Michael Ford (post until Oct. 31/19)
Estates & Wills & Trusts

Multiple wills decision fallout: why the judge got it wrong

In part one of a two-part series, Toronto wills and estates lawyer Mary Wahbi discusses the fallout from a controversial decision concerning multiple wills.

The estates bar is virtually united in its criticism of a Superior Court decision that called the use of multiple wills into question, Toronto wills and estates lawyer Mary Wahbi tells AdvocateDaily.com.

Wahbi, a partner with Fogler Rubinoff LLP, says the Ontario Superior Court justice's ruling in the case, which involves a common estate planning tool in which primary and secondary wills are executed by the same testator, has already been appealed to the Divisional Court.

“I would say the estates bar is still reeling from the decision, and we’re all hoping the appeal will overturn it,” she says. “Everyone I’ve spoken to agrees the basis for the decision is wrong.”

Wahbi says the aim of multiple wills is to smooth the estate administration process, and cut its cost, by separating assets requiring probate for their administration — which go into the primary will — from those that do not and are dealt with in the secondary will.

She explains that the practice emerged in the late 1990s as a response to rising probate fees, and its popularity spiked after a landmark 1998 decision endorsed the technique. Multiple wills are particularly useful for clients who wish to avoid significant amounts of tax on high-value assets that are not subject to probate, such as shares in private companies or loans owing from private companies, Wahbi adds.

“It would be great if we didn’t have to come up with these plans to reduce fees that people think are unfair,” she says.

Wahbi says there were warning signs in previous endorsements by the same judge where he took issue with clauses in multiple wills. However, his ruling in the most recent case still came as a shock, she says.

The judge found that the primary wills before him were invalid because they failed to “describe with certainty” the property that was subject to the will, instead leaving the decision up to the discretion of the trustees.

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

According to the 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.” 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.”

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

Wahbi says she’s troubled by the ruling in part because it had no basis in any of the arguments made by counsel, as well as the fact that the certainty principles cited by the judge actually apply to trusts, rather than wills.

“I believe the basis for the decision is wrong because a will is not a trust,” Wahbi says. “A will is a testamentary document, and it can create a trust, but it is not one itself.”

In addition, she says that the judge’s decision to invalidate the primary wills goes against the presumption against intestacy, a concept she describes as “one of the golden rules” of estates law.

“You don’t just knock out a will,” Wahbi says. “The idea is that the testator did not intend to die intestate if he or she made a will. Between them, the wills cover all the assets, so even if you have to treat them as a single document, they shouldn’t be ruled invalid.”  

Stay tuned for part two where Wahbi will discuss how estates lawyers are reacting to the confusion this decision has caused.

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