Last Wills and Testaments – How to Save a Buck or Two

Probate is a process which proves the validity of a Last Will and Testament so that a deceased’s property can be administered. While certain of a deceased’s assets may be transferred without producing a valid Will (and therefore do not require probate), if any part of the deceased’s estate does require probate, the estate administration tax – or probate tax, as it was formerly and is often more commonly known – is generally calculated based on the entire value of the deceased’s estate. This apparent “overpayment” was addressed by the Ontario Superior Court of Justice in Granovsky Estate v Ontario, in which the Court determined that it is permissible to submit for probate – and pay tax on – only those assets which require probate in order to be administered.

In order to take advantage of this cost-saving technique, a testator must prepare multiple wills: a Primary Will, which governs assets requiring probate (such as solely owned banking accounts), and a Secondary Will, which governs assets not requiring probate (such as a jointly owned home or vehicle). At death, only the Primary Will would be submitted for probate, and tax would be calculated only on the value of the assets included in that Will.It is noteworthy that, pursuant to Estate Administration Tax Act, 1998, the amount of tax payable is as follows:

• $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate; and
• $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.

Therefore, preparation of both Primary and Secondary Wills may only be worthwhile if those assets which would be excluded from probate are significant in value.Preparation of valid Primary and Secondary Wills requires inclusion of particular clauses which specify the assets being governed by each particular Will, and is a complex task for which legal advice should be sought, particularly where the nature of the property in question makes it unclear as to whether probate will be required to administer it. Where uncertain, it would be prudent to be over-inclusive in the scope of a Primary Will and risk paying the extra estate administration tax versus having to submit the Secondary Will for probate because of inadvertent inclusion of a probable asset.