The Benefits and Risks of Having Multiple Wills
DISCLAIMER
This information is intended for business owners in Canada and serves as general guidance only. Always consult with a qualified advisor before making any legal decision.
In this article, we’ll cover the following topics:
What is probate?
What are the benefits of having multiple wills?
What are the risks of having multiple wills?
According to the Wills, Estates and Succession Act, all citizens of British Columbia are allowed to use multiple wills. That’s great news for anyone looking to avoid probate fees.
But before we get into the specifics, let’s first cover the basics.
What is probate?
Probate is the process by which a court of law administers certain parts of your estate after your death. Generally speaking, probate is only concerned with assets in your estate that are owned solely by you, whereas the jointly-owned assets in your estate, such as insurance policies, retirement savings, and so on, will not need to go through the probate process.
The probate process goes a little something like this: upon your death, the court receives your will, as well as an inventory of your assets and liabilities. Then, the court acknowledges the executor of your estate, which, as we discussed in “How to Draft a Will: The Basic Terms Every Canadian Business Owner Should Know,” is generally a spouse or other close family member who are close to you in age.
Whatever assets that the court identifies as being subject to probate will then be taxed probate fees. As of November 2022, probate fees are calculated at 1.4% of the gross value of those assets at the time of your death.
What are the benefits of having multiple wills?
If you have two wills – one dealing only with assets requiring probate, the other with non-probate assets (i.e. shares of your private company), you’re essentially empowering your estate’s executor to bypass probate fees on a significant amount of your assets.
This is possible because in British Columbia, shares of a private company, as well as money owed to you by a private company (i.e. loans or dividends) can be transferred without having to go through the probate process.
On the other hand, if you have just one will and your estate’s executor requires a grant of probate, then that executor must pay fees on all of the assets that fall under the probate.
What are the risks of having multiple wills?
Before you decide to set up multiple wills, there are a few things to keep in mind:
You can’t have the same executor for both your probate and non-probate wills. Each individual needs its own executor.
Setting up multiple wills allows you to dodge probate fees, but it comes at a cost. Naturally, it requires more time and money to set up multiple estates rather than just one.
According to the Wills, Estates and Succession Act, if a spouse or child seeks to challenge the substance of a will (i.e. who gets what), they have 180 days to file a court action following the grant of probate. However, this is only true for your probate will. All assets that fall under your non-probate will may be challenged at any time; there is no 180 day limit.
