A Matter of Trust: The case against multiple wills as an estate-planning tool

When it comes to devising a will, the primary concern for testators is peace of mind in knowing their estate will be managed pursuant to their explicit instructions whereas for the solicitor, respecting the testators’ instructions, ensuring capacity, and protecting the will from a contestation are paramount.

It’s for this precise reason that the 1998 decision in Granovsky Estate v. Ontario that allows for multiple wills is at best dubious law. This questionable scheme, designed mainly as a tax avoidance arrangement so that wealthy estates can devise a secondary, separate will to avoid probate fees, greatly increases the probability of confusion, will contestations, and liability for solicitors. Despite the ruling, it’s time to reconsider the idea of multiple wills.

The central issue of debate in Granovsky was whether probate fees should be paid on the entire value of the assets at the time of death or whether those assets requiring probate “formed the basis from which to calculate the tax.” The second will was designed primarily to shelter the value of shares held in a privately held corporation from probate.

A confounding issue was the Ontario Estates Act itself. Whereas s. 53 of the Estates Act stated that probate fees were to be “calculated on the value of the whole estate,” s. 32(3) implies otherwise, stating it’s sufficient to include “only the property and value thereof intended to be affected by such application or grant.”

In this landmark decision, the Ontario Superior Court of Justice found in favour of the estate trustees given that testators have “unfettered discretion” when dealing with their assets and devising their wills subject only to the limitation of “certain legal claims dependants may have against estates if they are not adequately provided for” and “subject to the rights of the surviving spouse to take under the will or elect against it.”

The court’s position was that both wills were valid and that the testator had made a clear intention to dispose of each asset class separately. As such, it deemed the scheme to be permissible.

The testator’s “unfettered discretion” notwithstanding, this ruling is questionable in terms of its legal implications both for solicitors drafting the wills and estate trustees alike.

For solicitors, the use of multiple wills increases the likelihood of a negligence claim for what on the surface might appear to be simple errors but are in essence fundamental.

As an example, it’s not inconceivable that in a secondary, non-probate will, the solicitor accidentally includes a standard, boilerplate “revocation” phrase and, through inadvertence, the primary will in this multiple scheme is revoked. Although lawyers can easily avoid this simple error through careful drafting and proper due diligence, it’s still a possibility and the burden imposed on the estate trustee and, by extension, the solicitor potentially facing a negligence claim would be immense.

A second drawback of a non-probate will is that it affords no protection from liability to the estate trustee acting in such a capacity. Although the probate process doesn’t absolve estate trustees from liability, they’re released from any and all liability as long as they’re conducting their affairs as an ordinary “reasonable person” would do.

It’s strongly inadvisable for the solicitor to permit the estate trustee to encourage a scenario that dramatically increases the probability of a contestation from a dependant or third party.

Third, as deficits in Ontario are mounting and looming, the multiple wills scheme is questionable on the grounds of public policy in that its very rationale is to be a tax-savings vehicle with little or no other compelling objectives.

Notwithstanding, the courts must remain loath to reverse jurisprudence on the basis of public policy as the central task of any judge is to make rigorous legal findings and groundbreaking decisions based on a careful and methodical interpretation of it. Yet risky schemes unsupported by compelling public policy don’t make for particularly constructive law.

Finally, common sense dictates the preference for a single probate will, especially given that the Estate Administration Tax Act already excludes various items from probate.

Rational analysis of the jurisprudence and its consequences suggest it’s better to avoid using multiple wills. Yet if a client insists on the use of such a scheme despite the risks, the solicitor must, as the old adage goes, get it all in writing.

Jeremy Richler is a Toronto lawyer who practises in a number of areas including wills and estates. His web site is jeremyarichler.com.

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