Business Wills for Business Owners

In the general estate advice we give to business owners, multiple Wills are almost always brought up. Even in this blog, we’ve often recommended that you speak with your lawyer about the idea of drafting a separate Will for corporate assets. But lately we’ve had an influx of requests for information about this particular planning strategy so I thought I would cover off some of the generalities here.

A decade or so ago, the normal method of giving away your assets after your death was through a single Will that detailed all of your assets. If that Will required probate (a court approval, now called a Certificate of Appointment of Estate Trustee), the Trustee would submit the Will to court along with the prescribed probate taxes. Those probate taxes vary, but something on the order of 1.5% of the total value of the estate is not uncommon. The list of things that would require a Will to be probated is not long, but it usually applied to at least one asset or circumstance in a testator’s estate and so often estates were probated in their entirety – and probate taxes were paid accordingly.

Then in 1998, in Granovsky v. The Queen, Ontario courts upheld the right of testators to draft specific Wills that gave away specific assets, and affirmed the duty of the Ontario courts to provide a limited grant of probate where it was appropriate. This meant that if you owned a house that required probate in order for your Trustee to be able to transfer it to your beneficiaries, and also held shares in a private corporation which did not require probate, you could now draft two Wills – one for the house and another for the corporate assets. You could then apply for probate on the house Will, and pay the taxes only on the value of the asset, while the shares could transfer without the application of probate taxes.

Depending on the value of the estate, the savings could be quite significant. It’s no wonder why this is becoming such a popular estate planning strategy.

That said, it is important to know that the drafting of multiple Wills is not the end of the story. Conducting the actual transfer of a deceased’s assets often requires dealing with various organizations, banks in particular come to mind, that do not have the legal sophistication to understand the nature of the Will. Despite valid drafting, we still encounter institutions that refuse to honor the requests of a testator’s Will. As such, in addition to the Will itself, it is often just as important to retain expert counsel in assisting with some of the administration issues that are encountered in corporate estate planning. Here, estate experience is not sufficient – you will require counsel who also has significant corporate law experience (hint hint – that’s us).

At the end of the day, a multiple Will is a great tool to use if you know when and how to use it. If you have any questions about this or any other matter, please contact us and we’ll find a solution that is right for you.

Scott R. Young