Dual wills[i] are an estate planning tool that has gained popularity in British Columbia since 2014, when the Wills, Estates and Succession Act (“WESA”) came into effect. In essence, this planning tool involves the use of two wills for the same will-maker: one will for his or her private company shares (and any other assets not requiring a grant of probate for distribution); and another will for the remainder of the will-maker’s assets requiring probate. The end goal of this strategy is to avoid probating the will dealing with assets that do not require probate for distribution, therefore saving probate fees otherwise payable by the estate and expediting distribution of those assets in accordance with the will-maker’s intent.
It should be noted that a grant of probate is not required for all estates. However, certain assets (e.g., real property and most bank accounts) require a grant of probate to compel the third parties administering those assets (i.e., the Land Title Office and financial institutions) to distribute those assets to the executor and/or the beneficiaries of an estate. Other assets, such as shares that the deceased held in private companies, may not require a grant of probate to be transferred, especially when the will-maker was the controlling mind of such private companies.
To obtain a grant of probate, probate fees equal to roughly 1.4% must be paid on the gross value of the estate assets passing to an executor under the will being submitted for a grant of probate. Depending upon the gross value of an estate, these probate fees can be substantial.
Before WESA, it was uncertain whether dual wills could be used in British Columbia. The technique had been used in Ontario for nearly 20 years, but British Columbia wills legislation then in effect differed from that in Ontario. The wording of section 122(1)(b) of WESA brought greater certainty to the law in British Columbia by confirming that, as long as different executors are appointed under two wills for the same will-maker, a will-maker can essentially split his or her assets between two wills such that those assets requiring probate fall under one will, and those not requiring probate fall under another. As of the writing of this post, there are no British Columbia cases that have considered the new wording of section 122(b) of WESA.
As mentioned above, dual wills can reduce probate fees paid on the assets of an estate by separating the assets requiring probate under one will and those that do not under a second will. This strategy only works with separate executors, since the executor applying for probate must disclose all assets passing through the will in which that executor was appointed. If private company shares are expressly excluded from the will being probated, then the executor of the probated will can apply for probate without disclosing the other assets being administered by the executor of the second will who will not be applying for probate.
While the financial advantages of dual wills are clear, drafting and administering dual wills is considerably more complicated than drafting and administering a single will. Further, issues with respect to creditor protection, wills variation claims, and taxes may arise from dual wills. Other estate planning tools, such as the creation of an alter ego trust, may be available to achieve a similar intended result without the same complexities.
If you are considering dual wills for your estate planning, we can assist. For further inquiries on this topic and advice about dual wills, please contact one of our lawyers in our Wills, Estates + Trusts Practice Group.
[i] Special thanks to Ephraim Fung, Articling Student, for his directed research on this topic.