Recently, our Heirs & Omissions Bulletin contained a discussion about the probate avoidance effectiveness of a dual will plan in light of the recent decision of the Ontario Superior Court of Justice, Re Milne Estate. The issue before the courts was the use of a “basket clause” that provided the Executor the discretion to select which assets fell under either the Primary or Secondary Will. The Court held that the discretion to pick and choose assets violated Trust Law, resulting in the deceased’s dual will plan failing and Estate Administration Tax (“probate tax”) was not minimized.
In light of this case, we recommended that the prudent course of action would be to consult your lawyer as soon as possible to determine if a codicil should be prepared, in anticipation of the expected appeal of Milne. Ironically, just last week, a similar dual Will plan was put before the Ontario Superior Court in Re Panda Estate. In this case, the court declined to follow the judge’s reasoning in Milne. Re Panda Estate highlights that the construction of a Will, generally, should not be considered in probate. In addition, the Court also drew a distinction between a Will and a trust, stating that a Will, in and of itself, does not have to meet the requirements of a valid trust because they are two unique instruments. As a result, the inclusion of a “basket clause” giving an Executor authority to administer certain property under the Secondary Will does not render either Will invalid for failure to comply with Trust Law.
As Re Panda Estate and Re Milne Estate are two opposing decisions arising our of the same level of court, we anticipate that the Court of Appeal will address and clarify this issue further once the appeal for Milne is heard. The use of multiple wills remains an effective tool to minimize Estate Administration Tax; and it remains our recommendation that you consult your lawyer to determine the best solution based on your estate planning needs.
Joseph is a lawyer with the Estates Group at Cambridge LLP. He received his Juris Doctor from the University of Melbourne in 2015 after completing a semester abroad at the University of British Columbia, and was called to the Bar in 2018. He received a Bachelor of Arts from McMaster University, majoring in Art History and minoring in Commerce.