When an ‘attorney’ is not a lawyer
And other mystifying estate-planning terminology explained
This blog is a nod to all those who think they are appointing their lawyer/attorney as their “attorney” for property. This isn’t precisely the case, and it comes down to understanding some of the basic legal terminology involved in estate planning. So we’ve put together this helpful resource of important legal terms in the Ontario estate and trust planning context. We hope this is a helpful tool or refresher for our readers and will make these legal terms less confusing.
Attorney (for personal care or for property). A substitute decision-maker appointed under a Power of Attorney for Personal Care or Continuing Power of Attorney for Property. An attorney for personal care can make decisions about your health care, housing, and other aspects of your personal life such as meals and clothing. An attorney for property can make decisions about your financial affairs, including, for example, paying your bills, maintaining your house, and managing your investments. The term “Attorney” is another term for “agent” and does not mean a lawyer in this context.
Beneficiary. A person who inherits property or an interest in property upon the testator’s death or benefits under the terms of an inter vivos trust. A beneficiary can also be designated on life insurance policies and registered plans, such as Tax-Free Savings Accounts, Registered Retirement Savings Plans, and Registered Retirement Income Funds, to receive proceeds on death.
Codicil. A legal document, created by conforming to certain legislated rules, which amends a Will.
Continuing Power of Attorney for Property. A legal document, created by conforming to certain legislated rules, by which a person appoints another person (an “attorney for property”) to make decisions on their behalf about their property (except making a Will), which will continue should the person become incapable.
Decision-Making Responsibility (with respect to a minor child) and Guardian of the Property (of the minor child). A person can be appointed by a testator’s Will or by court order to have decision-making responsibility with respect to a minor child (formerly referred to as custody) after the death of the testator, including to make decisions about a child’s well-being, including with respect to health care, education, culture, language, religion and spirituality, and significant extra-curricular activities. A guardian of the property of a child has charge of and is responsible for the care and management of the property of the child.
Estate Administration Tax. Ontario’s Estate Administration Tax (formerly probate fees) is charged on the value of the estate of a deceased person if a probate certificate or certificate of appointment is applied for and is issued. There is no Estate Administration Tax payable on the first $50,000, and anything above that will be calculated at a rate of 1.5% ($15,000 per million).
Executor. The person appointed under a deceased’s Will who administers a person’s estate upon their death.
Inter Vivos Trust. A trust created while a person is alive. Common examples include a Spouse or Partner Trust, Alter Ego or Joint Partner Trust, and a family trust used for income-splitting purposes.
Power of Attorney for Personal Care. A legal document, created by conforming to certain legislated rules, by which a person appoints another person (an “attorney for personal care”) to make personal care decisions on their behalf in the event they are no longer mentally capable of making such decisions for themselves.
Primary Will. A legal document, which is prepared together with a Secondary Will, to express one Will and separate the estate assets into two groups. Assets owned personally by the testator and held in his or her name are typically dealt with under the Primary Will, which generally needs to be probated in order to effect the transfer or disposition of the assets falling under the Primary Will. This generally will include bank and investment accounts, real estate (subject to exceptions), and marketable securities.
Probate. The commonly used term for the process to have the Court confirm the authority of a person named as the executor in the deceased’s Will and formally approve that the deceased’s Will is their last valid Will, or, in the case where the deceased died without a Will, to grant a person the authority to act as the estate trustee of an estate. At the time an application for probate is made, Estate Administration Tax is paid.
Secondary Will. A legal document, which is prepared together with a Primary Will, to express one Will and separate the estate assets into two groups. The assets on which no probate fees will likely be payable are governed by the Secondary Will. This generally will include shares held in private corporations, any interest in a partnership, joint venture or other legal entity, any outstanding non-registered family loans, certain real estate, and personal effects, including art and jewellery.
Settlor. A person who creates (or settles) an inter vivos trust.
Testamentary Trust. A trust that is created under the terms of a person’s Will and is only effective after their death.
Testator. A person who creates a Will for himself or herself.
Trustee. A person who holds title to property on trust for the benefit of other persons or for certain specific purposes.
Will. A legal document, created by conforming to certain legislated rules, which comes into effect on death, by which a person provides for who administers their estate and who is to benefit from their estate.
Marly Peikes is a partner at O’Sullivan Estate Lawyers. Her practice includes all aspects of estate and trust planning, estate administration and estate dispute resolution. Marly focuses on assisting clients in organizing their financial affairs during their lifetime through creative estate planning strategies which balance each client’s unique needs with corresponding estate administration tax and income tax considerations, all while ensuring that each client’s objectives are achieved and optimized. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.
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Content © 2023 by O’Sullivan Estate Lawyers LLP. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited. Used with permission.
This article is the opinion of the writer and is meant to be general in nature, limited to the law of Ontario, Canada. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.