All About Beneficiaries
What is a Beneficiary?
A beneficiary is a person or persons who will receive assets or gifts after your passing, as named and listed in your Will. If you die without naming anyone, all of your assets will belong to your estate, which is the culmination of all your property, possessions, assets, and debts by default. When a beneficiary is named, the money or gift gets distributed straight to them through the estate. A Beneficiary can also be a charity organization. Donations to charities are also referred to as legacy gifts, and can be given as either a lump-sum amount or a percentage of the remaining estate can be left to the charity.
How Are Beneficiaries Named?
Anyone can be named as a beneficiary, however, it's important to name them correctly in your Will. To ensure there is as little confusion as possible, always use complete legal names for any individuals named.
Listing Minors as Beneficiaries
If you name a minor as a beneficiary in your Will, they will not receive any of the property or assets immediately. Generally, their inheritance will be held in trust by the estate trustee until they become the age of majority, or if you choose, at the age you specify. Their legal guardian will be able to access any funds left behind for the care and education of the minor.
Can My Debts be Passed On?
In Canada, debts cannot be inherited by friends or family members. However, your estate remains responsible for paying any outstanding debts owed. This means that if the amount of debt is greater than the amount you choose to distribute to beneficiaries, there may not be anything left from the estate to fulfill your beneficiaries' shares. This circumstance is referred to as “abatement”. The doctrine of abatement explains the order in which testamentary gifts are reduced if the assets of the estate are insufficient. After the debts have been paid to pay the gifts in full. The order depends heavily on how the fits are classified.
Testamentary gifts are classified into two categories: specific or residuary. A specific gift is generally a gift of property or an object that the testator has described in enough detail to set it aside from the general estate, an example may be a special necklace or heirloom. A specific gift can also be a sum of money. A residuary gift is a gift or all or part of the assets that have not otherwise been disposed of, and usually described in your Will in the form a percentage.
WillsKeeper has a comprehensive section on Beneficiaries that makes gift-giving easy and straightforward. Get started with your custom Will today!