Your estate planning glossary

The person, appointed by the court, who will administer the estate under the following circumstances: there is no will, an executor was not named in the will, all named executors have died, or all named executors are unwilling or unable to act. Also referred to as a “personal representative.” See also Estate Trustee Without a Will.

Agent for the Executor
This is a person or trust company, retained by the executor, to provide them with administrative services and advice.

Alternate Appointment
This is another executor, appointed in the will, in the event the first named executor is unwilling or unable to act.

Anything that you own, or is owed to you, that has a value in economic terms. Obvious examples would include a car, a house, RRSPs, an investment portfolio, business interests, etc.

Attribution Rules
These are rules under Canada’s Income Tax Act, the aim of which is to discourage certain income-splitting arrangements. These rules may cause income and losses, or capital gains or capital losses, to be taxed in the hands of the transferor, not the person holding the prorty. This will depend on the circumstances of the individual case. These rules are very complex. Even if you believe you have found a way to circumvent them, the government can rely upon the General Anti-Avoidance Regulation to reverse actions you’ve taken. It is essential to seek professional advice before implementing any income-splitting strategies.

The person receiving a benefit or gift under a will. Also, the person for whose benefit a trust is created. Can also be the recipient of benefits under a life insurance policy, an RRSP, or a pension plan.

A gift of personal property made pursuant to a will.

Capital gain
A capital gain is realized when an asset is sold and the proceeds of disposition, less selling expenses, is greater than the asset’s adjusted cost base. Such a gain will often result in tax consequences. Two-thirds of a capital gain is taxable, as a result of changes in the 2000 federal budget. Examples include the sale of stocks, bonds and real estate.

Capital loss
A capital loss is realized when the capital gain calculation (see above) results in a negative number. In other words, the adjusted cost base is greater than the proceeds of disposition less selling expenses. Two-thirds of a capital loss is an allowable capital loss, and can be used to offset taxable capital gains.

Capital property
A somewhat vague concept, not clearly defined in the law. Generally, though, capital property is property which, if sold, leads to a capital gain or a capital loss. A distinction should be made with property that is acquired to produce income.

Cash flow
Net income for a stated period, plus any non-cash deductions (e.g., depreciation, and amortization).

Certificate of Appointment
See Grant of Probate

A properly witnessed, written amendment to a will. The amendment could be a change or an addition. It is executed with all the formalities of the will it amends.

A person legally responsible for overseeing the care and affairs of a minor or an incompetent person, should both parents be dead. Custodianships are appointed by the Court. Also referred to as a guardian.

The person or party receiving a gift (from a donor). In the context of a power of attorney, the party to whom authority has been granted.

The person or party making a gift (to the donee). In the context of a power of attorney, the party who granted the authority.

The right, title, or interest a person has in any property. This would include such items as monies, personal property, business interests, real property, receivables, etc.

Estate planning
The process of arranging for the orderly conveyance, to your chosen beneficiaries, of all of your assets at the time of your death.

Estate trustee
The individual or firm named, by the deceased in a will, to carry out the provisions of such will.

Estate Trustee With a Will
See Executor/Executrix.

Estate Trustee Without a Will
See Administrator.

Executor / Executrix
The person (or persons) or institution appointed to administer an estate in accordance with the terms of a will.

Fair market value
The value of an asset sold by a willing vendor to a knowledgeable purchaser, neither party being under duress.

An individual or institution having a lawful duty to act for the benefit of another party.

Grant of Probate
A document, issued to an executor by the Court, that confirms the executor’s authority to administer a particular estate. Also referred to as Letters Probate. In Ontario, now referred to as Certificate of Appointment as Estate Trustee With a Will.

See Custodian.

A person legally entitled to receive property from a deceased through inheritance.

Holographic will
A will written completely in the testator’s (the person writing the will) hand, signed and dated, but not witnessed. May not be a valid will in some jurisdictions.

A technique whereby taxable income from an individual in a high tax bracket is diverted to an individual in a low tax bracket, with the net result being that total taxes for the two individuals are reduced.

Intangible personal property
Personal property that does not have a physical existence, such as cash in the bank, ownership of shares of a company, copyright, and patent. A certificate, document, etc. may represent the property, but that physical thing is not, itself, the property.

