finding that you are no longer mentally competent before the EPA comes into effect. One of the primary benefits of executing an EPA is that your spouse or family will avoid the inconvenience and expense of making an application in the Court of Queen's Bench to appoint a Trustee on your behalf under the Adult Guardianship and Trusteeship Act.
  • How is my Estate taxed?


    Although Canada does not have "Estate Taxes" as such, your Estate is taxed under a "Terminal Return", much like an Income Tax Return. All income, capital gains, RRSPs, etc., are considered income in the terminal year. This usually results in taxation at the highest tax rate, reducing the funds which would otherwise be distributed to your beneficiaries.

    NB: If you or your spouse are American citizens, or if you own property or assets in the United States, your Estate will be liable for significant American Estate taxes.
  • How can I minimize the tax liability of my Estate?


    There are a number of ways to limit your Estate's tax liability by ensuring that your assets fall outside of your Estate and are not considered taxable under the terminal return. Several strategies include:

    • Make inter vivos gifts; that is, distribute your assets through gifts while you are still alive. Be careful if you have assets in the United States - gifts over a specified value are taxed.
    • If you own insurance policies, ensure you have specifically named beneficiaries. Do not refer to these policies in your Will - they will fall outside the Estate and be transferred to the named beneficiary(ies) allowing your Estate to avoid taxation in the terminal year.
    • "Freeze" your Estate under s. 85 of the Income Tax Act. The effect of an Estate freeze is to delay payment of tax on the capital gain that accrues subsequent to the Estate freeze until it is taxed through your children/beneficiaries' Estates.
    • Put your assets into a "Trust" whereby the income of the trust is distributed to your beneficiaries. This will preserve the principal assets of your Estate; however, Trust income is taxable, as are the payments received by the trust beneficiaries. You can also retain control over the management of the Trust after you die, by specifying the terms of the trust.
  • Do I need a lawyer to prepare documents related to my Estate?


    No, but it is recommended that you use a lawyer to ensure that the Will, Enduring Power of Attorney or Personal Directive is properly drafted and executed in accordance with the relevant legislation.

    Kirk Montoute LLP offers comprehensive Estate planning and Estate administration services.
  • How can I resolve disputes arising from the administration of an Estate?


    Hopefully, such disputes will be avoided by thoughtful planning. In the event a dispute does arise, any interested party can apply for a remedy from the Surrogate Court. Such applications are typically costly, time consuming and result in permanent damage to family relationships. It is recommended that the every attempt be made to resolve such disputes through mediation and/or arbitration.

    Kirk Montoute LLP offers services in mediation, arbitration and litigation of Estate related disputes.