How Many Wills Do I Need?
To avoid the difficulties associated with intestacy—passing away without a Will—it is crucial to establish a legitimate will. In fact, everyone finally has a will of some kind; either the decedent decides how assets are dispersed by creating a will prior to death, or the provincial authorities decide based on intestacy statutes. Therefore, it's best to have a Will prepared in advance.
Do you require more than one, then? Why would someone want to have two Wills when getting one Will is difficult enough? The type of assets you own and your wishes for what to do with them after your death will determine whether you need more than one trust. Whether all of your assets must go through probate will determine whether you need a second Will.
Simply put, probate is the procedure used to demonstrate that a will was correctly made and is legitimate. Most jurisdictions impose a probate fee for this. While other provinces charge smaller or flat costs, B.C. and Ontario levy 1.4% and 1.5% of the probated estate, respectively.
Sometimes, people will make agreements like putting assets under joint ownership in an effort to avoid paying probate fees. This and other similar arrangements may result in issues and increased costs. Reducing the amount of assets subject to probate costs is the most efficient approach to do so. For instance, it is quite effective to use beneficiary designations for your registered plans and life insurance (where applicable).
Furthermore, not all assets must pass through probate, which is also true. Shares in a private corporation that a taxpayer owns are the most obvious example of these assets. Let's examine the two will types first before going any farther with this.
The Basic or General Will
This alludes to the Will that people typically consider. It consists of all the things that ordinarily belong in a will and have to go through probate. Remember that once a General or Primary Will has been probated, anyone with an interest or desire may get a copy. In fact, in Ontario the employees of the probate court will aid in locating copies of Wills so the curious can read all documents and obtain copies, while in British Columbia the Archives provide a research guide to probated Wills to help anyone who want to receive a copy. The only prerequisite is that there is a price.
The Secondary or Restricted Will
The Restricted or Secondary Will only refers to those assets that can pass to the estate and heirs without going through the probate process. These assets are often private company shares, but they may also include assets located in other countries or provinces.
Because the remaining directors of a private company can typically transfer the corporate interest to the estate and then to the beneficiaries of the estate without making a probate application, shares in a private corporation do not need to be probated. Although each province may have different regulations in this area, bypassing probate typically has the desired effect.
Since a Restricted or Secondary Will is not probated, a copy of it is not retained with the probate registrar, unlike a General or Primary Will, which is. Since the terms of these Wills are not made public, this gives rise to the moniker "Secret Will." A business owner who may not want the general public to know what occurs with his or her corporate holdings may find this to be very significant.
Why might a secondary will be significant?
They are employed to avoid paying probate expenses while passing on assets. As a result, the estate may experience significant cost savings.
Secondary wills are very good at maintaining the secrecy of the assets that are not subject to probate.
Both positive and negative aspects
While having many wills might sound desirable, weigh the benefits and drawbacks.
Even though confidentiality and cost savings are crucial, it's also critical to keep in mind that there are now two Wills to pay for, a more complicated situation exists because you must appoint two distinct executors, and the executor under your Secondary Will should be able to manage the complexities associated with the assets covered by that document.
While this kind of planning was contested in Ontario, which led to a court ruling that threatened numerous Wills (see Milne Estate), the ruling was overturned by a higher court in 2019. Secondary Wills are still an effective estate planning tool as of the publication date of this article.
Nothing should be done in relation to estate planning without consulting a qualified legal and accounting professional.