Limited Grants: Multiple Wills? Yes. One Will? No.

November 16, 2018 Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Planning, Trustees, Wills Tags: , , , 0 Comments

Multiple wills are an extensively used estate planning tool designed to reduce the amount of Estate Administration Tax payable. Essentially, the grant of a Certificate of Appointment is limited to the assets referred to in the will that is being probated, and Estate Administration Tax is only paid on the assets falling under the will that is being probated.

This estate planning strategy was tested and approved by the courts in Granovsky Estate v. Ontario.

However, the strategy was called into question in the recent decision of Milne Estate, which we have blogged and podcasted on.

Where there is only one will, can similar probate fee/administration tax savings be accomplished by applying for a limited grant? According to the Manitoba Court of Appeal decision of Pollock v. Manitoba, the answer is NO.

In Pollock, the deceased died leaving personal property, mainly shares in privately held corporations, having a value of about $12.5m, and real property having a value of $1m. Probate was required to deal with the real property, but not required to deal with the shares. If probate could be obtained in relation to just the real property and not the value of the shares, the estate would save $75,000 in probate fees. (Using current Estate Administration Tax rates in Ontario, the saving under such a scheme would be $187,500!)

The Manitoba legislation allowed the administration of an estate of a deceased person to be limited to certain assets “as the court thinks fit”. The Manitoba Court of Appeal considered a long line of cases dealing with the issue and concluded that the court must have a “strong reason” for making a limited grant, and stated “I do not regard the saving of probate fees as a sound reason for making a limited grant of probate. An applicant for a limited grant is, of course, entitled to take the least expensive way of administering an estate, but the chosen way must be one permitted by the legislation. The saving of probate fees is not, as I see it, a sufficiently strong reason to justify a limited grant. Nor is a limited grant a money-saving device contemplated by the legislation.”

In Ontario, the Rules of Civil Procedure specifically allow for limited grants. However, the grant is “limited to the assets referred to in the will”: Rule 74.04(1). Thus, in Ontario, if there is only one will, the result would be as in Pollock: even if probate of the will was needed in order to deal with only one asset, Estate Administration Tax would need to be paid on all assets of the estate.

Have a great weekend.
Paul Trudelle

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