The Annotated Will 2017: Meshing not Messing Multiple Wills Darren G. Lund A Note on Terminology Choice of terminology does not matter, so long as terms are used consistently Annotated Will terminology: General Will for Public Assets Private Assets Wills for Private Assets N.B. Two references to Public Assets Will should be changed to General Will (p. 1-117 and 1-118) 1
Introductory Clauses (p. 1-113) For the non-probate or Private Assets Will: I, JOHN DOE, of the City of Toronto and Province of Ontario hereby declare that this is my Last Will and Testament with respect to my Private Assets (as hereinafter defined), made this XXX day of January, 2014. For the probate or General Will: I, JOHN DOE, of the City of Toronto and Province of Ontario hereby declare that this is my Last Will and Testament with respect to my Public Assets (as hereinafter defined), made this XXX day of January, 2014. Revocation Clause Objective = avoid inadvertent revocation of one of the wills If wills contain standard revocation clauses, execution of Private Assets Will revokes the General Will Drafting solution: Use revocation clause in each will that is limited to the assets governed by that will Buttress revocation clauses with statements of intention 2
Revocation Clause (pp. 1-113 to 1-114) For the probate or General Will: I revoke all Wills and Codicils made by me at any time before the XXX day of January, 2014 with respect to my Public Assets (as hereinafter defined) and declare this to be my Last Will and Testament with respect to such Public Assets. For the non probate or Private Assets Will: I revoke all Wills and Codicils made by me at any time before the XXX day of January, 2014 with respect to my Private Assets (as hereinafter defined), and declare this to be my Last Will and Testament with respect to such Private Assets. I hereby declare that I have an existing general Will dealing with my Public Assets (as hereinafter defined) which was executed on this XXX day of January, 2014, and which I do not intend to revoke by the provisions of this my Will with respect to my Private Assets. No Intention to Revoke (p. 1-118) For the probate or General Will: For greater certainty, nothing in this my Will shall revoke or override any Will made by me on the XXX day of January, 2014, that purports to dispose of my Private Assets. Neither the execution of this my General Will nor the execution of my Will dealing with my Private Assets is intended to revoke the other; they are to operate concurrently. For the non probate or Private Assets Will: For greater certainty, nothing in this my Will shall revoke or override any Will made by me on the XXX day of January, 2014, that purports to dispose of my Public Assets. Neither the execution of this my Private Assets Will nor the execution of my will dealing with my Public Assets is intended to revoke the other; they are to operate concurrently. 3
A Note On Codicils Doctrine of republication When codicil executed, the will is republished as of the date of the codicil Potential for inadvertent revocation If General Will contains general revocation clause, upon republication the Private Assets Will is revoked Avoid codicils, execute new wills Defining the Estates (pp. 1-114 to 1-116) Objectives: No slippage (assets not governed by either will) No duplication (assets governed by more than one will) Use Granovsky structure Private Assets = specific classes of assets governed by the Private Assets Will (non-probate) Public Assets = all assets other than the Private Assets 4
Private (Non-Probate) Assets Private companies, partnership interests Amounts owing to will-maker and assets held in trust for will-maker Beneficial interest in trusts / property held in trust for will-maker Joint accounts on resulting trust Personal effects and household articles Private (Non-Probate) Assets Debts owing to will-maker by individuals, trustees Real property In Registry system In Land Titles if first dealings exception applies Held in bare trust by single purpose corporation 5
Risk of Tainting Non-Probate Estate Will-drafter must always consider whether there is a risk that probate may be required for a particular asset If probate required for one asset, probate fees payable on all assets governed by that will Drafting strategies: Restrict definition of Private Assets Use additional wills Include renunciation provision Restricting Definition of Private Assets Private companies Are there companies with with unrelated or arm s length directors? Will an operating company need to be sold? any other private company limited to companies whose shareholders are certain persons or classes of persons (e.g. spouse, children) 6
Restricting Definition of Private Assets Debts limit to unsecured debts limit to debts owed by specific persons or classes of persons (e.g. spouse, children) avoid debts where there is risk that enforcement will be necessary Restricting Definition of Private Assets Personal effects and household articles Are there valuable items for which a third party may insist on evidence of good title? Are there valuable items that will be sold or donated? Any other assets for which my Trustees determine probate is not required Unclear if this is effective, avoid 7
