PublicationsProbate Fees and Dual Wills The Estate of Philip Granovsky has won a landmark decision in an Ontario probate fee case, and the result may be a complete overhaul of the will-making process in Ontario. The question was whether or not a second will dealing with specific assets only, is a valid means of avoiding probate fees if the executor decides not to have it probated. The case in point involved the death of an individual possessed of an estate of about $27 million dollars, made up of $2 million of cash and other marketable assets, and $25 million in shares of a private company. The deceased had prepared two wills, the first dealing with the $2 million in normal assets and the second dealing exclusively with the $25 million in private company shares. Under common law, the executors have the authority to deal with the assets under a will without getting probate, but financial institutions and transfer agents for public company securities will often not release assets without the comfort of knowing that the court has confirmed the authenticity of the will and the authority of its executors (in other words, probate). Ontario took the position that probate fees apply to all the assets of the deceased regardless of the number of wills involved, in that the relevant section of the Act refers to "the value of the whole estate". In other words, the deceased may have only one estate, notwithstanding that he or she may have multiple wills. The Court disagreed and held that there is no obligation to obtain probate at all and "limited probate" is possible under the Act. Ontario immediately advised that it would appeal. Although the matter is therefore not finally resolved most lawyers seem to feel that the decision is sound and will stand up on appeal. The value of this decision is readily apparent. The deceased's estate in this case saved about $375,000 in probate fees (i.e. 1½% of $25,000,000 of assets covered by the second will). At the same time, of course, it has opened the door for all private business owners to avoid the 1½ probate fee charge in this manner. It must be remembered that the point here is that executors of an individual's will need no authority to pass on the shares of a private company to the deceased's heirs as provided by the will, and the probate fees are simply a charge for comfort where no comfort is needed. Where only one will exists, probate will be required solely to give the holders of the other assets the comfort needed to release them. We would suggest that business owners now seriously consider setting up two wills, with the second holding only their private company investments. While there may be some legal costs involved in doing this, the savings are obvious and even should Ontario prevail on appeal there will have been no "downside" (other than the legal costs). Until such time as the appeal is heard the decision stands. |