Privacy Please!

by Lisa Collins, QC, TEP | April 1, 2015Top secret! - Young businessman with finger on his lips

For families in business, one of their major concerns is maintaining privacy about their business and financial affairs. It is to be respected and guarded at all times.

Imagine their surprise when they find out that when they die, their Will becomes a public document when it is probated. Anyone can search the Registry and not only see the deceased person’s Will but find out about their assets and liabilities, including their values.

Fortunately, there are strategies to help maintain privacy for families’ financial affairs on death. It involves the use of a trust and/or using multiple Wills.

In the case of the trust, assets are transferred to and held in a special kind of trust that is set up during a person’s lifetime so that when they die, the assets do not form part of their estate. Therefore, they are not required to be reported in any probate process. The trust remains a private document.

In the case of multiple Wills, this strategy takes advantage of the fact that it is not necessary to probate a Will for the Will to be valid. It is just that in order to transfer certain assets, such as real estate and investments, probate is required by the Land Titles Office or by the financial institution. It is possible to have one Will that deals with the assets that require probate (such as real estate) and another Will that deals with the other assets, such as shares in a private company, that do not require probate in order to be transferred. Only the first Will is submitted for probate and it only deals with the limited list of assets (and not the private company interests).

There are added benefits to these strategies. One is that they can greatly reduce probate fees (in provinces where they apply). I am currently working with a family where the private business interests have been transferred to a special kind of trust. Because these private business interests are very valuable, the projected probate savings are over $650,000.

These strategies can also make dealing with a person’s estate more efficient and straightforward.

So yes privacy is a major concern for private business owners. But in ensuring their privacy they can take advantage of other benefits and savings!