The Benefits of a Secondary Will: FAQs
You might already have a will, but do you know what are the benefits of a secondary will? The use of “multiple wills” in estate planning typically means that there is a primary and a secondary will. The ability to have two or more valid wills was confirmed in an Ontario court case, Granovsky Estate v Ontario. In that case, the judge ruled that there are no legislative prohibitions on restricting a testator to one will. As the law stands in Ontario, you as the testator can have multiple wills to dispose of your estate in the way that you want.
So, what does this mean for the average person? Do you need a secondary will? What are the benefits of a secondary will? What are the considerations you need to make before getting one? This blog will go over some common questions you might have regarding a secondary will.
- What is a secondary will?
- What is the Estate Administration Tax in Ontario?
- How does the Estate Administration Tax impact a secondary will?
- Do I need a secondary will?
- What are the benefits of using a secondary will?
- Do I need a secondary will to save on probate?
- Why does the secondary will need to be carefully drafted?
- Should I review and update my wills?
- Why should I use a lawyer for a secondary will?
What is a secondary will?
What is the Estate Administration Tax in Ontario?
In Ontario, the Estate Administration Tax is about 1.5% of the value of the testator’s total assets at the date of death. You can calculate how much Estate Administration Tax will need to be paid based on your estate value here. This tax will be paid when you probate the assets in the primary will.
How does the Estate Administration Tax impact a secondary will?
In Ontario, individuals only need to pay the Estate Administration Tax on the assets they administer through the primary will. This tax does not apply to assets included in the secondary will unless they are determined to require probate. If any part of the secondary will requires probate, the entire will is subject to probate, and all assets are included in the calculation.
Do I need a secondary will?
The use a secondary will is context dependent. Having a primary will is essential, but having a secondary will all depends on you as an individual and the types of assets you have.
You can typically put the following assets into a secondary will:
- Shares of privately held corporations, related shareholder’s loans and receivables
- Partnership interest and related loans and receivables
- Household goods and personal effects
- Assets that do not have a registered title
- Unsecured debts
A secondary will can also be a useful estate planning tool if you have a cottage or winter/summer home outside of Ontario, where the language and the law may be different to that of Canada.
What are the benefits of using a secondary will?
Do I need a secondary will to save on probate?
You will need a secondary will to contain all the assets that you do not need to pay probate for in order to benefit and save on probate fees. If you only have one will, and in that will you have assets subject to probate and other assets that typically are not subject to probate, you will pay probate fees for the entire value of the estate, including the ones that would normally not be subject to probate.
The $500,000 in shares of the privately held company would not be probated and would not be subject to any Estate Administration Tax if it were placed in a secondary will. This results in savings of thousands of dollars in the Estate Administration Tax and is typically the reason why people use a secondary will. Your tax savings will depend on your circumstances and the assets you own, but using a secondary will is the only way to save on probate fees for items that do not require probate.
Why does the secondary will need to be carefully drafted?
You need to be careful when drafting a secondary will. Having multiple wills requires diligence in drafting them so that they do not accidentally revoke each other and that the gifts are not doubled. You’ll also want to ensure that you clearly state your intention that you will use multiple wills in order to achieve your desired estate planning objectives. If you make any mistakes while drafting the will you may end up in a situation where neither of your wills will be valid. For this reason, it is recommended that you obtain the assistance of a lawyer when drafting a secondary will.
Should I review and update my wills?
Why should I use a lawyer for a secondary will?
If you require any assistance with your estate planning get in touch with us at Beffa Law and we will be able to help you make the right choice. Beffa Law is a law firm serving Oakville, Burlington, Milton, Mississauga, and other areas west of the GTA. We offer assistance in estate planning along with other practice areas. Call us at 647-812-8462 or email us at email@example.com to set up an appointment to discuss your questions or concerns.