In our October 2018 Tax Flash, we discussed the decision of the Ontario Superior Court in the case of Re Milne ONSC4147. The Court held that a Will, which provides the executor(s) broad discretion in determining the assets covered by the primary Will, was not a valid Will. The decision meant that the primary Will was not valid, leaving the secondary Will to govern distribution of all the estate’s assets (probate assets and non-probate assets). As a result, all estate assets required probate.
The decision caused much concern amongst the estate planning community as the use of multiple Wills is commonly used to avoid probate on certain assets, such as shares of private corporations. The decision in Milne meant that previously drafted Wills which provide executors discretion in determining which assets be covered by a particular Will (commonly referred to as a “basket clause”) would need to be redrafted. Many practitioners have been waiting with bated breath for the appeal to be heard.
On January 24, 2019, the Ontario Divisional Court released its ruling, allowing the appeal and overturning the Application Judge’s decision. The decision is a welcome relief for practitioners and their clients.
Furthermore, prior to the Ontario Divisional Court’s decision on January 24, 2019, a similar case was decided on by the Ontario Superior Court in Re Panda 2018 ONSC 6734. The Courts firmly disagreed with the Judge’s ruling in Re Milne. These decisions have provided clients and their advisors confidence that the use of multiple Wills remains a valid planning strategy to minimize the impact of probate.
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