Canada: Probate Fee Avoidance: The Potential Benefits And Challenges Of Using Multiple Wills

You may be familiar with the term "probate". Probate is the process through which the BC Supreme Court issues a grant of probate, which is legal confirmation of the validity of a Will and the Executor's authority under it.

Under the probate process, the Executor of a Will must disclose all the assets and liabilities of the deceased person's estate to the court and provide the Will to the court; once satisfied of the Will's validity and the disclosure related to the estate, the court will acknowledge the appointment of the Executor under the Will. The probate process can be time-consuming, makes the Will publicly available (anyone can search the court's registry), and necessitates the payment of a fee equal to approximately 1.4% of the value of the estate (the exact formula is 0.6% the estate value greater than $25,000 but less than $50,000, and 1.4% on the rest). For example, if the estate was valued at $1,000,000, then probate fees of approximately $14,000 must be paid before the court will issue the grant of probate.

There are strategies available to avoid the probate process, in whole or in part, thereby reducing the amount of probate fees payable. One of these strategies exploits the fact that not all assets require a grant of probate before they can be transferred to the beneficiaries. Assets controlled by third parties such as the Land Title and Survey Authority or financial institutions often need a grant of probate before they can be transferred; these include assets such as real estate, bank accounts solely in the deceased's name, vehicles and some insurance policies. Assets which do not always need a grant of probate include private company shares, art, personal belongings, shareholder loans, RRSPs, RRIFs, TFSAs, and jointly-owned assets with the right of survivorship.

If a single asset captured by a Will requires a grant of probate, the Executor must disclose all other assets captured by the Will regardless of whether or not they require a grant of probate to be transferred.

A strategy to avoid paying some probate fees is to make multiple Wills. One Will – the probate Will – would capture and govern all assets that require a grant of probate; and the other Will – the non-probate Will – would capture and govern all assets that do not require a grant of probate. Through this strategy, probate fees are calculated and owed only on the value of the assets captured and govern by the probate Will, and all other assets are transferred without probate fees. Table 1 shows an example of how fees may differ in a single Will versus multiple Will scenario.

For a real-life example of the benefits of multiple Wills, see our previous post on the topic.

Table 1: Approximate probate fees paid under single and multiple will scenarios.

There are several factors which should be taken into consideration before someone decides to use multiple Wills to plan the distribution of their estate.

• Added complexity and increased cost: Drafting multiple Wills instead of a single Will is inherently more complex. This adds cost to the drafting process, and one should make sure that their savings outweigh the added expenditure.
• Issues with wills variation claims: From the time a Will is probated, any disgruntled spouses or children have 180 days to dispute the distribution of the estate and bring what is known as a Wills Variation claim. If a grant of probate is not sought (as would be the case for a non-probate Will), then their right to dispute the distribution has no limitation period. If there is a concern that the Will may be disputed, not probating the Will could expose the Executor to a great deal of risk.
• Need for different Executors: During the probate process, an Executor has a duty to disclose all assets that pass to them whether or not they are contained within a single Will. For this reason, the Executor of the probate Will must be different than the Executor of the non-probate Will, so that the Executor of the probate Will does not have to disclose to the court the assets which are captured by the non-probate Will.
• Unintended revocation: Multiple Wills must complement each other to be effective. It is possible for a term in the secondary Will to revoke the primary Will if not drafted correctly.

In conclusion, probate can be an expensive and time-consuming process. In certain situations, drafting multiple Wills can be an effective strategy to avoid paying probate fees on certain assets.

However, it is important to consider the added complexity/cost, issues with Wills Variation claims, the need for different Executors, and possible unintended revocation. Before deciding on an estate planning strategy, it is important to consult with a legal professional to ensure all factors are considered and that all documents are drafted correctly.

With over 125 years of combined experience, families have turned to the trusted expertise of our Estates & Trusts lawyers to assist with strategic estate planning and administration, including drafting wills, probate, and tax strategies.

Whether you are creating your first will, revising an existing will or now looking to create multiple wills, we can address any questions you may have and work with you to ensure your final wishes are honoured.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.