1. What Is a Beneficiary?

2. What Does Alberta Law Say?

3. How to Choose Beneficiaries

4. Should You Divide Your Estate Equally?

5. Should You Name Alternate Beneficiaries?

6. Common Mistakes

7. Costs and Considerations

8. When Should You Speak With an Estate Lawyer?

9. How Bridgestone Law Can Help

   
   

Introduction

One of the most personal decisions you will make when preparing your will is deciding who should receive your estate. For some people, the choice is straightforward. Others have blended families, adult children, grandchildren, close friends, charitable organizations, or business interests that make the decision considerably more complex. Questions often arise about whether gifts should be divided equally, whether minor children should inherit directly, or how to avoid family conflict after death.

In Alberta, you generally have the freedom to decide who will inherit your estate, provided you have the legal capacity to make a will and your decisions comply with applicable law.

Your beneficiaries can include family members, friends, charities, or almost anyone else you choose. However, selecting beneficiaries involves more than simply writing down names. Careful consideration should be given to your family circumstances, the types of assets you own, tax implications, and how your estate will be administered.

Thoughtful planning today can help ensure your wishes are carried out while reducing the likelihood of misunderstandings or disputes after your death.

What Is a Beneficiary?

A beneficiary is a person or organization that receives property from your estate under the terms of your will.

A beneficiary may receive:

• a specific sum of money;

• real estate;

• investments;

• personal belongings;

• business interests;

• charitable gifts; or

• a share of whatever remains in the estate after debts, taxes, and administration expenses have been paid.

Not every beneficiary receives the same type of gift. Some inherit a particular asset, while others receive a percentage of the remaining estate.

What Does Alberta Law Say?

In Alberta, the Wills and Succession Act governs the legal requirements for making a valid will and how estates are administered after death.

Generally speaking, a person making a will (known as the testator) has broad freedom to determine who will inherit their estate. However, there are circumstances where Alberta law may affect how an estate is distributed.

For example, legislation may provide certain rights or remedies for family members or dependants in particular situations.

Choosing beneficiaries thoughtfully and ensuring your will is properly drafted helps reduce uncertainty and improves the likelihood that your wishes will be carried out as intended.

How to Choose Beneficiaries

Step 1: Consider the People Most Important to You

Begin by thinking about who you wish to benefit from your estate.

Many people choose:

• a spouse or adult interdependent partner;

• children;

• grandchildren;

• siblings;

• nieces and nephews;

• close friends; or

• charitable organizations.

There is no requirement that every family member receive an inheritance, but you should carefully consider your decisions and obtain legal advice if your circumstances are likely to create disputes.

Step 2: Decide What Each Person Should Receive

After identifying your beneficiaries, decide how your estate should be distributed.

You may choose to:

• divide everything equally;

• leave different percentages to different beneficiaries;

• give specific assets to particular individuals;

• make charitable gifts; or

• leave the residue of your estate to one or more beneficiaries.

The approach that is appropriate for one family may not be suitable for another.

Step 3: Think About Minor Children

Children under the age of 18 generally cannot directly manage a significant inheritance.

If you intend to leave assets to minor children, your will should address how those assets will be managed until they are old enough to receive them.

Depending on your circumstances, this may involve creating a testamentary trust or appointing someone to manage the inheritance until the child reaches the age specified in the will.

Careful planning can help ensure that a child's inheritance is protected and used for their benefit.

Step 4: Consider Your Assets

Different assets may require different planning.

For example:

• real estate;

• businesses;

• family cottages;

• investment accounts;

• farms;

• corporations; and

• valuable personal property

may not be easily divided equally among beneficiaries.

Some assets may also pass outside your will through joint ownership or beneficiary designations.

Understanding how your assets will be distributed is an important part of choosing the appropriate beneficiaries.

Step 5: Review Your Will Regularly

Choosing beneficiaries is not necessarily a one-time decision.

Your will should be reviewed after significant life events such as:

• marriage;

• divorce;

• entering or ending an adult interdependent partnership;

• the birth or adoption of children or grandchildren;

• the death of a beneficiary or executor;

• purchasing or selling significant assets;

• starting or selling a business; or

• major changes in your financial circumstances.

Regular reviews help ensure your will continues to reflect your wishes.

Should You Divide Your Estate Equally?

There is no legal requirement that every beneficiary receive an equal share of your estate.

Some people divide everything equally among their children because they believe it is the fairest approach. Others choose to distribute their estate differently based on individual circumstances.

For example, a parent may wish to:

• leave a family cottage to the child who has cared for it for many years;

• provide a larger inheritance to a child with a disability;

• recognize financial assistance previously provided to one child;

• make charitable gifts alongside gifts to family members; or

• divide a family business differently than other assets.

Every family is different, and what is fair is not always the same as what is equal.

