Yes, a multiple-will plan can be an estate saver

Using Secondary Wills for bequests that don’t require probate

In jurisdictions where there are high probate fees, like Ontario, using multiple wills in your estate plan is of particular importance. As you may be aware, you can have two wills – a Primary Will that governs any asset that would likely attract a request of probate, and a Secondary Will that governs any asset that does not require a probated will to administer. When the Primary Will is submitted for probate upon your death, probate fees would only be payable on the value of the assets falling under the Primary Will.

Clients who own certain business assets typically benefit the most from this two-will structure. Shares held in private corporations and interests in partnerships or joint ventures or other legal entities controlled by the deceased and close family members do not typically require probate. These assets can fall under the Secondary Will, and not be subject to any probate fees.

Even if you don’t have any business interest, the dual-will structure may still be useful. Here are five other scenarios where a two-will structure may be for you.

When you have valuable personal effects and household articles

If you have personal effects and household articles, including art and jewellery with significant value, you should consider a dual-will plan. Generally, this category of asset does not require probate for their transfer on death, and so they can fall under the Secondary Will. The savings in probate fees can be quite significant, especially when dealing with valuable collections, such as art or wine.

In addition to the savings in probate fees, having a two-will structure also eliminates the need for your executor to spend time and resources obtaining date of death valuations of all of your personal effects and household articles. After an estate is probated, the Ontario rules require the executor to fill out an Estate Information Return, confirming all the assets of the estate and their date of death values. This return can be audited, so it is important for executors to have supporting documentation confirming their values. It can be quite challenging and expensive to obtain date of death valuations of personal effects compared with, say, a bank account.

When you own assets jointly with an adult child

Although we’ve already told you in other blogs why you probably shouldn’t own joint assets with your adult children for the sole purpose of avoiding probate, this planning technique will always be common. Without two wills (in addition to a declaration of trust confirming the relationship, which is strongly recommended), however, this benefit will not be realized.

Without a two-will structure, if any of your other assets require probate, the value of the joint assets would be includable in the value of your estate, since your adult child is considered to be holding this asset in trust for your estate, which retains the beneficial ownership, meaning there would be no probate fee savings in this case. A two-will structure would again prevent this, as the joint asset would fall under the Secondary Will, and not attract further probate fees.

When you own real property that falls under the First Dealings Exemption

It is almost always a guarantee that Ontario real estate will attract the need for a probated will. That being said, there is a very limited exception where certain properties in Ontario may be exempt. The First Dealings Exemption is available for properties with no transactions or “first dealings” after the property converted from the old property registration system in Ontario to the new one (check out our recent blog post for more information on this exemption).

If you are one of the lucky few who has a property that falls under the First Dealings Exemption, then a two-will plan must be used. With only one will, if any other asset of yours would require probate, then the value of the property would still be includable as part of the total estate value and probate fees would need to be paid on this asset.

When you lend money to others

The two-will structure is also beneficial if you have any significant loans owing to you, whether this is from a corporate entity, a trust, your spouse, or other family member. A loan is considered an asset of your estate and would be subject to probate fees. However, with two wills, the loan can fall under the Secondary Will and avoid probate.

For further information on this, check out our recent blog, “Real Estate and Probate Planning: More Issues to Consider.”

When you are looking for more privacy

A final, and important consideration in considering a dual-will plan extends beyond probate fee saving. Recent changes to the probate application process in Ontario has led to certain privacy concerns. When applying for a grant of probate (“Certificate of Appointment”), the gross value of the estate is included in the application form. Any beneficiary, whether a residual beneficiary or a contingent beneficiary or a legatee, receives a copy of this application form as part of the notice requirements.

This means that if you have a legacy in your will, in addition to the excerpt of your will showing this legacy, the legatee will also get a copy of the application form, and is able to see the entire value of your estate. Depending on the nature of your relationship with the legatee, you may not have wanted them to know how much your estate is actually worth.

If you are considering leaving numerous legacies, then you may want to consider a two-will structure whereby the legacies are in the Secondary Will, which doesn’t get admitted to probate. The disclosure to the legatees would then be limited to just the excerpt of the Secondary Will confirming their bequest.

Just as you do not have to run a business to see the numerous benefits of using a dual-will plan, you also do not need to own a business to enjoy these benefits.

Stephanie Battista is a partner at O’Sullivan Estate Lawyers. She practices exclusively in estate and trust law, focusing on all aspects of estate planning and estate administration in order to provide clients with sound and helpful legal advice. She advises clients on their succession plan including wills, trusts, powers of attorney and domestic contracts. She also advises executors, trustees, and attorneys on their duties and obligations, and provides guidance through the complexities of the estate administration process as well as estate and trust accounting. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.