Estate lawyer Adam Castonguay explains how Dual Wills can reduce probate tax, protect private assets, and ensure more of your estate is passed on to your beneficiaries
When most people think about estate planning, they assume probate tax is simply unavoidable, but that’s not always the case. Dual Wills can be a smart and surprisingly flexible way to minimize Estate Administration Tax, often called Probate Tax.
Estate Lawyer and Managing Partner at Conroy Scott LLP in Sudbury, Adam Castonguay says, “Most people are surprised to learn that you can have two Wills. A Primary Will handles assets that require probate, while a Secondary Will covers certain private assets that do not require probate, thereby reducing the Estate Administration Tax.”
A Strategy Most Don’t Know Exists
Many people believe, estate planning begins and ends with drafting a single document. In reality, Dual Wills can significantly reduce the Estate Administration Tax, yet it remains one of the least discussed and least understood planning tools available. Castonguay says, “For some people, it’s difficult to grasp the concept that you’re dividing your estate into two sections, a Primary Will subject to probate and a Secondary Will that deals with everything else. The primary Will requires a Certificate of Appointment of Estate Trustee from the court that allows the executor to access financial accounts and sell real estate, while a Secondary Will covers personal property that the executor can transfer informally or access without needing to prove they are the named executor with the certificate from the court.”
Most people, including some lawyers only think about using Dual Wills when dealing with a business owner, which is why it’s sometimes referred to as a Corporate Will, but the tax advantages apply equally to everyone, whether you own a business or not.
Simple Strategy, Substantial Savings
Many people don’t realize that their “toys” such as vehicles, boats, trailers, and valuable collectables may be increasing the probate bill their estate may one day face. Castonguay points out, “If all these expensive assets were put in a single Will, they would be subject to Probate Tax. Everything that is dealt with in the Will that goes to probate is taxed. If you have one Will that includes all of your assets, your executor must assign a value to all of those assets and pay the Estate Administration Tax accordingly.”
In Ontario, the Estate Administration Tax is calculated at $15 for every $1,000 on estate value over $50,000, effectively 1.5%. The first $50,000 is tax free. For example, an estate valued at $500,000 could mean $7,500 in probate tax must be paid to the provincial Minister of Finance.
Assets subject to the Estate Administration Tax are all assets that require a Certificate of Appointment of Estate Trustee, or probate. These assets are typically real estate, bank accounts, and investment holdings, where the lawyer and Land Registry Office require proof that the executor can access those accounts and investments. These assets would be in the Primary Will.
The Secondary Will would cover assets that do not require probate such as personal property including vehicles, campers, trailers, jewelry, artwork, collectibles, furniture, and other valuables. Castonguay points out, “By dividing assets this way, the only assets subject to the Estate Administration Tax would be those assets in the Primary Will, which reduces the overall probate costs payable by the estate.
What the Savings Can Look Like
Consider the miner who has spent decades working in a high-paying job. He doesn’t own a corporation, but over the years, he’s built a collection of valuable personal assets: an $80,000 camping trailer, $40,000 boat, $100,000 pickup truck, $10,000 ATV, $10,000 Rolex, and a $10,000 inherited coin collection. That works out to $250,000 in personal property. The savings can be significant. Castonguay says, “At 1.5% Estate Administration Tax, that share alone could amount to $3,750 in probate tax, if included in a probated estate. With properly structured Dual Wills, the personal assets can be excluded and the miner can leave that additional $3,750 for his family.”
Smart Planning Pays Off
The Conroy Scott Law firm has many business owners and high net worth clients, both for corporate matters and estate planning. Adam Castonguay says, “We take the experience we’ve developed and apply it to all of our clients. We ensure they receive the best representation possible, the best results, with the best care provided for their families.”
Clients are thrilled, particularly older clients who’ve accumulated significant assets, when they discover that they can potentially save thousands of dollars in probate tax. Castonguay adds, “The most common reaction is, ‘anything I can do to keep my money out of the hands of the government, let’s do it’. It’s a proven concept used across the province, primarily for business owners, but it can apply to anyone looking to save on probate tax.”
Start Saving with the Right Advice
Drafting Dual Wills requires carefully prepared new Primary and Secondary Wills. That’s why working with an experienced estate lawyer is indispensable. Adam Castonguay regularly advises clients on this approach. He says, “Anyone who is looking to update their Will and has personal assets should consider Dual Wills. I generally recommend this option to those who have personal assets valued in excess of $50,000, which is the point where the savings begin to justify the cost. Everyone’s circumstances are different, and careful review and planning with a lawyer is indispensable.”
If you would like to know more about Dual Wills, a thoughtful discussion today with Adam Castonguay could mean significant savings and greater peace of mind for your family tomorrow.
Contact Adam Castonguay at Conroy Scott LLP at (705) 674-6441, by email at [email protected], or online.
