An Application for a Certificate of Appointment of an Estate Trustee with a Will, or more commonly referred to as probate, is the process whereby the Court certifies that an individual’s will as their valid last will and testament. Additionally, the process also validates the executor’s authority as given under the will.
Where an individual dies holding assets; such as: bank accounts, investment accounts, and real property (other than property held as joint tenants), the executor will be required to provide a copy of the probated will before administering those assets. However, other assets such as shares of private corporations, partnership and trust interests, and personal effects do not require a probated will to be administered.
In Ontario, it is a common planning technique to have two wills, a primary will covering assets requiring probate and a secondary will covering all other assets. Estate administration tax (i.e. probate fees) would not be required on the value of the assets covered in the secondary will ultimately reducing the probate fees related to the overall estate.
Similarly, the executor would have authority immediately after death to deal with the assets covered by the secondary will. However, a recent decision by the Ontario Superior Court of Justice may cause advisors to reconsider how these two wills are drafted.
In the case of Milne Estate (Re), 2018 ONSC4147 the Court held that a will which provides the executor(s) broad discretion in determining the assets covered by the primary will was not a valid will. As such, the Court held that the primary will was not valid leaving the secondary will to govern distribution of all the estate’s assets (probate assets and non-probate assets). As a result, the secondary will (only valid will) now had to be probated covering all assets of the estate.
As a result of this decision, advisors need to carefully review currently drafted wills and consider appropriate language going forward. It will be important for advisors to ensure each will clearly identifies the assets covered based upon the intention of the testator, not based on an executor’s discretion. Although many are hopeful that on appeal the decision will be overturned, until then advisors must proceed with caution.
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.