If you intend to divide your estate unequally, it is often worthwhile discussing your intentions with an estate lawyer.

Careful drafting can help ensure your wishes are clearly expressed and may reduce the risk of disputes after your death.

Should You Name Alternate Beneficiaries?

Yes, in many cases.

An alternate (sometimes called a contingent) beneficiary is the person or organization who receives a gift if your first-choice beneficiary dies before you or is otherwise unable to inherit.

For example, you may state:

"I leave $50,000 to my sister Jane. If Jane does not survive me, I leave that gift to her children in equal shares."

Naming alternate beneficiaries helps avoid uncertainty and reduces the likelihood that a gift will fail if circumstances change before your death.

Without alternate beneficiaries, some gifts may fall into the residue of the estate or be distributed according to the applicable provisions of the will or Alberta law.

Practical Examples

Example One: Equal Distribution

David and Susan have three adult children.

Their estate consists primarily of their home, investments, and savings.

After discussing their options with their lawyer, they decide that, after paying debts and taxes, their estate should be divided equally among their children.

Their will clearly explains how the estate is to be divided, making administration straightforward for their executor.

Example Two: Protecting a Child's Inheritance

Margaret has two young children.

Rather than leaving them their inheritance outright at age 18, her will creates a trust allowing the executor (or trustee) to manage the funds for their benefit until they reach a more mature age.

The trust allows money to be used for education, health care, and reasonable living expenses while protecting the inheritance during the children's younger years.

Example Three: A Blended Family

Robert remarries later in life.

He wishes to provide for his spouse while also ensuring that children from his first marriage ultimately receive part of his estate.

Instead of simply dividing everything equally, Robert works with his lawyer to prepare an estate plan that reflects both objectives.

Careful planning helps reduce uncertainty and minimizes the potential for conflict between family members after his death.

Common Mistakes

Forgetting to Update Beneficiaries

Many people prepare a will and never review it again.

Life changes such as marriage, divorce, births, deaths, or significant changes in assets should prompt a review of your estate plan.

Assuming Equal Is Always Fair

Equal distribution is appropriate for many families, but not every family has the same needs or circumstances.

A thoughtful estate plan considers the unique situation of each beneficiary.

Overlooking Minor Children

Leaving assets directly to young children without proper planning can create unnecessary complications.

Trust provisions may provide greater flexibility and protection.

Forgetting About Alternate Beneficiaries

If a beneficiary dies before you and no alternate beneficiary has been named, additional legal issues may arise when administering the estate.

Naming alternates often provides greater certainty.

Ignoring Assets That Pass Outside the Will

Not every asset is distributed under your will.

Jointly owned property, life insurance policies, RRSPs, RRIFs, TFSAs, and other assets with designated beneficiaries may pass directly to the named beneficiary.

Your estate plan should consider both your will and your beneficiary designations to ensure they work together.

Making Decisions Without Considering Tax Consequences

Certain assets may have significant tax implications depending on who inherits them.

Obtaining professional legal and accounting advice can help ensure your estate plan is both fair and tax-efficient.

Costs and Considerations

Choosing beneficiaries does not usually increase the cost of preparing a will. However, more complex family situations may require additional planning.

Examples include:

• blended families;

• children from multiple relationships;

• family businesses;

• corporations;

• farms;

• significant investment portfolios;

• trusts for minor or vulnerable beneficiaries;

• charitable giving; and

• tax planning strategies.

While these circumstances may require more detailed estate planning, they often reduce the likelihood of disputes, unintended tax consequences, and costly litigation after death.

The best estate plan is not necessarily the simplest one, it is the one that accurately reflects your wishes and works effectively for your family.

When Should You Speak With an Estate Lawyer?

Professional legal advice is particularly valuable if:

• you have a blended family;

• you wish to leave unequal inheritances;

• you have minor children or grandchildren;

• a beneficiary has a disability or requires ongoing financial support;

• you own a business, corporation, farm, or multiple properties;

• you wish to make charitable gifts;

• you own assets outside Alberta;

• you are concerned about potential family disputes; or

• you are unsure how your beneficiary designations interact with your will.

A lawyer can help ensure your beneficiary choices are clearly documented and form part of a comprehensive estate plan.

How Bridgestone Law Can Help

Choosing beneficiaries is about more than deciding who receives your property. A well-prepared estate plan considers your family relationships, your assets, future tax implications, and the practical administration of your estate. Thoughtful planning today can provide clarity and peace of mind for your loved ones in the future.

Bridgestone Law assists individuals and families throughout Calgary and Alberta with wills, estate planning, probate, and estate administration. We can help you prepare a will that clearly reflects your wishes, review existing estate plans following major life events, and ensure your beneficiary designations and estate planning documents work together effectively.