A recent decision from the Ontario Superior Court of Justice had put wills and estates lawyers into the nearest thing to what could be called a panic amongst us (yes, a few raised eyebrows were observed). The Court made a controversial ruling in the 2018 Milne Estate case, calling into question a common estate planning technique, the use of dual wills, was being carried out.
Dual wills are routinely used as an estate planning technique, where a person has a sizeable estate comprised of assets that would not ordinarily require a Certificate of Appointment of Estate Trustee (commonly referred to as “probate”), together with assets that require probate. The technique involves making two wills: one that will get submitted to court for approval (triggering payment of the Estate Administration Tax – commonly referred to as probate fees); and a second will that does not (reducing the total Estate Administration Tax payable). This is a well-established practice, following a 1998 decision of the Superior Court.
The question in the Milne case turned on the discretion of an executor to identify the deceased’s assets to be governed by each of the two wills, thereby reducing the total tax liability of the estate. Justice Dunphy held that an executor having such discretion results in uncertainty as to the subject-matter of the trust created by the will.
In January 2019, the decision was overturned on appeal by the Divisional Court. That court found that, while a will may contain a trust, which indeed requires certainty as to the subject-matter, the will, and the determination of what assets fall within its application, is not, in itself, a trust. The end result is that the practice before the initial Milne decision, leaving discretion to the executor to determine which assets are governed by which of the wills, continues to be the law of Ontario.
We invite you to contact one of our estate planning lawyers, to see if a strategy using dual wills is right for you.