Milne Decision Overturned

In September 2018, the decision of Milne Estate (Re)[1] was released and cast doubt whether the long-standing practice of preparing two Wills—one, which is submitted to court for probate and the second, which is not and is used to reduce probate fees  (also known as Estate Administration Tax)—could continue to be used as an estate planning tool in Ontario to reduce probate fees.


In Milne, the executors of the deceased, John and Sheilah Milne, filed “Applications for Certificate of Estate Trustee with a Will Limited to the Assets Referred to in the Will” for each of the deceased.


Ultimately, the application judge, Justice Dunphy, held that:


  • A will is a trust;
  • Since a Will is a trust, it must satisfy the “three certainties” (intention, object and subject) to be valid; an
  • It was proper for him to examine these elements at the probate stage.


The Milne decision was heavily criticized by tax and estate lawyers and the decision was appealed to the Divisional Court.[2]


The Divisional Court overturned Justice Dunphy’s decision and found that:


  • A Will is not a trust. A will is an instrument by which an individual disposes of property upon death and may contain a trust or give rise to a trust, but a Will is not a trust.
  • Since a Will is not a trust it does not have to satisfy the three certainties. However, if a Will is a trust, the subject matter of the Primary Wills at issue is certain.  The property in the Primary Wills can be clearly identified because there is an objective basis to ascertain it, that is, whether a grant of authority by a court of competent jurisdiction is required to transfer the property.
  • Finally, the Divisional Court explained that, while it was not necessary to decide the appeal, Justice Dunphy exceeded his jurisdiction by seeking to answer questions with respect to interpretation, the validity of the powers of appointment and other discretionary decision-making conferred on the trustees.


What does it all Mean?


Dual Wills continue to be an effective estate planning tool to reduce probate fees in Ontario for high net worth individuals, small business owners and entrepreneurs.


[1] 2018 ONSC 4174.

[2] 2019 ONSC 579.