What is Probate and Use of Multiple Wills?
What is “Probate”?
Probate is a court process that validates a Will and confirms the authority of the estate trustee to act on behalf of the deceased’s estate. A Will that has been probated will require that proper notice has been provided to all interested parties. It helps to ensure that the Will is properly administered i.e. the beneficiaries receive their entitlements and for payment of all taxes and liabilities associated with the estate. A ‘probated Will also provides assurances to third parties such as financial institutions, lawyers, and realtors that they are engaging with the individual duly authorized to represent the deceased’s estate. This safeguard ensures proper handling of assets by preventing unintended transfer of assets to unauthorized recipients.
The Ontario government has one of the highest probate fees (now referred to as “estate administration tax”) in Canada and is approximately 1.5% of the value of the deceased’s Estate.
The Use of Multiple Wills in Ontario
The use of multiple Wills as a strategy to reduce or avoid probate fees payable on death has been considered by Ontario estate practitioners and has evolved for the past three decades. To minimize probate fees, lawyers started analysing the assets of the Estate and whether it can be dealt with by (i) a Primary or “Public” Will to distribute assets for which probate is required, such as real estate, accounts or investments at financial institutions and (ii) a Secondary or “Private” Will to dispose of assets for which probate is typically not required, most notably shares of private corporations, and valuable personal items such as vehicles, art and jewelry. Only the Primary Will is then submitted for probate, thereby sheltering the assets passing through the Secondary Will (i.e., the assets not requiring probate) from probate fees.
The multiple Wills strategy was endorsed by the Ontario court in Granovsky, a 1998 case in which the deceased’s estate payment of probate fees was significantly reduced by dividing assets between two separate Wills. The Court confirmed that both the Primary and Secondary Wills of the testator were valid testamentary instruments despite only the Primary Will having been formally probated. Initially, the Ontario government indicated that it would appeal the court’s decision in Granovsky, but it later abandoned its position.
In conclusion, through the strategic use of multiple Wills, you can reduce the amount of estate administration tax payable. There will be some additional costs in setting up multiple Wills so make sure you review your assets with a qualified lawyer and/or financial advisor.
Contact Realty Care Law LLP today to discuss your options of creating a Will.
Author:
John Y.S. Park
Managing Partner