What is a Multiple Will Strategy?

Reducing Estate Administration Tax in Ontario

Many Ontario business owners are surprised to learn that it may be possible to reduce Estate Administration Tax (commonly referred to as "probate fees") through the use of a multiple Will strategy.

A multiple Will strategy involves preparing two separate Wills: a Primary Will and a Secondary Will.

Generally speaking, the Primary Will governs assets that are expected to require probate, while the Secondary Will governs assets that may be transferred without obtaining a Certificate of Appointment of Estate Trustee (commonly known as probate).

The strategy was developed in response to Ontario Court decisions recognizing that certain assets do not necessarily require probate in order to be administered.

Examples of assets that may sometimes be governed by a Secondary Will include:

• shares of a privately held corporation;
• shareholder loans;
• personal effects;
• loans receivable; and
• other assets that may be transferred without obtaining probate.

Because Estate Administration Tax is generally calculated based upon the value of assets passing through the probated estate, excluding appropriate assets from the probate process may result in significant tax savings.

Multiple Will planning is particularly common among business owners who hold shares in private corporations. In some cases, the potential tax savings can be substantial.

However, multiple Will planning is not appropriate in every circumstance. The effectiveness of the strategy depends upon the nature of the assets involved, the manner in which they are held, and the individual's overall estate planning objectives.

Careful drafting is essential. Improperly prepared multiple Wills may create uncertainty, administrative difficulties, or unintended consequences. For this reason, these strategies should only be implemented following appropriate legal advice.

For many individuals, a single Will remains entirely appropriate. However, where significant private company interests or other qualifying assets exist, multiple Wills may form an important part of a comprehensive estate plan.

If you own shares in a private corporation or would like to discuss whether a multiple Will strategy may be appropriate for your circumstances, please book your FREE CONSULT with Tonelli Estate Law today.

***This article is for general informational purposes only and does not constitute legal advice***