CANADA Trends and Developments Contributed by: Ian M Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
law from Trezzi in Alberta, holding that a testator who was the sole shareholder of a corporation could gift real property owned by the corporation in her will. In Petropolous , because the numbered company that owned the real property was not mentioned anywhere in the will, the residuary beneficiary argued that the corporate shares fell into the residue of the estate, in which case she would inherit the real property held by the corporation. The court dismissed this argument, as the testator’s true intention – to gift the real prop- erty held by the corporation to her grandchildren – was clear. The court also held that it could distinguish prior case law decided in Alberta on the basis that it had been determined under Alberta’s previous wills statute, before the province’s current legislation – the Wills and Succession Act, SA 2010, c W-12.2 – came into force. The law in Manitoba also appears to shifting in the same direction. For example, in Zindler v The Salva- tion Army et al , 2014 MBQB 117 the Manitoba Court of Queen’s Bench found that the sole shareholder of a corporation could use her will to instruct her executors to do what was necessary to transfer monies held by the company – technically, a corporate asset – into the estate before disposing of the corporate shares. More recently, in Re Berry Estate , 2024 MBKB 81, the court upheld a testamentary gift of mineral rights, even though the testator had transferred those rights to a holding company as part of an estate freeze, for tax purposes. In keeping with the Ontario Court of Appeal’s decision in Trezzi , the Manitoba Court of King’s Bench found that it could honour the testa- tor’s intention to gift the mineral rights to the benefi- ciary named in the will, notwithstanding the transfer of those rights to the holding company. This case is dis- tinct from others because the testator was not the sole shareholder in the holding company – the beneficiary to whom the testator wished to gift the mineral rights was the other 50% shareholder. Accordingly, this case demonstrates that under certain circumstances, a shareholder may gift corporate assets, even if they are not the sole shareholder in a corporation. However, it merits noting that prior case law indicates that if a testator is not the sole shareholder of a cor- poration and gifts corporate property in their will, the
gift could fail, as demonstrated by the British Colum- bia Court of Appeal’s decision in Wong v Lee , 1993 CanLII 2423. Ultimately, the growing body of case law from Ontario, Alberta, and Manitoba demonstrates that, depending on the circumstances, a shareholder may use their will to gift corporate assets. While it appears that a tes- tamentary gift of corporate assets would not be per- mitted in Saskatchewan, it is unclear how the courts would treat such gifts elsewhere in Canada. Using multiple wills to gift corporate shares and assets When gifting corporate shares or corporate assets using a will in Canada, it may also be strategic to use multiple wills, depending on where the testator is domiciled. Not all Canadian jurisdictions permit this practice though. In the provinces where it is allowed, the advantage of using multiple wills is that estate administration tax or probate fees will not be calcu- lated on the corporate interests or assets distributed through a secondary will, so long as that will is not submitted for probate. This practice has been embraced primarily in Ontario. In Granovsky Estate v Ontario , 1998 CanLII 14913, the Superior Court of Justice affirmed that when multiple wills are used for estate planning, only the primary will must be submitted for probate so long as the assets distributed through the secondary will do not require probate. Practically speaking, this means that an estate can avoid paying estate administration tax on assets distributed through secondary wills that are not probated. The court also held in Granovsky that corporate shares can be distributed through a secondary will, so long as the directors of the companies in which the testator held shares, or held an interest, do not require a formal grant of probate to deal with those shares or with the executor of the estate. Multiple wills can also be utilised in British Colum- bia, although there is less case law on point in that province: see, for example, Berkner (Estate) , 2017 BCSC 619 and Holmes v Holmes , 2024 BCSC 737. Unfortunately, the use of multiple wills has not been
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