The legatees section is one of the most important in your last will and testament. It outlines which individual(s) or organization(s) you would like to receive your assets after you’re gone, whether that’s money, property, or sentimental assets.
In this article we cover the basics around naming legatees and passing on legacies in your will.
What Is A Legatee?
The formal definition of a legatee is someone who is entitled to receive assets from an estate. In the financial world, a legatee typically refers to someone eligible to receive distributions from a trust, will or life insurance policy.
In Quebec, the people or organizations you leave your assets and property to are called legatees (in the rest of Canada, they’re called beneficiaries). You may also hear legatees referred to by the terms “heirs” or “successors.”
The legatee or legatees outlined in your will are the individuals or organizations whom you choose to pass on your property or belongings to when you are no longer living.
When and Why Would I Need To Name Legatees?
When making your will, you will be asked to name a legatee or legatees regardless of the estimated value of your assets and belongings. This is your chance to distribute assets, cash, or legacies (gifts) that you would like to pass on to important individuals, charities or organizations in your life. Note that a legatee does not have to accept a gift arising either by way of a will or intestacy (dying without a will) – they are able to refuse it.
Passing On Particular Legacies
Particular legacies are identifiable pieces of property or monetary amounts gifted to individuals upon your passing, sometimes called specific gifts or bequests. For example gifting a car to a sibling, or $5,000 to a charity. These legacies are not included in your residue (everything that’s left after debts/taxes/estate expenses are paid, and particular legacies are distributed).
Before outlining particular legacies in your will, we recommend going around your home and creating a list of specific items and that you’d like to include in the will. In doing so, you will avoid having to think through all of the items on the spot, which can be overwhelming.
Some common legacies include:
- Real estate: For example your primary residence, a summer home, a cottage
- Lump-sum cash legacies
- Jewelry, art, clothing, cars
- Heirlooms or mementos with special meaning (like a book of recipes, or photographs)
- Leaving charitable donations - Charitable donations can be given in two ways. First, you can leave a lump-sum cash amount to an organization of your choice. These legacies are given separately when you pass away, and are not included in your residue. Instead, or in addition to this method, you may leave a percentage of your residue (remaining assets) to a charity. The organization will receive the cash value of the distribution you gave them from your overall estate.
Appointing legatees for registered plans or pensions
In Quebec there is no legislation that permits assigning a named beneficiary directly on registered savings plans or pensions - this means that if you have an RRSP, TFSA, or pension, you must leave it to someone as a particular legacy in your will if you want it to go directly to someone specific (including to your spouse).
Willful allows you to do this in the particular legacy section of our platform.
Note that if you leave a registered account or pension to your spouse, and they elect not to take a spousal rollover of the account and instead take the cash, typically the estate would be responsible for paying the taxes. In Willful wills, there is a clause that dictates that the spouse will be responsible for paying the taxes. For example: Mary leaves Jim the contents of her RRSP in her Willful will, totalling $100,000. When Mary passes away, Jim elects to take the cash instead of using the spousal rollover to add that $100,000 to his own RRSP. By taking the cash, Jim triggers tax consequences, and he is responsible for paying the tax bill (it will not form part of the succession).
Beneficiary designations on a life insurance policy may be made directly on the policy, and the proceeds pass outside the will. If you don’t make a beneficiary designation directly on a life insurance policy, the estate becomes the beneficiary by default.
Finally, after particular legacies (including any charitable donations), you should determine who (or which organization) will receive your residue. The legatees for your residual estate are called ‘universal legatees’. Your residue includes all personal property of value not otherwise distributed. It can be thought of as an umbrella that covers your every asset: from real estate you may own, to a gold watch, to an amount of money in a bank account.
Think carefully about your universal legatees, as your residue often forms the largest financial component of an estate. It is very important that there is a clause in your will dealing with which one or more legatees the “residue” of your estate would go to, because if not, whatever assets comprise the residue will be distributed according to the laws of intestacy (they will be distributed according to a provincial formula).
On Willful, we help you name your universal legatees, and we also help you build in layers of backups in case a legatee is unable or unwilling to accept a gift.
Who Can I Name As A Legatee?
