Recent Decision Could Significantly Impact Estates with Multiple Wills
September 26th, 2018
The Ontario Superior Court of Justice recently reviewed two almost identical wills and found that one of the two documents was invalid because it failed to “describe with certainty” any property that is subject to the will and left assets to the discretion of the trustees.
Some Helpful Background Info
In some cases, a grant of probate (now known as a “certificate of appointment of estate trustee with a will”) is needed and an estate trustee (or trustees) will have to apply to court for probate and will have to pay the relevant estate administration tax. This is needed, where, for example, a house is being sold and a buyer requires assurance that the sale is bona fide (i.e. that the buyer is dealing with the legitimate personal representative of the estate and is purchasing the home from the estate) or where a bank requires documentation to allow an estate trustee to deal with the bank account of the deceased.
A common estate planning tool that is employed in order to avoid paying estate administration taxes is to execute multiple wills. A Primary Will will contain all assets that will require probate (for instance, real estate) whereas a Secondary Will will contain those assets that do not require probate (for example, shares in a corporation, furniture, etc.).
The Three Certainties
Wills are a form of trust. As such, in order to be valid, a will must satisfy the “three certainties”:
- Certainty of intent to create the trust;
- Certainty as to the subject-matter of the trust;
- Certainty as to the objects of the trust or the purposes to which the property is to be applied.
What Happened in this Case?
Two married testators created two materially identical wills, a Primary Will and a Secondary Will. Both testators passed away on the same day. The wills appointed the testators’ daughter, their accountant, and their solicitor as executors.
The Primary Will settled upon the executors “all property owned by me at the time of my death EXCEPT … [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or a realization thereof” [emphasis added].
The Secondary Will, which expressly did not revoke the Primary Will, settled upon the executors “all property owned by me at the time of my death INCLUDING… [certain named assets and] any other assets for which my Trustees determine by a grant of authority by a court of competent jurisdiction is not required for the transfer or realization thereof”.
Approximately two weeks after the testators’ death, the executors commenced two Applications for Certificate of Estate Trustee with a Will.
Issue at Hearing
The issue that arose at the hearing was whether a will was valid if there was uncertainty as to the subject-matter of the trust created by it.
The trustees argued that there was no uncertainty of subject-matter in the Primary Will.
The judge found that the Secondary Will of each testator was valid but the Primary Will was not.
With respect to the three certainties: there was nothing to suggest that the testators had lacked the intent to create a trust (the language used in the wills was clear and unambiguous, and there was no evidence that either testator lacked capacity to express their intentions). Likewise, there was nothing to suggest any questions as to the certainty of objects (there were a number of bequests made in the will).
However, the court noted that there were some issues with certainty of subject-matter.
The Secondary Will vested in the executors all property of the testator and therefore satisfied the requirement of certainty of subject-matter: no property was excluded from the trust created by the Secondary Will, even though it stipulated that it did not revoke the Primary Will.
In contrast, the Primary Will effectively vested the entire discretion to retroactively determine whether any assets were vested under the will to the executors and relied on the executors to decide whether probate was necessary or desirable.
The Court noted:
The three certainties necessary for a valid trust must be satisfied at the time the trust is created – in this case, at the time of death. It is not enough to say that the assets subject to the trust will be determined later and will then be governed by one will or the other. There is no requirement to probate a will. Whether the trustees decide that a Certificate is necessary or desirable to dispose of a particular asset is a matter of their discretion and is not ascertainable by objective criteria ascertainable in advance. Bank X may decide not to accept anything less than a Certificate in order to authorize the Estate Trustees to deal with a bank account of the deceased, for example, while Bank Y may be satisfied with a certified copy of the will appointing them.
The Court went on to say that the fundamental issue with the position of the trustees was that the Primary and Secondary Wills in this case overlapped entirely. Each Secondary Will applied to virtually all property of each testator. The Primary Wills sought to carve out a variable subset of that property but also remained subject to the Secondary Will without subtracting that property from the secondary estate and, moreover, sought to do so based on the subjective determination of the trustees. The court believed that this could not be done.
The Court specifically made a point of emphasizing that the use of multiple wills is common and is not a objectionable estate planning tool in most cases. However, the court further noted that where multiple wills are used the property that is subject to each will “must be ascertainable objectively based on the express intent of the testator without regard to discretion of the Estate Trustees exercised afterwards”. This was not the case here.
What Does this Decision Mean?
This decision appears to be the first in which multiple wills have been tested by a court. Due to its novel nature, and depending on whether the decision is appealed, it might now potentially nullify existing multiple wills across Ontario.
It would be wise to review your existing estate plan and will to determine whether the language there may be problematic, and to lessen the potential of a will challenge or other future estate litigation.
Regular consultations with a knowledgeable estates lawyer about your will and estate plan are advisable.
As a litigation firm that focuses on financial disputes, Financial Litigation has experience handling complex estate matters involving businesses, investments, and other assets. We have an extensive network of financial experts including forensic accounting and estates professionals to help build a successful case for our clients and ensure their rights are protected. To make an appointment, call 416-769-4107 x1 or contact us online.