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The Case for Dual Wills

One method for reducing probate fees in Ontario is the use of multiple Wills. Why do we want to avoid probate? Probate may be required to transfer certain assets, and there is a tax of 1.5% of the value of the estate that is payable to the Province. Probate will be required to transfer certain assets such as real estate or other institutional investments. Financial institutions will require probated Wills before they will accept instructions from the executor named in the Will. The estate is subject to payment of the probate fees on these assets. Unfortunately, if probate is required, the fair market value of all assets of the deceased must be included in the calculation. The strategy behind multiple Wills involves preparing two Wills.

One Will deals with assets administered by third parties and is designed to transfer bank accounts and investment portfolios which are included and “probated”.  Personally held assets such as personal effects, shares of a private company, art collections, and jewelry do not require probate to be transferred. Probate fees would be paid only on the assets that were part of the probated Will.  In other words, it is possible to segregate assets of an individual into multiple Wills. For clarity, a primary Will holds the assets that require the probate process, but the secondary Will holds assets that do not require probate. The result is lower probate fees paid by the estate, because only the assets of the primary Will are subject to the provincial probate tax.

Also, we all have to pay taxes but we don’t have to leave a tip.  The secondary Will is not just for the rich. Clothing, furniture and as I said jewelry, can be transferred without probate. This relieves the estate from potential provincial audit which would require appraisals of all those items.

Other commonly used strategies to reduce probate fees include holding property and other accounts in joint names with the right of survivorship, designating beneficiaries on RSP’s, RIF’s, life insurance, creating family trusts and making gifts during your lifetime. These assets do not form part of your estate on death.

Hertzberger & Associates

Gregory C. Hertzberger B.A. (Hons), L.L.B.

Certified Specialist in Corporate & Commercial Law (L.S.U.C.)

Email: greg@hertzbergerlaw.com

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