Many Canadians choose family members or loved ones; however, a legatee can also be a charity or organization that is meaningful to you. Below we have outlined a list of individuals that people commonly choose as their legatee or legatees.
- Your spouse: Married couples often choose each other as the primary legatee of each others’ estates. Read more about how marital status affects your will in Quebec here.
- Common-law spouses: Similarly, common-law spouses often choose each other as the primary legatees of their wills. Common-law spouses do not automatically have the same property rights under the law as married couples, so it’s even more important that this desire be recorded. In Quebec common-law spouses have no rights to inherit when their spouse passes away.
- Your children: A child or children born to you - including those from a prior marriage or legally adopted by you - can be named as your legatee. Although by law stepchildren are not legally considered your children, you can, of course, leave property to anyone you desire including your stepchildren.
- A minor: You can leave legacies, assets, and property to minors in your will, but keep in mind that the minor will not be able to receive or control any property. Please see the section on minor legatees and their tutors.
- A charity or organization: Choosing a charity or organization to leave some or all of your assets is another popular option. It will be the responsibility of your liquidator to carry out your wishes accordingly.
- Other legatees: Friends, neighbours, loved ones, someone who showed you memorable acts of kindness— anyone important to you can be named a legatee in your will.
How Do I Name My Legatees?
For clarity, it is recommended that you use first, middle and last names for people you name as legatees. Also, it is best to use the formal name of any Charity or Foundation you wish to leave funds to, and to include the Charity Registration number (CRA registration number for Canadian charities) – Willful makes it easy to find that information via CanadaHelps.
After particular legacies, you can choose one primary legatee and leave your entire residue to them; or you can divide your remaining assets among multiple legatees in your will, leaving them each a portion. You can split your residue equally, for example: 50% to each child, or unequally, for example: 30% to your sibling and 70% to your parent.
Can I Name No Legatees In My Will?
Choosing a legatee is not legally required in your last will and testament; however, it is not an optional section on the Willful application. By creating a will, you are helping your family, friends, and liquidator navigate difficult decisions after you pass away. Dividing your assets is a crucial part of that, and making decisions ahead of time will avoid conflict for them later.
If you do not name any legatees in your will, provincial law will determine who receives the property in your estate, and it may not be distributed as you would have intended.
Can I Leave Cash Or Property To A Charity?
Willful provides a list of Canadian registered charities you may want to leave a gift to, and also allows you to enter your favourite organization if it’s not on our list. If you decide to name another organization or charity, we recommend finding their formal name and business registration number (CRA number) to include in your will. An excellent resource for finding information on charities, and to donate while still alive is CanadaHelps.
When you pass away, it will be the responsibility of your liquidator to distribute any assets or legacies to the charity or organization of your choice.
One Or More Of My Legatees Are Minors - Should I Leave Money To Their Tutors Too?
You can leave legacies, assets, and property to minors in your will, but keep in mind that the minor will not be able to receive or control any property immediately. Their share will be held in trust by the estate trustee (on Willful, your trustee is also your liquidator) until they reach the age of majority, or another age detailed in the will. Prior to that time, their legal tutors will be able to request access to funds for the maintenance, care, and education of the minor, at the discretion of the estate trustee.
On Willful, you may delay the minor’s receipt of their inheritance to the age of majority (18 in Quebec), twenty-one, or twenty-five. Note that even where you specify an age other than majority, there is a rule that allows a person who is sui juris (meaning mentally capable and over the age of majority) and is solely interested in property, which has vested in him or her absolutely, to demand a conveyance or transfer of the property having reached the age of majority.
The estate trustee may have duties such as dealing with investments for the minor, collecting debts, paying bills, or distributing funds to their guardians.
What Happens If A Legatee Dies Before Me?
If one of your legatees predeceases you, in the Willful platform you can choose for the estate to go directly to their children, or the estate can be divided among your other named legatees. Willful is also adding the ability to appoint specific backups for each legatee in case one passes away before you (you can also update your will if one of your legatees passes away by removing them and adding a new legatee).
It is important to do this, because otherwise, the gift will lapse and be added to the residue, and if there is no legatee for the residue to flow to, the residue will default to intestacy laws (which means it will be distributed according to Quebec law). Splitting the benefit by designating two or more legatees can reduce this risk. Another option would be to create a contingent legatee (think of it like an ultimate backup legatee), which you can also do in the Willful platform.
