In Ontario, when your will is probated, Estate Administration Tax ("EAT") of approx- imately 1.5% must be paid on the value of the assets in the estate. While this may seem like a relatively small amount, it can add up significantly if you hold valuable assets like shares in a private corporation. Through proper estate planning, certain EAT can be avoided through the use of multiple wills.

Since only certain assets require probate, two wills can be prepared; one dealing with the assets which require probate (including bank accounts, GICs, real estate, and shares or debt obligations of publicly traded corporations), and the other dealing with non-probate assets (including personal effects, RRSPs, pension plans, and shares or debt obligations of private corporations). By dividing your assets into these two groups, you can avoid the EAT which would have been unnecessarily applied to and paid on your non-probate assets.

For example, if your private shares are valued at $1,000,000, and you have implemented the multiple wills strategy, your estate will save about $15,000 worth of tax, which can then be distributed according to your wishes instead of to the government.

There are instances where the Courts will require non-probate assets to be probated:

• if the estate is involved in litigation;
• if third parties dispute an asset transfer; or
• if foreign executors are dealing with assets situated in Ontario.

If you hold significant assets for which probate is not required, speak to me about whether multiple wills would be beneficial for your estate plan.

Suzanna Winsborough
Business Succession and Family Succession Services
Tel: (905) 276-0434
E-mail: swinsborough@kmblaw.com

The comments in this newsletter are of a general nature and are not designed to replace professional advice in specific situations. If you would like extra copies of this newsletter, or you know of anyone who would be interested in joining our mailing list, please contact Cheryl Woolcott at (905) 276-9111.