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Estates & Wills & Trusts

Estates bar relieved as court endorses dual wills

The estates bar breathed a sigh of relief after the Divisional Court overturned a decision that called the use of dual wills into question, Toronto wills and estates lawyer Daniel Bernstein tells AdvocateDaily.com.

Bernstein, a founding member with Weltman Bernstein, explains that the case concerned a common estate planning tool in which primary and secondary wills are executed by the same testator with the aim of smoothing the estate administration process.

Assets requiring probate, such as money held in bank accounts, land or vehicles owned by the deceased, are dealt with in the primary will, while all others go into the secondary will, including cash, jewelry and shares in private corporations, he adds.

Bernstein says lawyers in the practice area were worried when Ontario Superior Court Justice Sean Dunphy invalidated a set of primary wills in one recent case.

“I was quite surprised because I know many firms were using the same sort of basket clause that the judge had trouble with, and the decision seemed a little overreaching,” he says. “Luckily, the wills I create don’t use that clause, but some lawyers were scrambling to add codicils to existing wills, while others were waiting to hear the result of the appeal.

“So we were really happy when the appeal judgment came in,” Bernstein adds.  

In its decision, a unanimous three-judge panel of the Divisional Court overturned Dunphy’s findings.

The couple in the case, who each had primary and secondary wills, died in October 2017, designating their daughter, accountant and lawyer as trustees of their estate.

But Dunphy ruled the primary wills before him were invalid because they failed to “describe with certainty” the property that was subject to the will, and instead left the decision up to the discretion of the trustees.

According to his decision, the primary wills put the executors in charge of “all property owned by me at the time of my death EXCEPT ... [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or realization thereof,” while the secondary will said it referred to “all property owned by me at the time of my death INCLUDING ...  [certain named assets and] 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.”

Dunphy ultimately voided the primary wills, finding the language that was used failed to identify the property it related to, violating the subject-matter certainty necessary for any valid will.

However, the Divisional Court panel found he erred in describing a will as a trust, noting that a will “may contain a trust, but this is not a requirement for a valid will.”

Even if a will was a trust, the judges concluded that it would be a statutory trust created by law, which exempts it from the subject-matter certainty requirement. In any case, the Divisional Court panel was satisfied that the wills in the case met the subject-matter certainty test.

“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,” wrote Justice Frank Marrocco on behalf of the panel.

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