The use of multiple Wills is one of the most effective estate planning strategies available to Ontario business owners and professionals to save, and sometimes, avoid estate administration tax on death.
The multiple Wills strategy allows for the creation of a separate and distinct testamentary document outlining your instructions that generally would not be subject to the probate process. The use of multiple Wills received judicial approval in Ontario in Granovsky Estate v Ontario. In this case, the court considered the testator’s use of two wills: a ‘Primary Will’ and a ‘Secondary Will’. The Secondary Will governed the testator’s private company shares, amounts owing to the testator from the companies, as well as assets held in trust for the testator by the companies. In other words, the Secondary Will consisted of assets that the estate trustee could manage without needing probate. Whereas the Primary Will governed all of the testator’s other assets, for which probate was required.
In Granovsky, the court found that there is nothing prohibiting the testator from having a Primary and Secondary Will based on the applicable legislation. A testator is entitled to plan his or her estate as they wish. The court also held that there was no legal requirement that the Secondary Will needs to be probated or that an estate administration tax must be paid on the value of the assets governed by the Secondary Will.
Generally assets that are typically dealt with in a Primary Will include:
- Assets registered in a single name such as a chequings or savings account
- Real property solely in the name of the testator
- Personal property in the name of the testator
- Insurance policies where there is no named beneficiary
Assets that are dealt with in a Secondary Will include:
- Assets that do not have a registered title
- Shares in a private company
- Unsecured debts
It is important to note that the use of Secondary Wills as an estate planning tool is accepted practice in Ontario and has not been approved in other provinces. That said, caution is required when drafting Secondary Wills, as if there are any questions over the validity of the Will, it could be revoked.