Milne – Ontario Divisional Court confirms that the executors per se do not hold their property in trust

The Ontario Divisional Court has overturned a decision of Dunphy J below that a primary will that covered property which needed probate in order to be transferred (as opposed to all the other property of the testator, such as private company shares, which was covered by a secondary will) was void because it did not satisfy one of the requirements for a valid trust, namely, that there be certainty of subject matter.

First, Marrocco ACJ, speaking for the unanimous Court, stated that “A will may contain a trust, but this is not a requirement for a valid will” – so that it did not matter whether the primary will satisfied the test of the “three certainties” for the existence of a trust. In this regard, he quoted Williams on Wills that “the property comprised in residue is not held in trust for the beneficiary under the will so as to invest any equitable interest in him.”

Second, even if there were a requirement for certainty of subject matter, that requirement was satisfied here as the criterion for distinguishing the included and excluded property could be objectively applied.

This decision is of course of interest for supporting the use of a secondary will that is not probated and, thus, avoids probate duties. Although the confirmation that a will is not a trust is not directly applicable for ITA purposes given that s. 104(1) effectively deems an estate to be a trust, such finding may assist in analysing what is going on, and when, where a residue is held on, or transferred to, trusts.

Neal Armstrong. Summary of Milne Estate (Re), 2019 ONSC 579 under s. 104(1).