The use of multiple wills for estate planning purposes is a strategy that many have used to allow some assets to pass to family members of loved ones quickly while the remainder of the estate gets settled. The use of primary and secondary wills has recently been the subject of controversy as it worked its way through the courts, eventually landing before the Ontario Superior Court of Justice.
The wills
The case originated with a married couple who died on the same day in October 2017. Each of them had left both primary and secondary wills behind. The wills named their daughter, accountant, and lawyer as the executors.
Each primary and secondary will as essentially the same. The primary wills were designed to deal with the distribution of all property except, “any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for the transfer or realization thereof.”
The secondary wills covered items explicitly excluded from the primary wills as well as “any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for the transfer or realization thereof.”
When the wills were submitted for a Certificate of Appointment the application judge had a problem with the executors being able to determine which property would be covered by each will. This discretion left too much ambiguity behind because with few exceptions, the secondary will did not include specific assets. The application judge wrote, “ “A will is a form of trust. In order to be valid, a will must create a valid trust and must satisfy the formal requirements of the Succession Law Reform Act (“SLRA”). He further set out thata valid trust, and therefore a will, must demonstrate “certainty of intent to create the trust, certainty as to the subject-matter or property committed to the trust, and certainty as to the objects of the trust or the purposes” (i.e., the “three certainties”).
The application judge also wrote,
“The Secondary Will of each testator vests in the executors all property of the testator and therefore satisfies the requirement of certainty of subject-matter. No property of the testator of any kind is excluded from the trust created by the Secondary Will even though it provides that it does not revoke the primary will. The Primary Will, by contrast, effectively vests in the executors the entire discretion to determine retroactively whether any assets were vested under the will at death based upon the executors’ view as to whether probate is necessary or desirable.”
As a result, the judge found the secondary wills to be valid, but the primary wills to be invalid.
At appeal
The court was tasked with determining whether the application judge erred in stating that a will is a trust. The court also had to determine whether the application judge was correct in holding that the “three certainties” are what should be used to determine the validity of a will.
Common law in Ontario has long held that multiple wills are valid, explaining that they are often used to allow the estate to pay less tax. The court wrote,
“Because a testator often executes their Last Will and Testament several years in advance of death, it is often not practical to provide a definitive list of assets which will require or do not require a Certificate of Appointment to be transferred or realized at the time the Primary and Secondary Wills are executed. To overcome this practical problem, estate planning lawyers often provide estate trustees with the power to determine whether a particular asset requires a Certificate of Appointment upon administering the will. These clauses are often referred to as allocation clauses. The use of allocation clauses is a common estate planning technique.”
The court added that just because the executors in this case had the discretion to allocate assets under each will, it did not follow that they could exercise that discretion in an arbitrary fashion.
The court did not agree with the application judge’s statement that a will is a trust and is therefore subject to the three uncertainties. However, even if a will is a trust, the primary will should have been determined as valid. The court’s decision stated,
“The property in the Primary Wills can be clearly identified because there is an objective basis to ascertain it; namely whether a grant of authority by a court of competent jurisdiction is required for transfer or realization of the property. As a result, the Executors can allocate all the deceased person’s property between the Primary and Secondary Wills on an objective basis.”
As a result the primary and secondary wills were both held as valid.
If you are considering filing an application to challenge a will, contact the estates lawyers at Derfel Estates Law before you proceed. We can help you determine whether you are eligible to bring such a claim, can help you understand your options and rights, and can represent you throughout the challenge process. Call us at 416-847-3580 or contact us online to schedule a consultation.