Proper estate planning allows you to employ strategies to minimize costs payable by your estate and preserve amounts available to heirs. For those individuals with complex financial situations, such as business owners and individuals who own property in more than one jurisdiction, having a secondary or multiple Will(s) may be an option to mitigate probate costs and ease estate administration.
Probate is a process where a court confirms the submitted Will is the last valid Will of the deceased and that third parties are able to take instructions concerning the estate from the named executor. Probate may be required by a third party or a financial institution prior to distribution of a deceased individual’s assets or accounts. The corresponding probate fees that are payable in connection with a probate application can vary – in some provinces, probate fees are charged as a percentage of estate assets; other provinces charge flat fees, to a maximum amount, based on the value of the estate.
As soon as probate is required to deal with a particular asset, all probatable assets owned by the deceased will be subject to probate fees, regardless of whether a third party or financial institution requires probate for transfer of the other assets. In those provinces where probate fees are charged as a percentage of the value of estate assets, this could result in substantial probate fees.
An option to reduce probate fees would be to create a primary Will for assets subject to probate and a secondary Will for assets that do not require probate before transfer, such as shares held in privately owned corporations and personal effects such as vehicles, furniture, art, jewellery, etc. With a secondary Will, you avoid paying probate fees on assets that otherwise do not require probate. This could be especially beneficial for business owners where the value of the shares could be substantial, which if included under one Will could significantly increase probate costs when applying for probate to deal with other assets. The use of multiple Wills is not an accepted practice in all provinces across the country but it is readily used in British Columbia and Ontario, two jurisdictions that have high probate fees on a relative basis compared to their provincial counterparts.
Extending this estate planning concept to situations where an individual owns property outside of Canada, it can be beneficial to have a separate Will that pertains specifically to the foreign property. The laws in foreign jurisdictions may differ significantly from Canadian law making it difficult for a Canadian Will to be compatible with the estate administration rules in that jurisdiction. Having a separate Will prepared in accordance with the laws of the foreign jurisdiction often eases estate administration and potential delays that may result from attempting to settle the estate under one Will for all assets.
Another factor to consider when contemplating the use of a secondary Will is when a Will is probated, it becomes a matter of public record. Therefore, if you have privacy concerns with respect to your estate and would prefer your estate assets remain confidential, having a secondary Will to deal with certain assets that do not require probate may help ensure confidentiality and privacy.
Caution must be taken with the preparation of multiple Wills. The Wills must be carefully worded so the signing of one Will does not revoke the other. Each Will should clearly identify the property to which it applies and to make certain that estate debts and expenses as well as payments to, for example, legatees will not inadvertently be double paid.