Wills: Why Two Is Better Than One

Pursuant to the Superior Court's 1998 decision in Granovsky Estate v. Ontario, it is permissible in Ontario to have two Wills as a means of minimizing Estate Administration Tax (formerly, Probate Fees).

Estate Administration Tax is levied on the total value of assets that are governed by a Will submitted to the Court under an Application for a Certificate of Appointment of Estate Trustee (formerly called Letters Probate). A Certificate represents the Court's stamp of approval that the Will in question is in fact the valid Last Will and Testament of the Testator and that the Estate Trustees applying have the authority to administer the Estate. To determine the Tax, all of the assets under the Will must be valued and an aggregate sum must be determined. The Tax is then calculated as 0.5% of the first $50,000 of the estate, and 1.5% of the balance.

Under the dual Wills system, Estate Administration Tax can be reduced by dividing assets into two categories and dealing with each under a separate Will. The "Primary Will" is designed to deal with the assets that require or may require a Certificate of Appointment of Estate Trustee to transfer or distribute (for example, real estate or bank accounts registered in your name alone), and the "Secondary Will" deals with the assets that can be distributed without a Certificate of Appointment of Estate Trustee. Upon the Testator's death, only the Primary Will is submitted to the Court under an Application for a Certificate of Appointment of Estate Trustee, and Estate Administration Tax is only payable in respect of the assets dealt with under that Will.

So, how do you know whether you should have two Wills?

There are certain types of assets that can generally be distributed without a Certificate of Appointment of Estate Trustee. If you own any of these assets and they constitute a significant portion of your overall Estate, you are a good candidate for dual Wills. 

Specifically, here are 5 indicators that you should have two Wills:

1. You own shares in a private corporation;
2. You have an interest in a partnership;
3. You own valuable personal articles such as works of art, antiques, jewellery, cars, boats, wine, or other collectibles.
4. You have an interest in property that is held in trust for you by an individual or a corporation as a bare trustee; and/or
5. You own real property that can be transferred without a Certificate of Appointment of Estate Trustee (for example, land that has not been transferred since it's conversion from the registry system to the land titles system).

 By: Serena Wolfond

For the next part in this blog series see: So You've Been Appointed as an Estate Trustee