Inter Vivos Trust
A trust created during the lifetime of the settlor (the person creating the trust). Assets can be passed to the trust for the benefit of beneficiaries and in order to minimize probate expenses. Also referred to as a “living trust”. See also Trust.

A person who dies without a will is said to “die intestate”.

Irrevocable Trust
A trust which cannot be canceled by the person who created it (the settlor). See also Trust.

All those who are descended from a common ancestor. The term “children” is limited to the first generation.

Joint and last survivor
A feature of an annuity. Benefits are paid until the death of the second, surviving spouse, at which time they cease.

Joint tenancy
A form of joint ownership of tangible and intangible assets where the death of one of the joint owners results in the immediate transfer of ownership of the asset to the surviving joint owner(s). Also referred to as Joint Tenancy With Right of Survivorship, and abbreviated JTRS, or JTWRS.

Joint tenant
One of the tenants in a joint tenancy

Used in the province of Quebec, this is a person legally entitled to receive property from a deceased through inheritance.

Letters Probate
See Grant of Probate

Debts or obligations of a person or company. Usually distinguished between current liabilities, which are due in less than one year, and long-term liabilities.

In the province of Quebec, the person who administers the succession of the deceased’s patrimony. It is analogous to the executor in common law provinces.

Living Trust
See Inter-vivos Trust. See also Trust.

The person or persons to whom authority is granted under a mandate. Used in the province of Quebec. Equates to the donee in common law provinces.

The form of power of attorney used in the province of Quebec.

The person who grants authority to the mandatary. Used in the province of Quebec. Equates to the donor in common law provinces.

This term is used exclusively in Quebec. It is the total of the economic rights and obligations of a person. A person’s patrimony begins when they are born, and lasts for their life. A person has only one patrimony.

Personal net worth (PNW)
A person’s total assets, less total liabilities. This is their equity.

Personal property
See Tangible personal property and Intangible personal property.

Personal representative
See Administrator

Power of attorney
A legal document that gives one person (the donee) authority to act on behalf of the person granting the power of attorney (the donor). See Power of attorney for property and power of attorney for personal care. Referred to as a mandate in Quebec.

Power of attorney for personal care
Also referred to as a health care power of attorney. The donee has authority to make decisions regarding the donor’s health and personal care issues. This power of attorney does not extend to decisions regarding property.

Power of attorney for property
This power of attorney applies to personal, financial, and business transactions (signing cheques, undertaking contracts, etc.). If “enduring”, the donee may continue to exercise authority during the subsequent incapacity of the donor.

Probate of will
The process, in the appropriate court, that certifies a will to be the valid, last will of the deceased. It also confirms the executor(s) named therein.

The individual who establishes a trust.

A person’s succession begins with their death, at the location where they were last domiciled. It is the process of conveying their patrimony (property) to their heirs and legatees. The term is peculiar to the province of Quebec.

Tangible personal property
This refers to personal property that has a physical existence. This includes your home and household goods, car, clothes, boat, artwork, etc.

Taxable capital gain
That portion of a capital gain that is subject to taxation. Currently it is 66.67%.

Tenant in Common
A form of joint ownership in which two or more persons have an interest in the same property. Upon the death of a tenant-in-common, ownership of the deceased’s interest transfers to that person’s estate, not to the other owner(s).

Testamentary Trust
A trust established by a will, that only takes effect after death. The will would normally specify what assets the trust will hold and for whose benefit the trust will function. The trustee, the person responsible for the administration of the trust, would also be identified in the will. See Trust.

Refers to a person who has died leaving a valid will.

Testator / Testatrix
The individual who makes a will.

A legal instrument established to hold property, such property to be managed by the trustee for the benefit of a third party or parties. One person (the settlor) transfers legal title for certain property to the trustee to manage for the benefit of a person or institution (the beneficiaries).

A person or a trust company responsible for taking legal title to the settled property, and who has the fiduciary duty to follow the terms of the trust. Settlors may name joint or co-trustees, who exercise equal authority.

A legal document signed by the person making it (the testator), and witnessed by two individuals, that takes effect on the testator’s death, and directs survivors regarding the disposition of the deceased’s assets.