Divisional Court confirms common estate planning tool: Radnoff
By Kirsten McMahon, Managing Editor
A recent Ontario Divisional Court ruling on multiple wills is “significant” because it validates a standard estate planning procedure, Toronto commercial litigator and appellate counsel Brian Radnoff tells AdvocateDaily.com.
“The use of primary and secondary wills permits a testator to avoid probate on some assets and is a common practice that estate practitioners use for high-net-worth individuals,” says Radnoff, partner with Dickinson Wright LLP.
He says a primary will commonly contains a list of property and assets that require probate. It will also have a catch-all clause at the end allowing the estate trustee to determine any other assets that would fall under the primary will.
"This is done because, between the time that a testator makes their will and when they die, they may have acquired other assets. This clause avoids the need to update their will each time they acquire a new asset,” Radnoff says.
“Ontario Superior Court Justice Sean Dunphy invalidated a set of primary wills in a case late last year, which put this practice at risk and could have had a huge effect on primary wills across the province,” he adds.
In its decision, a unanimous three-judge panel of the Divisional Court overturned Dunphy’s findings.
The couple in the case, whom each had primary and secondary wills, died in October 2017, designating their daughter, accountant and lawyer as trustees of their estate.
However, Dunphy ruled the primary wills 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 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.
In overturning Dunphy’s decision, Radnoff, who was not involved in the matter and comments generally, says the panel confirmed that what is usually accepted to be standard estate planning in Ontario is valid.
“This is probably the most important Ontario estate planning decision to come out in the last several years,” he says. “It’s also comforting for estate practitioners to know that it reaffirms what everyone thought was correct. If it went the other way, it would have necessitated lawyers redrafting almost every primary will for any client who had multiple wills.”