A will is a formal document that names an executorExecutor Someone you name to carry out the wishes that you set out in your will after your death. May be named by the court if you don’t name one. In Ontario, an executor is called an estate trustee.+ read full definition who will be responsible for carrying out your wishes and distributing the assets of your estateEstate The total sum of money and property you leave behind when you die.+ read full definition after your death and sets out how your money, property and other assets (your “estate”) are to be distributed to your beneficiaries when you die.
A Will typically includes the following:
- Sets out the powers and obligations of the executor and trusteeTrustee A person or company that you appoint to manage the assets of a trust. You can name more than one trustee.+ read full definition(s);
- Instructions as to how the assets of the estate are to be managed and distributed, which may involve the creation of a testamentary trustTrust An account set up to hold assets for a beneficiary. A trustee manages the assets until the beneficiary reaches legal age.+ read full definition to allow for distribution at a later date, or the immediate distribution of assets to beneficiaries
- Naming of a guardianGuardian A person that you give the legal responsibility to care for a child or adult who cannot take care of themselves. There are different types of guardians for property or health.+ read full definition for minor children, and
- Burial wishes.
You can change your will at any time before your death, as long as you have the mental capacity to know and understand the change.
If you die without a valid will, a court will appoint someone to administer your estate and distribute the assets according to a formula set out in provincial estate and family laws.
Having a valid, up-to-date will is essential to ensuring your estate is distributed as you intend it, and that your death does not create a legal and administrative burden to your family.
Beneficiaries in a will
Your beneficiaries are the people you name in your will to inherit your assets.
You can distribute your estate in one of two main ways:
- By a specific bequest (“I give my daughter Joan Jones the sum of $10,000 and my diamond engagement ring”), or
- By a share in the residue, which is the amount remaining in the estate after all bequests, debts, and taxes have been paid (“I leave my husband Bob Jones the residue of my estate”).
Your will can also provide other types of gifts by creating a trust in your will. This is known as a testamentary trust.
You should also know that some assets may pass outside of the estate – that is not be included in your will. When making a beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition designation for your RRSPRRSP See Registered Retirement Savings Plan.+ read full definition, RRIFRRIF See Registered Retirement Income Fund.+ read full definition, TFSATFSA See Tax-Free Savings Account.+ read full definition or life insurance policyInsurance policy A written contract for insurance. It describes how long you are covered, what you are covered for, any part that you have to pay (the deductible) and what you will pay for the insurance (your premium).+ read full definition, you should ensure that your wishes are consistent with your estate planningEstate planning The plans you make to build and manage wealth for your lifetime and thereafter. Goals may include leaving the most money possible to your loved ones, with the least amount of taxes. Other goals may include caring for children, paying off debt or passing on a business.+ read full definition objectives, not inconsistent with your will, and take into account tax implications.
A designation of a beneficiary on a life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition policy can be revoked by a designation in a will. Therefore, you want to be careful you don’t unintentionally revoke the designation on a life insurance policy when you write your will.