Estate planning can be complex, especially if you own a corporation or hold shares in a private business. One of the most effective tools for business owners in Ontario is the use of primary and secondary wills. Here’s what you need to know about these documents and how they can benefit you if you own a corporation.
What Are Primary and Secondary Wills?
- Primary Will: This will covers assets that require probate, such as real estate (not jointly owned), bank accounts, and investments held outside of registered plans. Probate is the legal process that confirms the validity of a will and grants the executor authority to act.
- Secondary Will: This will deals with assets that do not require probate, most commonly shares of a private corporation, certain personal belongings, and shareholder loans. These assets can be transferred without the need for probate court approval.
Why Use Two Wills?
The main reason for having both a primary and secondary will is to minimize probate fees (also known as Estate Administration Tax in Ontario). Probate fees are calculated based on the value of the assets that go through probate. By separating assets into two wills, you can potentially exclude high-value corporate shares from probate, resulting in significant tax savings.
How Does This Work for Business Owners?
If you own a corporation, your shares in that company can be included in your secondary will. Here’s how this benefits you:
- Avoid Probate Fees on Corporate Shares: Shares of a private company can often be transferred to beneficiaries without probate, provided the company’s directors accept the secondary will. This can save your estate thousands of dollars.
- Faster Administration: Assets in the secondary will can be distributed more quickly, as they are not held up by the probate process.
- Privacy: Probate is a public process. Keeping business interests out of probate helps maintain the privacy of your corporate affairs.
Key Differences at a Glance
| Feature | Primary Will | Secondary Will |
|---|---|---|
| Covers assets that… | Require probate | Do not require probate |
| Common assets included | Real estate, bank accounts, investments | Private company shares, personal items |
| Subject to probate fees? | Yes | No |
| Public record? | Yes | No |
What Should Business Owners Do?
- Consult a Lawyer: Drafting dual wills is a legal strategy that must be tailored to your specific circumstances and comply with Ontario law.
- Review Your Corporate Documents: Ensure that your corporation’s bylaws and shareholder agreements permit the transfer of shares under a secondary will.
- Update Regularly: As your business or personal situation changes, review your wills to keep them current.
If you own a corporation, using primary and secondary wills can be a smart way to protect your business, save on probate fees, and ensure a smooth transition for your beneficiaries. Speak with an estate planning lawyer to see how this strategy can work for you and your family.
This information reflects Ontario law and common estate planning practices as of 2025. For personalized advice, consult a qualified estate lawyer. If you have a question, reach out to Peter
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