In Ontario, probate fees are among the highest in the country. There are some ways that you can help your loved ones avoid paying some estate administration tax (EAT) after you are gone.
A Secondary Will can help reduce the amount of tax that your loved ones will have to pay in EAT. A Secondary Will is not applicable to everyone, though. Your Secondary Will only covers assets that are not required to go through probate.
First, let’s break down what your regular Will, or Primary Will in this case, and your Secondary Will covers:
- A Primary Will determines where your personal assets will go after you are gone.
- Your Primary Will determines guardianship for minors under the age of 18.
- Real estate property solely in your name.
- Personal property (such as boats, automobiles) solely in your name.
- Registered plans (RRSP, for example) and insurance policies that do not have named beneficiaries or the estate is the named beneficiary.
- Bank accounts.
- Shares in a public corporation.
- Shares in a private corporation.
- Personal effects like antiques, art, and jewelry.
From Canadian Business Journal, for owners of shares of private companies the savings from having dual wills can be substantial. For example, if the value of the private company shares is $1,000,000, the EAT is $14,500. By excluding those shares from the primary will and including them in the secondary will, the estate will not have to pay EAT on those shares.
If you have a Secondary Will and a Primary Will, it is imperative that the two Wills do not contradict each other. Each Will should make it clear that there is another Will that needs to be taken into consideration. They should both be kept in the same place and your Executor should know where they are.
If a Secondary Will is not applicable to you, there are other ways that you can reduce the EAT needing to be paid on your estate after your death. This includes naming a beneficiary on your insurance policies, joint ownership of assets like real estate, and making gifts prior to death. These can have their own financial drawbacks and should be discussed with a professional.
There are many elements of estate planning. Our aim is to “demystify” wills, powers of attorney and trusts, so everyone has access to the knowledge they need to make informed choices about their estate plans. We have been doing this work a long time, but nonetheless remain passionately committed to personal, individualized service for each of our clients.
We are happy to discuss the range of our estate services with you during a one-on-one meeting. To speak with us, send us an email or call us at 1-800-756-7138 or 289-278-0934.
This is for informational purposes only and does not constitute as legal advice. Please contact us if you have any questions