Probate fees in Ontario are calculated at the rate of 1.5% of the value of the estate in excess of $50,000 (the first $50,000 attracts fees of 1%). On an estate of $3,000,000, the probate fees will be about $45,000. This is not an insubstantial burden, particularly if the value of the estate is further reduced by income taxes. Multiple wills are recognized by the courts in Ontario as a legitimate estate planning technique that in certain cases may be used to reduce probate fees.
Probate is not required to validate a will – a will is valid on its own terms. Probate is the process by which a will is approved and the appointment of the estate trustees is confirmed by a court pursuant to provincial legislation. Pursuant to such legislation, third parties are entitled to rely on the probated will and the authority of the trustees thereby appointed. While an estate is not required to obtain probate (and some estates are not probated, particularly where virtually all property has transferred pursuant to the survivor under a joint tenancy), probate is almost invariably required where there is real estate or investments with institutions. Where the estate holds real property (such as house or cottage) in Ontario, probate of the estate and an estate Lawyer, Ottawa based if you live in this area, may be appropriate.
Multiple wills is a technique that may be used in certain circumstances reduce the probate fees that would otherwise be payable in a single will. Multiple wills are simply that – the use of two or more wills, each of which deals with a particular part of the estate. Multiple wills may be structured in a different ways, most commonly by jurisdiction, in order to take advantage of jurisdictions with lower probate fees, such as Quebec or Alberta. An Ontario resident taking advantage of multiple wills would have an “Ontario” to address real property located in Ontario and might have Quebec will to address other property, such as institutional investments. Other multiple will structures are used, such as an Ontario will to address property requiring probate, and a second Ontario will for property that does not require probate, such as shares in a closely held private company.
If an estate is comprised of an $800,000 home in Ontario, and $2,200,000 investment portfolio. If a single will is used, probate fees will be approximately $45,000. If instead, the testator used an Ontario will for the home and a Quebec will for the investment portfolio, the probate fees will be about $12,000 in total, a savings of about $33,000 may be realized.
Multiple wills are complex and not available in all circumstances. There are increased costs to set up multiple wills and administer multiple wills, although these may be minimized through use of the same executors. Where appropriate, multiple wills are very effective to reduce the probate fees on death.
I made my own hand-written will few years ago. I believe it’s valid and truly reflects my wishes, however my financial advisor told me I should get a proper will drafted by a Lawyer. Why should I do that?
Wills are legal documents that will dictate the distribution of assets after one’s passing and there are many reasons why wills should be prepared by a Lawyer specializing in this area of law.
Formal validity For wills to be valid and legally binding they have to be executed (signed) according to legal requirements. A Lawyer preparing your will would ensure that the document is executed properly and therefore legally valid and binding.
Comprehensiveness A Lawyer can make sure your will deals with all important matters, such as appointment of executor(s) and alternate executor(s), distribution of your assets, appointment of custodians and guardians for your children and setting up trusts for minor beneficiaries. Your Lawyer will also ensure your will gives executors enough powers to properly and efficiently administer your estate and follow your testamentary wishes.
Reflecting all your legal obligation
Under the law you are obliged to provide for your spouse and your dependents. Your Lawyer can advise you of your obligations to such persons.
Clarity of language
A properly drafted will should use language that is clear and precise in order to prevent any issues with interpreting your instructions contained in the document. Your Lawyer will make sure that proper language is being used to avoid any ambiguities and clearly reflect your intentions.
Preventing future challenges to your will
Having a Lawyer draft your will significantly reduces any risk of future legal challenge to its validity based on your legal capacity or any undue influence. When your legal capacity might be an issue, your Lawyer will gather and keep all the required evidence to prove you had the necessary legal capacity to make a will. He or she will also ensure there is no undue influence from any individuals, including family members that would affect any of the provisions of your will.
We have been married for the last 25 years but don’t have any children. Do we need a will, or would everything just go to the surviving spouse anyway?
Yes, you do need a will. Whenever you don’t have any children, under the statutory distribution scheme for individuals that die without a will, your spouse would receive your entire estate. However, you should still have a will for at least two reasons:
- Appointing an executor of your estate; and
- Making instructions for the distribution of your estate in the event that you’re predeceased by your spouse.
Appointment of an executor of your estate.
The executor named in a will has the legal authority to take possession of all your assets, do your final income tax returns, and deal with banks and government institutions. If you don’t have a will, a court would have to appoint an executor of your estate to deal with any assets that were not jointly owned, as well as any registered investments that did not have a named beneficiary. The process of appointing an executor usually takes few months, so in addition to incurring unnecessary costs, there will be an extended delay during which your spouse will not have access to the assets in your estate. In my experience, some financial institutions will waive a probate requirement if your spouse is the named executor and the only beneficiary of your estate, which could provide your spouse with ready access to some assets shortly after your death.
Distribution of your estate if you survive your spouse.
By having a will in place, you will make sure that your estate is distributed the way you want it to be in the event that your spouse passes away shortly before you, or in the event that you are unable to make a will after your spouse’s death. Under the statutory distribution scheme, if you don’t have a spouse nor children, your estate would go to your parents. Alternatively, if your parents are deceased, your estate would go to your siblings. This may not be your wish. For example you might want to leave part of your estate to your spouse’s family, or you may wish to skip your parents and siblings and distribute the estate among your and your spouse’s nieces and nephews, or make gifts to a charity or charities. No matter which option you choose, having a will can provide the peace of mind of knowing that your estate will be distributed according to your wishes.
Your last will does not have to be drafted or signed by a Lawyer. However, a will is a legal document that will determine who will have control of your estate and how it is going to be distributed. There are certain legal requirements that have to be met for the will to be valid. As such it is very important that your will is drafted, signed and witnessed properly.
How can a Lawyer help?
A Lawyer will ask you right questions to help you determine how to distribute your estate while taking into consideration various contingencies and scenarios that might be in place at the time of your passing. She will discuss with you legal clauses that you might want to include in your will, such as a beneficiary designation for your RRSP and insurance policies, expressing your wishes in regards to the custody of your minor children or confirming compensation for the executor. Your Lawyer will also talk to you about the powers that you want to give to your executor in addition to the powers he would have under current legal framework or limits that you want put on such powers. She will properly draft your will and will try to help you understand all the legal clauses and legalities contained in a will. Your Lawyer will also make sure that your new will revokes all your previous wills or other testamentary documents. Most importantly, your Lawyer will also make sure that your will is properly signed and witnessed.
Your last will is an important legal document and you should retain a professional to help you with its preparation and execution. Seeking and using such help will give you peace of mind knowing that your affairs are in order and make sure that your will reflects all your wishes.