November is both make a Will month and financial literacy month — what better time to share some thoughts on a recent decision from the Ontario Superior Court on double Wills? Once we’ve helped our client with the substantive part of estate planning — the decisions on who gets the cuckoo clock, the diamond brooch, the cottage, and who shares in the rest of the estate — we often turn our attention to ways in which the estate administration tax (Probate fees) might be reduced.
What, you might ask, is Probate and how much are Probate fees? It is a process whereby the Will of the deceased is submitted to the court, and a Certificate of Appointment of Estate Trustee with a Will (Probate) is then issued, which allows third parties to rely on that Will and deal with the estate trustee named therein. A fee is payable to the province to obtain this certificate. Probate is not required for all estates. Certain assets need Probate before the estate trustee can deal with those assets and certain institutions will require Probate before they will release the deceased’s investments to the estate trustee. Once one asset is caught for Probate, then all assets in the deceased’s name alone as at the date of death must be valued and the sum total is multiplied by approximately 1.5% to arrive at the Probate fees payable to the province to obtain the certificate/Probate.
So how, you may ask, can Probate fees be reduced? One technique which has been in use for over 20 years has been to draft double Wills for a client. One will, the “primary Will” deals with those assets that require a Certificate of Appointment of Estate Trustee with a Will (Probate) and only the value of assets in this Will are subject to Probate fees and the second Will, the “secondary Will” deals with those assets that do not require Probate and the value of the assets in this Will are not subject to probate fees. By creating two pools of assets, we can thereby reduce the total value of the estate and minimize the Probate fees.
The case that has caused estate lawyers to pause and review our drafting involved a Toronto judge rejecting a primary Will which was submitted to obtain the Certificate of Appointment of Estate Trustee with a Will. To put it as simply as possible, the judge found the division of assets wasn’t sufficiently certain and therefore failed. The case is currently under appeal. If you have double Wills, you may wish to have the language reviewed to avoid disappointment until the appeal is heard.