February 15th 2024
Welcome to our latest newsletter! In this edition, we shed light on the use of dual wills as an estate planning tool in Ontario. Understanding your estate plan is critical to avoiding unnecessary challenges for your loved ones when you pass away. As this article discusses, dual wills can be an effective way to avoid the unfortunate taxation and delay associated with the probate process, and specifically focuses on distributing corporate and other assets where probate is avoidable.
To understand whether a dual will can be a solution for you, we must first consider the difference between primary wills and secondary wills. Your primary will, often called the “public will”, is the last will and testament that deals with those assets that are subject to probate. Probate is a process whereby the Court issues a certificate to the person 
named in the will as the executor. This certificate of appointment of estate trustee allows the executor to deal with the assets of the estate. In order to obtain this certificate, the estate must pay Estate Administration Tax, which tax is calculated on the total value of all assets that go through the probate process. Assets that are most commonly subject to estate administration tax often include real estate, bank accounts, vehicles, and personal articles and investments.
To minimize the estate tax burden and streamline the distribution of assets, individuals should consider the use of dual wills. In contrast with a primary will that deals only with assets that require probate, the secondary will, also called the “limited will”, or “private will”, specifically deals with assets that do not require probate. A secondary will may include the transfer of private shares and other assets that are capable of passing to loved ones outside of probate, without the need of having such shares or assets given a formal valuation and made subject to estate tax. Lets consider in detail why business owners may want to consider the use of a dual will below.
Private company shares may form a substantial part of the value of an estate. The seamless transition of shares may be crucial for the continuity of the business. With a secondary will, business owners can also designate a specific executor to handle just the corporate assets, separate from other aspects of the estate. This can ensure a smooth succession process for the business. For spouses who are given shares of a private company in a secondary will, this means the spouse is in a much better position to manage or sell the business assets, as the surviving spouse can become a lawful director of a corporation and access the corporate bank accounts legally, without needing first the issuance of a certificate from the court and “up front” payment of estate tax. For anyone who has been left shares in a company from their spouse through a secondary will, it is highly recommended to review the tax position of the business with a tax professional, as there will be an important conversation regarding the impact or possible avoidance of automatic tax rollovers and the use of capital gains deductions.
There are other use cases for a secondary will, including cottages that are subject to first dealings exemptions. The “first dealings” exemption can impact any piece of real estate that has been held by individuals for a long period of time, as these properties may qualify for an exemption from estate administration tax under the right conditions. Although having a valid will is one such condition, many estates often require probate anyways, because bank accounts or other pieces of real estate cannot be transferred without this certificate. Unless a secondary will was created that has separated the “first dealings” property from those other assets that require probate, all of the assets of the deceased will come through the probate process and are all taxed accordingly. Given that estate tax is valued at 1.5% for every dollar beyond $50,000, a cottage with a large amount of value will result in a sizeable tax burden payable by the estate. For example, an estate may save nearly $30,000 on a family cottage valued 
at $2M. To avoid this tax, working with a trusted legal professional to ensure a properly drafted secondary will is an easy way for the estate to save a sizeable amount of money.
In conclusion, dual wills offer a strategic and efficient solution for residents in Ontario looking to safeguard their legacy, minimize estate administration tax, and ensure a smooth transition of assets. As estate planning is a complex and dynamic process, we strongly recommend consulting with a qualified legal professional who has a thorough understanding of Ontario's estate laws and regulations. Seeking professional legal advice is essential to ensure that your dual wills align with your overall estate plan and meet all legal requirements. Liddiard Law can help you navigate the complexities of drafting a dual will and can maximize the benefits of a secondary will for your unique situation.
Thank you for taking the time to read our newsletter, do not hesitate to reach out for a consultation on your estate plan today!
Best regards,
Michael Liddiard, BA MA JD
Liddiard Law Professional Corporation