November is recognized across Canada as “Make a Will Month”, which raises awareness about the importance of creating or updating a legally binding will to protect your assets after your death. In Ontario, will creation and overall estate planning can be a complex process, especially for individuals with significant assets or business interests. One of the most effective tools for high-net-worth individuals and business owners to reduce estate administration tax (commonly referred to as probate fees) is the use of secondary wills. When used correctly, secondary wills can help preserve wealth, streamline the estate administration process, and protect valuable business assets from unnecessary taxation.
This blog provides an in-depth look at what secondary wills are, how they work in Ontario, who can benefit from them, and what you should consider when implementing them as part of your estate plan.
What Is a Secondary Will?
A secondary will is a legal document that exists alongside a primary will, with each governing a different category of assets. The primary will typically deals with assets that require probate, such as bank accounts, real estate registered in the deceased’s name alone, and publicly traded investments. In contrast, the secondary will is used to govern assets that can be transferred without the need for a probate process.
In Ontario, this dual-will strategy is legally recognized and widely used, particularly by business owners who hold shares in private corporations. Because probate fees in Ontario are calculated as approximately 1.5% of the estate’s value (for estates exceeding $50,000), excluding assets from probate through a secondary will can result in significant tax savings.
How Secondary Wills Work in Ontario
Under Ontario law, when a will is probated, the estate is subject to estate administration tax based on the total value of the assets governed by that will. By using a secondary will, an individual can direct specific non-probatable assets (like private corporation shares) into a separate will. This secondary will does not need to be submitted to probate, thereby avoiding the associated tax on those assets.
For example, consider an individual who owns a home, several bank accounts, and shares in a family-owned business. The home and bank accounts would be included in the primary will and would go through probate, while the private company shares would be included in the secondary will and would bypass probate altogether.
Key Assets Commonly Included in Secondary Wills
The most common asset addressed through a secondary will in Ontario is shares in a privately held corporation. Other non-probatable assets that may be suitable for inclusion in a secondary will include:
- Interests in family trusts
- Certain shareholder loans
- Personal items or collections of significant value
- Some business interests not registered in the deceased’s name alone
It is essential to obtain legal advice to determine which assets can be appropriately assigned to a secondary will, ensuring it complies with Ontario law.
Who Can Benefit from Secondary Wills?
Secondary wills are particularly beneficial for:
- Business owners who hold shares in a private corporation
- High-net-worth individuals with complex asset portfolios
- Entrepreneurs involved in multiple business ventures
- Individuals with valuable personal property that does not require probate to transfer
By separating these assets from the primary will, individuals can reduce the probate tax burden and simplify the administration of their estates.
Legal Requirements and Best Practices
To be effective, both the primary and secondary wills must be drafted carefully to ensure there is no overlap or conflict between them. Each will should clearly define the types of assets it governs and include language that explicitly excludes assets covered by the other.
Both documents should also appoint the same or different executors as appropriate, depending on the complexity and scope of the assets. Coordination between the two wills is crucial to avoid confusion or legal challenges during estate administration.
Potential Pitfalls to Avoid
While secondary wills offer valuable advantages, there are also risks if they are not appropriately prepared. Common issues include:
- Overlapping asset descriptions, leading to confusion or legal disputes
- Failure to update both wills after significant life events, such as a business sale or divorce
- Improper execution, which can lead to a will being deemed invalid
- Lack of clarity on which assets are governed by which will
To mitigate these risks, it is strongly recommended to work with an estate lawyer experienced in drafting multiple wills. Your lawyer can ensure that each document is legally valid, clearly worded, and synchronized with the other.
How Secondary Wills Affect Estate Administration
One of the primary advantages of secondary wills is that they can streamline the estate administration process. Since probate is not required for assets covered by the secondary will, the executor may be able to administer those assets more quickly and with fewer legal hurdles.
This can be particularly helpful in situations where time-sensitive decisions must be made regarding the continued operation of a family business. It can also reduce administrative costs and provide beneficiaries with faster access to certain assets.
Tax Implications and Financial Planning
Avoiding probate fees is a major benefit of using secondary wills, but they can also play a broader role in tax planning. By carefully structuring your estate to separate high-value, non-probatable assets, you can reduce the overall taxable value of your estate.
In addition, secondary wills can complement other tax-efficient strategies such as trusts, corporate reorganization, and life insurance planning. A coordinated approach with your lawyer, accountant, and financial advisor can help you develop a robust estate plan that maximizes the value passed on to your beneficiaries.
Secondary Wills: A Strategic Tool for Ontario Business Owners and Professionals
Secondary wills are a powerful estate planning tool for Ontario residents with complex or high-value estates. By separating non-probatable assets, especially shares in private corporations, into a secondary will, individuals can achieve substantial savings on probate fees, maintain greater privacy, and ensure a smoother estate administration process.
However, secondary wills must be drafted with precision and updated regularly to reflect changes in assets, business interests, and personal circumstances. Working with an experienced estate lawyer is crucial to developing a dual-will strategy that aligns with your goals and protects your legacy.
Contact Bader Law for Comprehensive Estate Planning Services in Mississauga & Oakville
If you hold shares in a private corporation or have a complex asset portfolio, a secondary-will strategy may significantly reduce probate fees and protect your business interests. At Bader Law, our estate planning lawyers can review your corporate structure, identify which assets can be placed in a secondary will, and ensure your documents are drafted with the precision required under Ontario law. Contact us by calling (289) 652-9092 or reach out online to schedule a confidential consultation and develop a plan that safeguards both your estate and your corporation.