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SUCCESSion: Tax & Estate Matters

Oct 25, 2018

Important Information regarding Multiple Will Planning

A recent Ontario Superior Court decision, Re Milne Estate, has created some uncertainty regarding an estate planning strategy used for over two decades to minimize the imposition of estate administration taxes (commonly called "probate fees"), through the use of Dual or Multiple Wills.

Probate fees are levied when a Will is submitted to Court for validation at an approximate rate of 1.5% of the value of assets governed by that Will. Probate Fees can be reduced by segregating assets that do not require the Court's verification in order for the executors of the estate to deal with them (such as private company shares and art) into a separate Will from those that do require probate (such as bank and investment accounts and real estate).

The Milne decision asserts that where the executors of an estate have discretion to identify which assets form part of which Will, coupled with imprecise drafting, one or both of the Primary and Secondary Wills may be found to be invalid, resulting in the loss of the planned probate savings and other undesirable consequences where the beneficiaries under both Wills are not the same.

It is important to highlight that this case did not strike down the use of Multiple Wills. Rather, the Judge endorsed this type of planning in his decision when he referred to it as "a common and normally unobjectionable estate planning tool". Even if the decision is correct, this continues to be a useful probate planning strategy provided that the language in each Will is carefully drafted.

This decision has been appealed, but in the interim as we await clarification from the appeals court, we invite you to contact one of our estate planning lawyers to review whether changes may be necessary to your Wills. 

A link to the decision can be found here.

more SUCCESSion: Tax & Estate Matters posts

Related Practice Areas

Tax Law  |  Estate & Succession Planning

Keywords

Milne decision  |  administration taxes  |  Ontario Superior Court decision

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