When we talk about estate planning, we are referring to the consideration of building, preserving and transferring wealth and property. The planning process can sometimes be difficult to initiate as it deals with both family circumstances and one’s own mortality. The cornerstone therefore of your estate plan is your will.
 

Your will is your expressed desire, in writing, on how you wish your assets distributed among your heirs. The property in your estate is first used to pay debts and taxes and then the executor distributes the balance to the beneficiaries according to your instructions.
 

The executor is the person or party named in a will whose primary responsibility is the administration of an estate. His role is to wind up the affairs of the deceased and to distribute the estate, after liabilities and taxes have been satisfied, to the beneficiaries. The role of the executor can be onerous. In selecting your executor or executors, you should give consideration to the time and effort involved. If the estate is complex, you may consider a professional executor such as a trust company, accountant or legal professional. They can act as an impartial third party, especially if there may be conflict between the beneficiaries.
 

We are often asked whether a will must be prepared by a lawyer. The laws that apply to the making of a will, and what constitutes a valid will, vary from province to province. A conventional will is usually prepared by a lawyer, who after questioning the testator (the person making the will), determines that he or she is mentally capable and not a minor. The will has to be in writing, signed by the testator, and signed by two witnesses present at the time. They attest that the will indeed bears the testator’s signature.
 

A will kit can be purchased and is valid in Alberta. You have to be careful though – a will prepared with a kit is still subject to the same strict guidelines as if done by a lawyer. Under the Wills Act (Alberta), there are very specific conditions for witnessing. The two witnesses must both be present to watch you sign the will or it could be ruled invalid. Also a beneficiary must not be a witness or that part of the will that refers to him or her could be invalid.  You also run the risk of confusing or ambiguous wording, which may cause problems on how your wishes are interpreted.  
 

If you die without a will, your estate will be divided according to the laws of your province. In Alberta this is the Intestate Succession Act which will entail the appointment of an administrator. He or she will gather and distribute your assets. The Act then sets out a schedule on who can inherit those assets and how much they receive. Each province has designated a spouse’s share, which in Alberta is $40,000. Other family members, including children, are provided for only if the estate exceeds the spouse’s share. If the estate is worth more than $40,000 and there are children, the spouse gets the first $40,000 and the balance is split between the spouse and the children equally. If there is no spouse and no blood relatives, the estate will pass to the provincial government.

 
Estate Planning hinges on having a valid and updated will, both to ensure having your wishes fulfilled and to avoid any disputes over your estate. 
 
 
The information contained in this article was obtained from sources believed to be reliable; however we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and it should not be considered personal investment advice or taxation advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax related matters. The views expressed are those of the author and not necessarily those of Credential Asset Management, Inc.
 

October 29, 2008