Wills And Estates 101: Keeping Your Legal Terms Straight - Part 2

Back in 2023, my colleague, Marly Peikes, wrote a blog demystifying some common legal terms used in Ontario estate and trust planning. While an entire textbook could be filled with estate-related legal jargon, for now, we want to provide our readers with greater clarity on even more commonly used terms in the estate and trust realm, with the goal of making this legal landscape a little less intimidating.

• Fiduciary Duty – The legal obligation of an estate trustee to act in the best interests of the beneficiaries. These duties include: exercising ordinary care and prudence in handling the estate's assets; following the directions contained in the will; treating all beneficiaries impartially and with an even hand unless otherwise directed by the will; not delegating their authority to others; not acting in a real or perceived conflict of interest; keeping proper records and accounts; and not unreasonably delaying the estate's administration.
  
• Holograph Will – A will written entirely in the testator's own handwriting and signed by them at the end of the document. In Ontario, holograph wills do not require witnesses in order to be validly executed. Typewritten wills do not qualify as holographic.
  
• Hotchpot – A clause in a will or trust used to account for gifts or loans made to a beneficiary during a testator's lifetime, often used to equalize inheritance among children. When a hotchpot clause is used, a beneficiary's entitlement to an estate is reduced by the amount that the beneficiary received via a gift or advance prior to the testator's death.
  
• Intestate/Intestacy – Occurs when a person dies without a valid will. In Ontario, on an intestacy, assets are distributed according to Part II of the Succession Law Reform Act to the deceased person's next of kin in the prescribed order.
  
• Issue – A person's direct lineal descendants of all generations. It includes children, grandchildren, great-grandchildren, and so on. In Ontario, "issue" does not includestepchildren whohave not been legally adopted.
  
• Bequests, Legacies and Devises – All of these terms refer broadly to a gift left to a beneficiary, such as individuals, organizations or charities, under a will, with each having slight nuances. A "bequest" is a gift of personal property, such as jewelry, vehicles, or household items. A "legacy" more specifically refers to a gift of money. A "devise" is a gift of real property. The former two are often used interchangeably to refer generally to a gift of cash or personal property, while "devise" is used less frequently.
  
• Mutatis mutandis – A Latin term commonly translated to "with the appropriate substitutions". It is used to apply existing rules or clauses in a will or trust to a new situation, allowing for minor adjustments in detail without needing to rewrite the entire provision.
  
• Per stirpes –A Latin term meaning "by branch" or "by roots", which provides for the distribution of an inheritance based on a family branch, rather than by individual persons. It is used to ensure that if a beneficiary dies before a testator, their share of the inheritance is passed down to their descendants in equal shares. For example, A leaves the residue of his estate equally to his issue in equal sharesper stirpes. A has three children, two who survive him, and one, B, who predeceases him. If B dies before A, then on A's death, B's 1/3 share of A's estate is split equally among B's children."
  
• Residue – The assets remaining in a deceased's estate after all debts and liabilities have been paid (including funeral expenses, taxes, administration costs, and specific bequests). The residue is addressed in a will by the residuary clause, which specifies who is to receive the remaining assets.
  
• Vesting – The moment a beneficiary's interest in an asset becomes absolute and legally enforceable. The law presumes that a testator intends for interests to vest at his or her death, or at the earliest moment thereafter.
  

For Further Reading

Wills and Estates 101: Keeping Your Legal Terms Straight – Part 1 – July 19, 2023

Demystifying Roles and Responsibilities of Fiduciaries – October 1, 2024

The Gift That Keeps Giving: Making Charitable Gifts Under Your Will – October 5, 2021

Considerations in Giving to Your Children – June 9, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.