Law Times

Law Times • OctOber 20, 2014 Page 9 www.lawtimesnews.com McLaughlin highlights drafting pitfalls of dual wills By JuDy vAn RhIJn For Law Times hile Ontario law provides estate planners with the option of more than one will as a tool to separate the assets that require probate from those that don't, it comes at the price of increas- ing complexity at the drafting stage. A recent Ontario case highlights the prob- lems where primary and secondary wills are incomplete or in conf lict. Although the principle of dual wills has been around for a long time, its use in Ontario has increased dramatically since the 1988 Granovsky Estate v. On- tario decision where the court allowed the use of dual wills to reduce probate fees. Rule 74.04 of the Rules of Civil Pro- cedure now refers to the practice in an oblique way with regards to an applica- tion being limited to assets referred to in the will, thereby inferring that there could be more than one such document. Charles Ticker, an estates litigator based in Markham, Ont., believes the technique is particularly useful when dealing with private companies where people can transfer shares via a cor- porate resolution, as was the case in Granovsky. "The whole purpose is to save the 1.5-per-cent estate administra- tion tax. Over the years since Justice [Su- san] Greer's now-famous decision, law- yers have become creative and expanded the principles. They have gone beyond corporate shares and now include other assets that don't need probate, such as household contents, cars, boats, jewelry, and even real estate that is still under the old registry system or any other dealing with real property for which you don't need probate." Jonathon Kappy, an associate at Hull & Hull LLP in Toronto, consid- ers that the use of dual wills represents proper estate planning, particularly where confidentiality is a concern. "Once a will is filed in court, it be- comes a matter of public record. Any- one could look it up and see what the assets are and who the beneficiaries are. If there are private companies involved, that's often where a lot of wealth is kept." In the recent case of McLaughlin v. McLaughlin, the testator used dual wills purely for probate planning pur- poses. The case is one example of what can go wrong due to insufficient atten- tion to the drafting stage. Elizabeth Anne McLaughlin's primary will dis- posed of all of her assets other than her house. The secondary will disposed of her house, which the estate could transfer free of probate as it was still in the registry system. Kappy says that in this case, McLaughlin originally had one will she had split into two. "They were copying and pasting from the original will to make the new wills and failed to review it. The lawyer was forthright in coming forward and admitting that it didn't re- f lect the intentions of the testator." Some of the mistakes in McLaughlin were simple drafting errors. "There was a cash bequest in both the primary and secondary wills without any guidance as to whether it should be paid once or twice or which estate it was to come from," says Ticker. "On its face, it looked as if it should be paid twice, which was not the intention." Ticker knows some dual wills in- tentionally repeat legacies. "You must make it clear that you intend to pay once and are leaving it up to the trustee as to which estate pays. It's hard to give a cookie-cutter clause. The drafter has to think about these things." Kappy notes that also applies to debts and expenses. "Another poten- tial problem is determining where the debts of an estate should be paid from. There needs to be co-ordination be- tween the wills. You also have to con- sider the question of abatement. If the pot's not big enough, can you dip into the primary estate?" Another error in McLaughlin was the failure to include a residue clause in the secondary will. That meant the residue of the secondary estate would go by way of intestacy to all five of McLaughlin's children, including two she had deliberately omitted from the current and several previous wills. "Each will stands as a full and com- plete will. Both have to have a residue clause," says Kappy. The third drafting error was the rep- etition of the same revocation clause in both wills. "They revoked all wills but not the will referring to the real prop- erty," says Ticker. "The effect was that the secondary will revoked the primary will. That is not an uncommon thing. It has occurred in other cases where they inadvertently revoke the other will by putting in the wrong revocation word- ing." Ticker notes that adding a codi- cil can republish the will at a later date, meaning it inadvertently revokes the sec- ondary one. "It can get tricky." Ticker suggests that while a dual will is a popular technique, it has also lead to many complications. "If it's carefully done, it should work. But you must be careful with cross-references and word- ing. It is the type of will drafting that lawyers should not dabble in." LT FOCUS " Thanks to the groundbreaking research, the care of Dr. Messner and the compassion of the whole team at The Princess Margaret, I'm here today." A gift left in your Will can save lives. If cancer is your cause, support one of the top 5 cancer research centres in the world. To learn more about planning your gift, call 416-946-2295 or email legacy@thepmcf.ca See Chris Taylor's story at www.thepmcf.ca " When you've had cancer, every day is a gift." -Chris Taylor Untitled-2 1 2014-10-14 10:42 AM Drafting dual wills can be tricky, says Charles Ticker. W

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