Multiple Wills: What are Primary and Secondary Wills?
Primary wills often contain assets that need to be dealt with through the process of probate. Although the process is commonly referred to as “probate”, the correct term now is obtaining a Certificate of Appointment (a “Certificate”). Assets that typically require a Certificate include real estate not held jointly, bank accounts without beneficiaries, publicly traded stocks and personal property without a designated beneficiary. The cumulative value of these assets is subject to an Estate Administration Tax (the “Tax”). The Tax is 1.5% of an estate’s value over $50,000.00. Estates with a total value of less than $50,000.00 are not subject to the Tax. This process can take months or in extraordinary cases years.
What can an estate planner do to help reduce administration delays and avoid the Tax? This can be done through the use of a secondary will. A secondary will typically includes assets that do not require a Certificate in order to be distributed amongst beneficiaries. Assets that do not require a Certificate can be distributed quickly and are not subject to the Tax. Assets that do not require a Certificate and would be included in a secondary will include private company shares, artwork, jewelry and other personal items.
Primary and secondary wills must be carefully drafted to ensure they do not contradict or revoke each other. Using multiple wills requires expert legal drafting to avoid conflicts. Also, be aware that some financial institutions may still require probate for certain accounts, even if listed in a secondary will.
How Have the Courts Dealt with Multiple Wills
In Milne Estate (Re), 2019 ONSC 579 (CanLII) the Ontario Divisional Court addressed the use of primary and secondary wills. In Milne, the dispute originated with a married couple who died on the same day in October 2017. Each spouse left primary and secondary wills. The wills named their daughter, accountant, and lawyer as the executors.
Their respective primary and secondary wills were 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.”
The wills were submitted to the court for a Certificate. The judge hearing the application for the Certificate took issue with the executors being able to determine what property would be covered by each will (primary vs secondary). The judge hearing the application, felt that the discretion afforded to the executors created too much ambiguity. But for a few exceptions, the secondary wills did not include specific assets. In Milne, the judge hearing the application 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 that a 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.
The decision of the application judge was appealed to the Divisional Court. The Divisional Court was tasked with determining whether the application judge erred when he held 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.
Re Milne was referred to in Ontario Superior Court decision Gordon v. Gordon et al., 2022 ONSC 550 (CanLII). Referring to Re Milne, at paragraph 42 the court writes,
The use of multiple wills is recognized by the courts in Ontario as a valid method to reduce the tax payable pursuant to the Estates Administration Tax Act, 1998, S.O. 1998, c. 34 (“EATA”): Re Milne Estate, 2019 ONSC 579, 431 D.L.R. (4th) 375, at para. 21. Testators often execute their testamentary document(s) years in advance of their death. As a result, it is not practical for a testator to set out a definitive list of the assets which fall within the portion of the estate to be probated and those which do not: Milne, at para. 22. For that reason, an allocation clause is frequently used and gives the estate trustee(s) the power to determine which assets require a certificate of appointment upon administering a will: Milne, at para. 22.
The Takeaway
In Re Milne, initially, at the application stage, the court held that granting executors discretion (what assets are subject to the primary will versus the secondary will) created a trust-like arrangement. This casted doubt on the wills’ validity. On appeal, however, the Divisional Court overturned this decision, clarifying that a basket clause does not establish a trust but represents a valid exercise of an executor’s authority
The Divisional Court reaffirmed that both primary and secondary wills are testamentary documents. These documents allow executors to allocate assets without violating trust principles. By distinguishing executorial discretion from the creation of a trust, the ruling reinforced the legitimacy of dual-will structures for probate planning.
By clarifying the distinction between executorial discretion and trust creation, the ruling affirmed the validity of dual-will structures in probate planning.
If you are involved in an estate dispute, require estate planning or need to draft 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.