It’s important to note that Willful documents contain a No Representation clause, which means that no relative of a legatee has a right to receive a gift in your will unless you have expressly outlined those wishes. It is possible to create a will via another method that does not contain such a clause, which would mean if no beneficiary in the will was able to receive a gift, it would flow to the descendants of those beneficiaries.
Example: John leaves everything to his siblings Jane and Jack in his will, and splits their share 50/50. In the event one passes away first, he has stipulated that their share should go to the other person. When John passes away, Jane and Jack have both predeceased him, and are unable to receive the gift. Because he has not stipulated that Jane and Jack’s children should receive their share, John’s estate will be distributed according to provincial intestacy rules.
What Is A Contingent Legatee?
A contingent legatee is a person or charity you designate to receive your estate in case all of your primary legatees are unable to inherit your estate - think of it as the ultimate backup legatee. Willful allows you to appoint as many contingent legatees as you’d like.
An example of this would be if you named your spouse and child as your legatees, and the three of you were in an accident and passed away together. In that scenario, your contingent legatee would receive the entire estate. But if you passed away while your spouse and child were still alive, they would receive your estate as planned, and the contingent legatee would receive nothing.
Life is full of twists and turns and there are a lot of tough scenarios to imagine. Regularly review your estate planning documents to make sure all those who are named are still alive to avoid any future confusion.
Other Common Questions About Legatees In Quebec:
I want to fully exclude a spouse, child, or another dependent from my will, can I still use Willful?
You can choose to exclude a spouse, child or another dependent from your will - disinheritance can be triggered by a specific event or strained relationships or estrangement.
Provincial law has upheld that testators (i.e. you – the person making the will) may owe a financial obligation to your spouse, children, and other dependents such as parents and grandparents, or brothers and sisters of the deceased. If you plan on excluding these persons entirely from your will, you should seek independent legal advice.
Is There Ever A Case Where Legatees Don’t Receive Money Or Assets?
In Quebec, your heirs don’t inherit your debts (though legatees can become liable for the debts of an estate if there are errors made during the estate administration process). Your estate is responsible for paying off your debts when you pass away – so if you’ve assigned three legatees, and your debts are more than the total value of your estate, there’s a risk they won’t receive anything.
Abatement refers to what happens when the estate assets don’t cover the debts owed by you, and how that proportionately affects the amounts or quantities of legacies. Debts must be paid before legatees have entitlement to legacies. If there are insufficient funds to pay creditors, creditors are paid in order of priority. If there are sufficient funds to pay creditors but not to satisfy the legacies in full, then some of the legacies will have to abate (be paid out proportionally). The primary fund to pay debts is the residue of the estate, then you will look to the general legacies, and then finally to particular legacies.
The abatement of legacies in each category will occur in equal proportions so that no single legatee will be made to bear the full burden of the abatement, although your specifically expressed intentions always override the rules of abatement.
What If The Gift Is No Longer In Existence At The Time Of Death?
Ademption occurs when property that is the subject matter of a gift in a will, which was in existence at the date of the will, is no longer part of your estate at the time of death – for example maybe you left your brother a car in your will, but you sold it prior to passing away. The gift is said to adeem, and your legatee gets nothing.
What Are Conditional Legacies?
There are a number of types of conditions that can be imposed on legacies – see below for an explanation of what these conditions are. While Willful does not offer the option to create conditional legacies at the moment, it is something that we are considering for the future.
- Condition precedent: refers to a requirement that has to be satisfied or fulfilled before the legatee will be entitled to receive the gift (for example, someone has to graduate university before receiving their gift)
- Condition subsequent: refers to a fact or circumstance that if arising after the receipt of the gift by the legatee could cause the forfeiture of the gift (for example, taking the gift back because the legatee didn’t go to medical school) *this is always unenforceable because you cannot give something to someone and then purport to take it back at some point if something changes
- Marriage: regardless of whether the condition is precedent or subsequent, you can’t leave a gift that’s conditional on the person’s marriage. Partial restriction on marriage, including restrictions on remarrying, marrying a specific person, or marrying without consent, are all considered valid provided that they are considered reasonable in the circumstances