Milne Decision Prompts Massive Multiple Wills Recall To Avoid Intestacy Risk

  • Multiple will drafting technique seeks to avoid the 1.5% estate administration tax (EAT) on those assets which can typically be conveyed after death without probate
  • Typically, closely held private company shares, private loans, and personal articles are disposed of under a secondary or "non‐probate" will
  • Mr. Justice Dunphy: Milne will clause which delegates discretion to the executors to allocate assets between multiple wills rendered the primary will void for uncertainty as to subject matter (trust assets)

Why Did the Milne Wills Give the Executor Discretion to Allocate Assets?

  • If a third party demands probate of an asset passing under the non‐probate will, EAT has to be paid on all the assets, defeating the usefulness of multiple wills
  • Giving the executor the ability to pick and choose what assets pass under the probated will and the non‐ probate will was seen as a drafting solution to avoid EAT
  • Obvious issues arise if the beneficiaries under the multiple wills are different, as it delegates to the executor, testamentary disposition powers

How is the Legal Profession Responding?

  • Massive recall of multiple wills which may contain similar language to Milne
  • Out of fear the decision may be applied broadly, concern for any language suggesting assets be allocated between the probate and non‐probate will based on whether a probate is required
  • Milne is under appeal to the Ontario Divisional Court
  • Widely held view that Milne is flawed in its analysis and it is hoped the law will be clarified on appeal

What Might Happen on the Milne Appeal?

  • Strong Argument that a will is not a trust such that a court of probate does not have jurisdiction to look beyond the requirements of a validly constituted Will
  • The issue of whether the trusts under the wills satisfy the 3 certainties of a valid trust is a matter for a court of construction on an application for interpretation
  • If the Divisional Court agrees with this argument, it may stop there, leaving unresolved the issue of whether the executor discretion to allocate assets to either will invalidates the trusts under the wills
  • If the appellate panel does not rule on the construction issue of uncertainty of subject matter in the Milne wills, what next?
  • Beneficiaries want to save EAT so we will not likely see a construction application soon
  • The issue is unlikely to come before a court of construction unless there are wills with different residual beneficiaries who may be unhappy with the executor's ability to allocate assets between the wills, or where an executor seeks advice and direction

What Happens Next?

  • If existing multiple wills are recalled and revised, and the Milne wills are held valid on the principle of certainty of subject matter, there will be another round of recalls to restore the Milne type will language
  • Probates of wills with language determining asset allocation based on whether or not probate of an asset is required, have been processed without issue by the Ontario estates courts for many years now
  • There are presently many Milne type wills before the Ontario courts waiting probate
  • Meanwhile, we wait and see ...

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.