If a client asks you to ensure his laundry, dirty or clean, isn’t aired after he dies, follow this simple rule: keep the will out of probate.
While most estate planners counsel clients to avoid probate, the advice is usually attached to the costs that will be incurred. Few bring up the privacy angle.
Once a will enters probate, its contents become a matter of public record. Not the path some of your clients may want to take. There could be a simmering family dispute over the whereabouts of a child, or one of the beneficiaries may have a stalker in her life.
In provinces where probate fees are low, few people bother to avoid the process. But what if there are secrets to keep?
Clients can apply to have the court seal records, but the province sets a high bar, says Yolanda van Wachem, associate with McLennan Ross LLP in Edmonton. “You have to prove irreparable harm to not exhibit what the assets are on the record,” she says.
If the will becomes public, beneficiaries can see who else gains from the will, which is concerning if a client wants to avoid family squabbles. In B.C., not only beneficiaries see the will if it goes to probate. Anyone who would inherit if the client died without a will does too. So if a client cuts her kids out, they’ll still see a copy.
Elaine Blades, director for estate and trust products and services for Scotia Private Client Group in Toronto, says it’s possible to draft a will so the names of beneficiaries or their entitlements don’t appear.
There’s a tradeoff, though. An ambiguous will risks not having the client’s intentions fulfilled when questions arise about amounts or identities of the beneficiaries. If legal challenges are filed, the will goes public.
“If there’s a dispute in the estate—if the spouse says you didn’t give me enough, I want more—then the courts will look at what went outside of the will,” says van Wachem.
Litigation also brings items that are normally hidden—like joint assets, directly designated assets, assets that passed out of the estate based on survivorship, and corporate tax planning, such as an estate freeze—to light.
Clear language within the will solves a lot of problems at the outset. But real anonymity means avoiding bequeathing large sums within a will.
“If wealthy families want to pass on money anonymously, they would be [better advantaged] to do it using a trust during their lifetime because it’s a private document, unlike a probated will,” says Blades.
Here are other options.
In Ontario and B.C., it’s possible to create two wills: one to govern administration of assets that must be probated (such as real property), and one with the rest. This is usually suggested for multi-million-dollar estates.
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