Most people in Canada don’t have a single will, nevermind multiple wills, so why on earth would anybody need a corporate will? The reason is simple, corporate properties such as shares don’t need to go through the process of being probated. Wills are normally probated or proven through the court.
This is a court-approval process that takes time and cost money.
Avoiding Probate Fees
Wills are normally probated or proven by going through a court approval process. This process costs 1.4% of the value of the assets that are going through the probate process. This can be quite expensive if the size of the estate is large.
So, most assets such as cars, real estate that is not held in a joint tenancy, bank accounts that are not joint, or an investment portfolio or life insurance policies where a beneficiary has not been designated, these are the types of assets that are going to go through probate. So the majority of assets do need to go through probate. But shares in a privately held company do not need to go through probate.
Creating a Restricted Will/Corporate Will
So for small business owners, the value of their shares might be one of the most significant if not the most significant asset that they are passing along to the next generation. So if that’s the case, then it’s best that those shares be transferred by a secondary will, what’s also known as a restricted will or a corporate will.
This corporate will, will not need to be going through the process of probate. And so that means that the executor and the estate can save on the probate fees. So if the value of the corporate shares is $1 million, then the probate fees would be $14,000, which makes the cost and process of setting up multiple wills a straightforward choice.
So if you have any questions about estate and corporate planning, please don’t hesitate to reach out, drop a comment.
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