Multiple Wills – A Way for Business Owners to Save Money on Estate Administration Tax
When a person dies, their estate may require a probate. Probate is the process to get formal approval of the appointment of the estate trustee through a court application. The estate pays estate administration tax in order to get a Certificate of Appointment of the Estate Trustee. The estate administration tax depends on the value of the estate.
Estate Administration Tax is the amount of tax payable upon the issuance of an estate certificate for which application is made on or after January 1, 2020, is $15 for each $1,000 or part thereof by which the value of the estate exceeds $50,000.
Primary and Secondary Wills
Ontario is one of the provinces which recognizes the concept of Multiple Wills, namely, Primary and Secondary Wills, which can help you in saving the estate administration tax. The Primary Will deals with assets which would need to be probated, and the Secondary Will deals with assets which can be transferred directly to the beneficiaries without requirement of a probate.
The Primary Will includes assets such as, real estate property, bank accounts, shares in a public company, etc. These assets would need to be probated through the court and will require a Certificate of Appointment of the Estate Trustee.
The Secondary Will include assets such as shares in a private corporation, jewelry, jointly held assets and accounts, assets going directly to the beneficiaries, etc.
If there is a Single Will and the estate trustee required probate for one asset, then the estate will pay estate administration tax on the entire value of all assets governed by that Will. In these scenarios, it is prudent to have Multiple Wills.
The ideology behind the Multiple Wills is to save and avoid the estate administration tax. This can be a significant saving for business owners. Properly written Multiple Wills can help your estate in saving considerable amount of money. As a single mistake in the execution of a Will can invalidate the entire Will, it is important to have an expert and professional advice.
If you are a business owner and looking for an estate planning advice, please feel free to reach our office for an effective estate planning.