ESTATE PLANNING THOUGH THE USE OF MULTIPLE WILLS
The theory behind multiple wills is quite simple: the Testator creates a will limited to assets for which probate is required and a separate will is likewise created for assets for which probate is not required. Upon death of the Testator, executors submit only the will dealing with assets (for which probate is required). The Estate Administration Tax (EAT) is then imposed but only upon assets dealt with under the probated will. Despite the simplicity of this concept, however, the usage of multiple wills continues to raise several issues, as illustrated in the case of Philip Granovsky v. Ontario. In the case of Philip Granovsky v. Ontario, the Testator, Philip Granovsky, left two different wills upon his death: a Primary and a Secondary Will. The Primary Will dealt with the authority of handling all of his property, with the exception of: shares specific to the capital of certain private corporations, amounts receivable from the private corporations, and assets held in trust for Mr. Granovsky by the private corporations. The Secondary Will dealt with those assets excluded from the Primary Will: assets amounting to $2.5 million. Subsequently, a limited grant of probate from the Primary Will was issued by the Court, only after the executors of Granovksy’s will provided an application to determine the status of the two wills. Probate fees were therefore only paid on the value of the assets governed by the Primary Will. The Secondary Will was exempt from paying any probate fees, or fees on the value of the assets governed by that will.
Madame Justice Greer rejected the Crown’s argument that that probate fees were necessary to be paid upon the value of all of the deceased’s property at the time of death, and that the executors of the estate weren’t required to submit the Secondary Will to probate. This set the precedent for Testators paying minimum taxes upon their death, a case initially fought by the Crown but abandoned on appeal.
In deciding to use multiple wills as an estate planning tool, assets should be segregated into two different areas: assets for when probate is required, and for when probate is not required. Assets that may be transferred or realized upon death without a probated will include: life insurance, pension plans, RRSPs and RRIFs, when a beneficiary is named or designated; assets held jointly that devolve by right of survivorship; real estate registered in the Registry System and not situated in Ontario; personal effects/household items, and shares/debt of private corporations. Assets, which require probate, include: Land titles, shares/debt from publicly traded corporations; bank accounts, GICs, brokerage accounts and term deposits. In certain circumstances a probated Will is necessary irrespective of the nature of the assets. Three of these circumstances are: 1) When the estate is involved in litigation either as a plaintiff or defendant: 2) If a third party refuses to transfer title to assets, and 3) A foreign executor’s intention to deal with assets situated in Ontario. In any of the above three circumstances, it is necessary to probate the will, notwithstanding the nature of the assets.
In conclusion, if multiple wills are to be considered for estate planning, careful organization, planning, and anticipation of future events are necessary.
