07 Jan Do you Need to Review your Multiple Wills in Ontario?
Two wills are often used to divide assets that require probate from those that do not. This is so that the probate tax will be calculated only on the value of assets in the first will. In other words, this allows people to limit assets that are taxed and save money.
What does it mean to probate a will?
Why do people use Multiple Wills?
Multiple wills are often used in situations where an individual owns shares in a private corporation. Such individuals are often advised to enter into multiple wills (or dual wills) as an effective tool to minimize the amount of Probate Fees and Estate Administration Tax payable.
The primary will would typically apply to all assets that require probate. The secondary will would typically apply to shares held in a private corporation and to shareholder loans owed to the individual and other assets that can be transferred to beneficiaries without probate. Probate fees and Estate Administration Taxes are only paid on the assets covered by the will to be probated often resulting in considerable tax savings.
The Re Milne Estate Court Case
The recent decision in Re Milne Estate (September 11, 2018) has caused some concern as the court found that the language used in the primary will (which allowed the estate trustees discretion as to the assets covered by the primary will) invalidated the primary will as it failed the “certainty of subject-matter” test.
This decision has caused concern and is being appealed but the outcome of the appeal will not be known for some time.
Do You Need to Review Your Multiple Wills?
Whilst this decision does not mean that multiple wills are invalid, clients who have multiple wills are advised to contact their legal counsel to obtain advice as to whether their wills should be revised in light of the Re Milne Estate decision and to make any changes necessary.