Some people find estate planning somewhat morbid as the thought of your own death can be depressing. But it is an essential legal task that will help sort out your assets before you pass. These assets, such as money, property, and other possessions, are what we legally call your estate. And your will can help your family and lawyers divide your estate to avoid confusion and conflict.
While most people would only have a primary will, some might decide to get a secondary will to help reduce the estate taxes. For business owners, it might be wise to get dual or multiple wills for your business.
What Is the Purpose of a Secondary Will
Before we go into the secondary will discussion, we must first discuss what a primary will is to differentiate the two.
A primary will basically dictates what happens to your estate upon your death. If you have children below 18, it will clarify who has legal guardianship over them. And it’ll also state when your kids will get their share of the estate.
In the primary will, you should also identify your estate trustee or executor. They will be responsible for managing your estate, distributing the assets to beneficiaries, and doing your last income taxes.
On the other hand, the secondary will is mainly used to reduce estate taxes. Secondary wills are often used by owners of an incorporated business and shareholders of a privately held incorporated family business. They typically govern what happens to your company shares and assets after you die.
Why Get Dual Wills
When it comes to will estate planning, it’s vital to understand probate. This is a process that legally acknowledges the primary will as the valid official will. If you have a will, it will need to be probated before the court can release any funds to your estate trustee. On the other hand, if you don’t have a will, the court will appoint an estate trustee during the probate.
Probate fees will need to be paid, and they can be approximately up to 1.5 percent of the estate value. Since the secondary will won’t be probated, you can transfer your corporate shares or personal effects to the secondary will to reduce the amount you’ll need to pay from the probate.
How Dual Wills Apply in Business
Getting a secondary will can reduce the amount of money your business will have to pay in probate fees. Through the secondary will, you’ll have the power to transfer the loans and assets without probate. You may even use the secondary will to cover sentimental items holding little monetary value. This will allow these sentimental items to be transferred without an appraisal, eliminating probate tax.
Dual or multiple wills can be an excellent way for business owners to divide and transfer their shares and corporate assets without adding to the probate fees. It can help reduce tax liability and also allow you to include sentimental items without the need for an appraisal. Estate planning might be a daunting task, but it’ll help put your things into order so they’ll end up in the right hands when you are no longer around.
If you need more assistance on how to write a will, Ontario Wills can give you quality legal advice. We offer a range of services from simple and inexpensive online wills to professionally structured comprehensive estate planning. Contact us today to get started!