October 1, 2021
When we first start to think about estate planning many things may come to mind - life insurance policies, instructions for funeral arrangements and hopefully, making a Will.
In this article we want to give you the vocabulary to begin and navigate the estate planning process. We will cover the definition of 6 commonly used words/phrases that you will see while estate planning. With this knowledge, we hope we can make the process easier and less intimidating. This is part 1 in a 3 part series.
Estate planning is thinking through and making specific, documented plans for the future.
It involves different processes and documents to cover various situations. It is the process of assessing and putting legally enforceable provisions in place for others to manage your affairs (personal and business) in the event of your death or incapacitation. So, this process handles what should happen if you ever become sick, seriously injured or mentally incapacitated and eventually, when you die. One of the easiest steps in estate planning is creating a Will.
Sometimes a Will is referred to as a " last Will and Testament". This stems from the old way in which non-land based assets were passed from one person to another. However today a Will refers to a document that covers both land based and non land based assets.
This is a document that becomes effective upon a person's death. This document outlines the deceased person's wishes relating to how their assets should be distributed. In layman's terms, who should get what, and when they should get it. It gives the executors the legal right to carry out various functions on the deceased person's behalf (such as the sale of property, or the distribution of jewellery, stocks or money etc.)
A Will can be as detailed as the person creating it wishes it to be. Some people outline the details of their funeral arrangements in their Wills. The details can be as specific as the colour shirt they wish to be buried in. There are some formalities or legal requirements that a Will need to have in order to be legally enforceable but those will be explored in a subsequent article.
This is the person who is making the Will. This is the person who owns the assets that the Will speaks about.
A Will only becomes effective after a person's death. A testator must have legal ownership or other legal rights to gift any assets to someone else under their Will. If the they don't own it they cant give it away.
An executor is the person or entity, that carries out the wishes of the testator. These persons MUST be clearly named and identified in the Will.
They are responsible for taking the Will to the court and getting it processed. An Executor is the person who conducts business on the estate's behalf. For example, the executor will now be legally able to transfer property into a beneficiary's name or to authorise a bank to transfer funds from the testator's bank account to a beneficiary' bank account. Executors are also legally entitled to a fee for their services that can range from 3%-5% of the total value of the estate. This is also the person who interacts with creditors and settles any outstanding debts that are still payable after the testator's death. They will also be the person responsible for hiring an attorney on behalf of the estate if the need arises.
This is the collective noun used to refer to all the possessions owned by a person, especially at the time of their death. This means both land and non land based assets.
We usually associate the word "estate" with a large piece of property owned by the wealthy. However, most people have an estate. This can include (but is not limited to):
These phrases are best defined by a comparison. Property in regular speech tends to refer to houses or land. But in law, property means anything that can be legally owned by a person or company.
Is classified as land, houses, apartments, condominiums, or other buildings that are permanent structure.
Is everything else that you can own that is not related to land or buildings. You can look at number 4 in this list for a few examples and try to think of other items that may fall into the personal property category as well.
This term refers to a physical person (like a relative or friend) or a legal person ( like an organization, charity, church or company) who receives something under a Will.
Here's an example: Marlon is a the father of two children, Keisha and Daniel. They are 23 and 21 respectively. In his Will he states that upon his death his daughter, Keisha, is to receive all the funds in his NCB account and Daniel, his son, is to receive all the funds in his BNS account.
Both Keisha and Daniel would be considered beneficiaries under Marlon's will. Beneficiaries can be adults or children (that is persons under 18). However there are special considerations that should be made for children. This will be discussed in future articles. Currently there is no limit to the number of beneficiaries or type of person who can be a beneficiary under a Will. Meaning that both both family and non family members can be named as beneficiaries.
In Part 2, we will introduce the terms: witnesses, residuary estate and several others.
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