The recent woes of the estates bar in connection with multiple Wills has been resolved positively by the Divisional Court's decision in the Re Milne appeal decision issued on January 24, 2019.1
To recap the history of the saga, the starting point is that the use of multiple wills, a standard technique used among estate planning solicitors as a method of limiting the amount of probate fees (now called Estate Administration Tax), took a beating in the Re Milne2 decision of September 11, 2018. We chronicled the initial decision in our October 12, 2018 article.
The Re Milne decision was criticized by the estates bar and estate academics as incorrect and, for several months, caused pandemonium among the estates bar and their will clients. Some measure of hope came on November 13, 2018 in the competing decision of Re Panda, rendered by Justice Penny, described in our article of December 5, 2018. The main issue in both cases was whether discretionary clauses (often termed "basket clauses") create uncertainty of subject matter and, if so, whether such uncertainty invalidates a will.
In the Re Milne decision, Justice Dunphy determined that a will is a trust and must meet the "three certainties" required of a trust, one of which is the certainty of the subject matter covered by a will on the date of death of the testator. He held that the subject matter of such trust is uncertain as a result of a discretionary basket clause and therefore the Primary Wills in question were invalid.
Justice Penny declined to follow Re Milne in similar circumstances in Re Panda. He made the following three findings:
- the role in a probate application is to consider whether a will meets the formal validity requirements, the Court is not sitting as a court of construction and it is not appropriate in a probate application to look at construction/interpretation questions.
- A will is not a trust and therefore it is not required that it satisfy the "three certainties" in order to be valid.
- It is inappropriate to make any determination regarding the validity of the powers given to the estate trustees because this issue was not before the court. This issue should be dealt with by the court only when it is raised in the context of a dispute before the court.
Re Milne was appealed to the Divisional Court and a decision by Justice Marrocco (with Justices Swinton and Sachs concurring) was released on January 24, 2019. The Divisional Court concurred with Justice Penny and overturned Justice Dunphy's determination that the Primary Wills of John and Sheila Milne were invalid on the basis that he made an error in law by stating that a Will is a trust. The court confirmed that a Will is not a trust but went further to say that, even if a Will is a trust, basket clauses do not create uncertainty of subject matter for a Will.
Justice Marrocco stated that:
[49] The property in the Primary Wills can be clearly identified because there is an objective basis to ascertain it; namely whether a grant of authority by a court of competent jurisdiction is required for transfer or realization of the property. As a result, the Executors can allocate all the deceased person's property between the Primary and Secondary Wills on an objective basis.
The Divisional Court in obiter stated that it is inclined to agree with Justice Penny's view that broader questions of interpretation and the validity of discretionary decision-making conferred on estate trustees are matters of construction and not necessary to the grant of probate and, therefore, that Justice Dunphy exceeded his jurisdiction; however, such a conclusion was not necessary to decide the appeal.
The Divisional Court made no mention of Justice Penny's third finding, above.
Much to the estates bar's relief, the Divisional Court's decision has granted practitioners express authority to use basket clauses in multiple wills. This decision will give practitioners increased flexibility when drafting these complicated documents and prevent the possibility of "tainted"3 Secondary Wills in the future.
Footnotes
1 Milne Estate (Re), 2019 ONSC 579.
2 Milne Estate (Re), 2018 ONSC 4174.
3 A Secondary (or non-probate) Will is tainted when an asset governed by it requires probate thereby requiring that the Secondary Will be probated. If that occurs, the value of all of the assets governed by the Secondary Will are included in the calculation of probate fees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