Use of Additional Wills If there are assets for which there is some risk that probate will be required, isolate those assets into an additional will or wills Valuable artwork, antiques Operating company, private company incorporated in a different jurisdiction Risky debts If using Primary and Secondary, terms are Tertiary, Quaternary, and Quinary Renunciation Clause (p. 1-118) For Private Assets Will: If for any reason the executors and trustees of this Will determine that they cannot deal with any of the assets listed in paragraph * without obtaining a Certificate of Appointment of Estate Trustee With a Will, I direct them immediately to renounce their interest in such asset by instrument in writing delivered to the executors and trustees of my Last Will and Testament dated * with respect to my property other than my Private Assets, in which case the definition of my Private Assets shall be deemed to exclude, and always to have excluded, such renounced interest. 8
Renunciation Clause Not recommended where residuary beneficiaries are different under the wills Problem can arise if asset for which title is renounced is specifically gifted, but specific gift is not included in both wills Renunciation clause has not been judicially considered Double Payments Risk of double payment where: Specific amount is to be paid or set aside Trustees may require access to assets of both estates to satisfy payment or set aside amount Therefore, the direction to pay or set aside amount appears in both wills 9
Common Double Payment Scenarios Pay debts and testamentary expenses Cash legacies $10,000 to my cousin, X, if she survives me Funds of specific amounts Set aside and hold in trust $100,000 for my cousin, X, if she survives me Executor and Trustee compensation Drafting to Avoid Double Payments Include statement of intention that amount is to be paid or set aside once only Include direction as to how amount is to be paid or set aside Executors have discretion to determine allocation between the estates Consider whether specific amounts should be paid from a specific estate (e.g. taxes related to property that is specifically gifted) 10
Addition to Debts Clause (p. 1-119) For the probate or General Will It is not my intention that my just debts, funeral and testamentary expenses, duties and taxes be paid more than once. My Trustees shall determine in their discretion how my said just debts, funeral and testamentary expenses, duties and taxes referred to above shall be allocated between that part of my estate dealt with pursuant to this my Will in respect of my Public Assets and that part of my estate dealt with pursuant to my Private Assets Will in respect of my Private Assets. For the non probate or Private Assets Will It is not my intention that my just debts, funeral and testamentary expenses, duties and taxes be paid more than once. My Trustees shall determine in their discretion how my said just debts, funeral and testamentary expenses, duties and taxes referred to above shall be allocated between that part of my estate dealt with pursuant to this my Will in respect of my Private Assets and that part of my estate dealt with pursuant to my general Will in respect of my Public Assets. Addition to Legacy Clause (p. 1-120) For the probate or General Will I wish to advise my Trustees that my Private Assets Will makes provision for a similar legacy to the legacy set out in this paragraph. It is my intention that the legacy be paid once only, either out of that part of my estate dealt with pursuant to this my Will in respect of my Public Assets, out of that part of my estate dealt with pursuant to my Private Assets Will in respect of my Private Assets, or partly from one and partly from the other. I direct my Trustees to consult with the Trustees of my Private Assets Will to determine how the legacy shall be allocated between such parts of my estate. For the non probate or Private Assets Will I wish to advise my Trustees that my general Will makes provision for a similar legacy to the legacy set out in this paragraph. It is my intention that the legacy be paid once only, either out of that part of my estate dealt with pursuant to this my Will in respect of my Private Assets, out of that part of my estate dealt with pursuant to my general Will in respect of my Public Assets, or partly from one and partly from the other. I direct my Trustees to consult with the Trustees of my general Will to determine how the legacy shall be allocated between such parts of my estate. 11
Legacy Options Legacies and funds of specific amounts do not have to be included in both wills e.g. bulk of wealth is in a private company and it is clear Private Assets will be sufficient to satisfy the legacies, funds However, where there is uncertainty, prudent to give executors access to assets of both estates Placement of Certain Clauses Beneficiary designations General Will Guardians and custodians of property General Will 12
Darren G. Lund + 1 416.868.3522 dlund@fasken.com 25 Disclaimer This handout is provided as an information service by Fasken Martineau DuMoulin LLP. It is current only as of the date of the presentation and does not reflect subsequent changes in the law. This handout is distributed with the understanding that it does not constitute legal advice or establish a solicitor/client relationship by way of any information contained herein. The contents are intended for general information purposes only and under no circumstances can be relied upon for legal decision-making. Readers are advised to consult with a qualified lawyer and obtain a written opinion concerning the specifics of their particular situation. 2016 Fasken Martineau DuMoulin LLP 26 13
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