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.
Connolly, Nichols, Allan & Snelling LLP offer the services of estate lawyers, Ottawa based, with experience in estate planning techniques and administration of multiple wills.