Use of Secondary Will for Shares in a Private Corporation

By Jacquelyn Johnson

One of the most common questions we get here at SSM in the Wills and Estates Department is, “what can I do to avoid, or eliminate the taxes paid on my death?”.  There are many different ways to structure your assets to minimize or avoid estate administration tax, and one such way is the use of multiple Wills. 

When someone dies, estate administration tax (EAT), or “probate fees”, as it is more commonly known, may be payable on the date of death value of the deceased’s assets.  However, there are certain assets that can be dealt with without the need for obtaining a Certificate of Appointment of Estate Trustee with or without a Will (also known as a “probate certificate”), and paying the associated EAT.  One of these assets is shares in privately held corporations.  By pulling these assets out of your Primary Estate and putting them into a Secondary Will, to be administered separately, it can reduce the value of your “probateable” assets on death, and hence, reduce the EAT payable.  This can be a substantial saving in tax, especially where the shares held are quite valuable. The other Will, often referred to as a Primary Will, would deal with real estate, bank accounts, investments, personal effects, etc.

Another benefit of using a Secondary Will for your corporate shares is corporate planning and structuring.  A Secondary Will is a good tool to effect corporate succession planning, especially where the goal is to distribute the corporate shares differently than the Primary Estate.   Further, you may want to select a different Executor than in your Primary Will.  You may wish to have someone more well versed in business, or is more familiar with the company and how it operates to administer your secondary estate. 

If you would like to review your estate plan and how the use of multiple wills could benefit your plan, please reach out to our Wills and Estates Department, and we would more than happy to assist.