When a shareholder of a private corporation dies, investment advisers are often among the first professionals families turn to. Understanding the key concepts of dealing with an estate which owns shares in a private corporation allows advisers to better support their clients\u2019 families through this difficult time.<\/p>\n\n\n\n
This primer offers an overview of the corporate roles at play, how private corporation shares pass on death, and when probate is (and is not) necessary under Ontario law. This overview is intended to be general in nature and is subject to any corporate by-laws, shareholder agreements or other restrictions which may be in place.<\/p>\n\n\n\n
Generally, the roles in a corporation consist of the following:<\/p>\n\n\n
In closely held corporations, especially family businesses, it is common for one person to wear all three hats, but each role is legally distinct.<\/p>\n\n\n\n
In Ontario, the directors of a private corporation are generally willing to transfer shares in accordance with the terms of the deceased shareholder\u2019s Will, without requiring the executors to apply for probate (a Certificate of Appointment of Estate Trustee or \u201cCAET<\/strong>\u201d).<\/p>\n\n\n\n Many Ontario business owners use dual Wills in their estate planning to minimize Estate Administration Tax (\u201cEAT\u201d or “probate tax”). Typically, the Primary Will governs assets that will require probate (for example, real property and bank accounts), while the Secondary Will covers assets that can be administered without probate (often including private corporation shares and some personal assets). Because the Secondary Will is not submitted for probate, the assets governed solely by that Will are not subject to EAT.<\/p>\n\n\n\n Here are the implications of a dual vs single Will plan:<\/p>\n\n\nEstate tips:<\/h3>\n\n\n\n
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3. Dual Wills vs Single Will: How do dual and single Wills impact Estate Administration Tax<\/h2>\n\n\n\n
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Estate tips:<\/h3>\n\n\n\n