How many Wills do I need? Multiple Wills in Estate Planning
Multiple Wills in Estate Planning
When a person dies, some of their assets will pass directly to designated beneficiaries and joint owners. The designated beneficiary named on a life insurance policy, RRSP or TFSA needs only to deal with the insurance company or financial institution. A joint owner of real estate simply needs to file a transmission in the Land Title Office to transfer the real estate to him or herself as the surviving joint owner. A joint owner of bank accounts or vehicles needs only to deal with the financial institutions and ICBC.
However, if the deceased died owning real estate, of any value, or any other asset or assets that are collectively valued at more than $25,000 solely in the deceased’s name, the validity of the will and the executor’s authority must be confirmed by the court – this is called probate – in order for the executor to deal with these assets.
Probate fees are payable at the time the application is filed with the court. These fees are levied at the rate of $200 plus $6 for each $1,000 of estate value in excess of $25,000 up to $50,000, plus $14 for each $1,000 of estate value in excess of $50,000, and are payable when the application is made for the grant. For ease of calculation, you can simply take the value of your estate, deduct secured debts, and multiply that by 1.4% to estimate the probate fees payable.
One of the strategies that can be considered to reduce probate fees is the use of multiple wills. With two wills you would have one will (your “Personal Will”) that deals specifically with all of your personal assets excluding your shares and shareholder loans in your company. You would have a second will (your “Business Will”) that deals specifically with your shares and shareholder loans in your company. With this strategy, only the assets governed by your Personal Will are subject to probate and probate fees.
For example, if your personal assets are worth $1,000,000, probate fees payable on your personal estate through the probate of your Personal Will would be $14,000. If your shares and shareholder loans in your company are worth $2,000,000, you would be saving $28,000 in probate fees. This is because, under the current British Columbia Business Corporations Act, the executor named in your Business Will does not need to probate your business estate to deal with the transmission and transfer of your shares in your company.
The multiple will technique has now been used successfully in British Columbia to reduce exposure to probate fees. In Re Berkner (Estate), 2017 BCSC 619, the British Columbia court ruled that a will-maker is permitted to make more than one valid will and that an executor is not required to probate a will.
However, it is important to note the following issues:
- the provisions of the British Columbia Wills Estate and Succession Act require that the two wills must have difference executors;
- there may be other options available to you to reduce exposure to probate fees, which are often better, for example, alter ego or joint spousal trusts are available once you are over 65;
- the multiple will strategy should not be used if there is a risk of claims by a spouse or child to challenge provisions made in the wills or if there are minor beneficiaries; and
- the multiple will strategy should not be used if there is a risk of claims by a spouse or child to challenge provisions made in the wills or if there are minor beneficiaries; an
Clearly, the multiple wills strategy is not for everyone. Please call us if you are interested in determining if this strategy would work for you.