Creating a Will: Essential Steps and Key Considerations

Creating a will is one of the most important steps you can take to ensure that your assets are distributed according to your wishes after your passing. This document serves as a legal guide for your loved ones and provides clear instructions on how you want your estate handled. Here’s an expanded look at how to create a will, the critical role of executors, and an in-depth overview of the probate process.

1. How To Create a Will

Creating a will involves several critical steps to ensure it is legally binding and clearly communicates your wishes.

Step 3: Appoint an Executor

Start by making a comprehensive list of all your assets. This includes real estate, bank accounts, investments, retirement accounts, personal property like jewelry or vehicles, and any business interests. Also, list all your liabilities, such as mortgages, loans, and credit card debts. Knowing what you own and owe is crucial for determining how your assets will be distributed and ensuring your debts are settled.

Step 1: Identify Your Assets and Liabilities

Decide who will inherit your assets. Beneficiaries can include family members, friends, charitable organizations, or other entities. Be specific about what each beneficiary will receive. For example, instead of broadly stating "all my possessions," specify items or percentages of your estate to avoid confusion or disputes among heirs.

Step 2: Choose Your Beneficiaries

The executor of your will is responsible for managing your estate, settling debts, and distributing assets according to your wishes. Choose someone you trust implicitly—often a close family member or friend. It's wise to discuss your decision with the person beforehand to ensure they are willing and able to take on this responsibility. You may also want to name an alternate executor in case your first choice is unable or unwilling to serve.

Step 4: Draft Your Will

You can draft your will yourself, but using a lawyer is highly recommended to ensure all legal requirements are met. A lawyer can provide advice tailored to your specific circumstances and help prevent any ambiguities or errors that could cause disputes later on. Your will should clearly state your wishes, including guardianship for minor children if applicable, specific bequests, and instructions for handling the residue of your estate.

Step 5: Execute Your Will Properly

For your will to be legally valid, it must be signed in the presence of at least two witnesses who are not beneficiaries. This process is crucial to avoid any conflicts of interest and to ensure the will’s legality. The witnesses must also sign the will in your presence, and depending on your jurisdiction, additional formalities may be required. If you have a lawyer draft your will, the lawyer will often ensure that the will is executed properly.

Step 6: Safely Store Your Will

Once your will is completed and signed, store it in a safe and secure place. Inform your executor and close family members where the will is kept so they can access it when needed. Remember that you can't inform your executor or family members the location of the will once you have passed on. Some people choose to store their will with their lawyer, while others might use a safe deposit box or a fireproof safe at home.

2. The Role of Executors

The executor plays a vital role in the administration of your estate and is responsible for ensuring your wishes, as outlined in your will, are carried out properly.

Responsibilities of an Executor:

• Locating and Securing Assets: The executor must identify all assets and protect them until they are distributed. This includes finding all financial accounts, real estate, personal property, and any other assets listed in the will. They must also ensure these assets are kept safe, insured, and maintained throughout the probate process.

• Distributing Assets to Beneficiaries: After debts and taxes have been settled, the executor distributes the remaining assets to the beneficiaries as specified in the will. This process can involve transferring titles, selling property, or making direct distributions of cash or assets.

• Paying Debts and Taxes: One of the executor’s primary duties is to pay any outstanding debts and taxes owed by the estate. This may involve liquidating assets or using funds from the estate’s bank accounts. The executor must also file the deceased's final income tax return and possibly estate tax returns, depending on the estate's size and jurisdiction.

• Handling Legal and Financial Matters: The executor may need to handle various legal and financial matters, such as dealing with banks, investment firms, government agencies, and possibly even courts. They are also responsible for keeping accurate records of all transactions and providing these records to beneficiaries if requested.

Choosing the Right Executor:

Selecting the right executor is critical for the smooth administration of your estate. Consider choosing someone who is:

• Trustworthy and reliable.

• Organized and detail-oriented.

• Capable of managing complex financial and legal matters.

• Emotionally resilient, as dealing with an estate can be stressful and challenging.

  
  

It’s also a good idea to name an alternate executor in case your first choice cannot serve. Additionally, if your estate is particularly large or complex, consider appointing a professional executor, such as a lawyer or a trust company.

3. Understanding the Probate Process

The probate process is the legal procedure through which a deceased person’s will is validated, and their estate is administered. The probate court oversees this process to ensure the will is authentic and the deceased's assets are distributed according to their wishes.

Steps Involved in Probate:

• Filing the Will with the Court: The first step in the probate process is for the executor to file the will, along with a petition to open probate, with the appropriate probate court. This is usually done in the jurisdiction where the deceased lived or owned property.

• Notifying Beneficiaries and Creditors: The executor is required to notify all beneficiaries named in the will as well as any creditors who may have claims against the estate. This notification process involves sending formal notices and, in some jurisdictions, publishing a notice in local newspapers.

• Inventory and Appraisal of Estate Assets: The executor must create a detailed inventory of the estate’s assets and, if necessary, have them appraised to determine their value. This step ensures that all property is accounted for and properly valued for distribution, debt payment, and tax purposes.

• Paying Debts and Taxes: Before distributing assets to beneficiaries, the executor must pay any outstanding debts and taxes owed by the estate. This includes settling any claims from creditors, paying funeral expenses, and handling any tax obligations. If the estate lacks sufficient funds (cash) to cover these debts, the executor may need to sell estate assets to generate the necessary funds.

• Distributing Assets: Once all debts and taxes have been paid, the executor can distribute the remaining assets to the beneficiaries according to the will. This distribution must be done in compliance with the instructions outlined in the will and any applicable laws.

• Closing the Estate: After all assets have been distributed, and all financial matters have been settled, the executor must file a final account with the probate court. This account details all actions taken during the probate process, including all receipts, disbursements, and distributions. If the court approves the final account, the probate process is complete, and the estate is officially closed.

Circumstances That May Not Require Probate

In Alberta, probate may not be required in certain circumstances, depending on the nature and ownership of the assets in the deceased person’s estate. Here are some situations where probate might not be necessary:

• Jointly Owned Property: If the deceased person owned property jointly with another person, such as a spouse, with the right of survivorship, the property typically passes directly to the surviving owner without the need for probate. For example, Spouse A and Spouse B own their house as joint tenants. Spouse A passes away, and the house passes directly to Spouse B. The house does not form any part of Spouse A's estate.
  

• Beneficiary Designations: Assets with designated beneficiaries, such as life insurance policies, Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), and pensions, can often be transferred directly to the named beneficiaries without requiring probate. This is because these assets are not part of the deceased's estate but instead pass directly to the beneficiary upon death.

• Small Estates: In some cases, if the estate is small and does not involve real estate or significant assets, financial institutions and other entities may release funds without probate. However, the definition of a "small estate" and the thresholds for this can vary, so it is important to check with each institution involved.

Even when probate is not strictly required, it can sometimes still be beneficial to obtain it. Probate provides a legal acknowledgment of the validity of the will and the authority of the executor, which can be useful in dealing with banks, financial institutions, and other parties. The probate process can sometimes lead to disputes among beneficiaries or with creditors. Common disputes include challenges to the validity of the will, disagreements over the interpretation of the will’s terms, and disputes regarding the valuation or distribution of assets. If disputes arise, they may need to be resolved through mediation or, in more contentious cases, litigation in court.

Conclusion

Creating a will, appointing a capable executor, and understanding the probate process are essential steps in estate planning. These steps help ensure your wishes are fulfilled and provide a clear roadmap for your loved ones during a challenging time. For more personalized advice and assistance with estate planning, contact Stem Law Office today. Our lawyer is here to guide you every step of the way.