Privacy and the protection of personal data are a major concern in modern society. Complicated privacy legislation exists in many jurisdictions with the objective of protecting personal information by imposing multiple safeguards, some of which can be frustrating to deal with. With the increasing stores of digital information, we also frequently see reports of security breaches of government and major corporations' databases, not to mention instances of identity fraud, theft and other cyber-attacks.
Juxtaposed against society's increasing vigilance to attempt to safeguard the privacy of our financial and personal matters in a digital age, is the lack of such protection, and in fact, open public disclosure of sensitive personal information after a person dies which arises out of the probate process.
Many people are unaware that in a large number of Canadian and foreign jurisdictions, a probated will is a public document. Information regarding estate values included in court records relating to wills and probate applications are accessible and searchable by the general public.
For example, in Ontario, the public can obtain copies of wills as well as probate applications and grants for a fee where the personal representative of an estate filed a probate application with an Ontario court (except in the rare circumstance where a judge has ordered a file sealed). The probate application includes the value of the deceased's estate, including personal assets and real estate assets.
England and Wales is a jurisdiction that, for a fee, now makes digital copies of grants of probate and wills available for online public viewing anywhere in the world through a searchable database dating back to 1858.
Why is it that, particularly with respect to non-contentious estates, the value of a person's estate and the contents of his or her will, all of which we would consider private and sensitive information, is publicly disclosed upon death? In particular, given modern attitudes and public policy concerning privacy of information? There seems to be a huge disconnect.
While some documents may have historical and archival interest and importance to family members and genealogists, it would seem that the public display of one's will and probate grant after death has no value or significance, and should remain confidential. And a strong argument can be made that there is a potential harm in making this information available. For example, vulnerable persons and beneficiaries could become targets for financial abuse.
In 2013, perhaps recognizing this unnecessary invasion of personal privacy, the Law Society of England and Wales proposed an "opt-out" procedure for removing certain information from the grant of probate, including the value of estate assets in non-contentious proceedings.
Given this present reality, and that this sensitive information is publicly available after death through the court probate process (for example, overall net worth, which may include the value of private company interests such as long-held family businesses) and other matters such as the identities of their estate beneficiaries, there are planning options that can be considered to protect privacy.
A trust set up during one's lifetime can be used as a will substitute. If a trust is established prior to death and assets are transferred to the trustees to be held by them, the trust agreement, the trust assets and beneficiaries generally remain private upon the client's death. There is no need to use the probate process for assets held in a trust because they pass outside the estate. Special trusts for those aged 65 and older called alter ego trusts and joint partner trusts can be used to transfer assets on a tax-deferred basis to such trusts.
For assets that do not require a court grant to administer, one technique that may be available in certain jurisdictions, including Ontario, is the use of "multiple wills", i.e., executing a primary will and a secondary will. The primary will deals with assets that require a grant of probate to administer them, such as financial assets with large institutions and real estate, and the second will deals with assets that typically do not require probate, such as shares of private family corporations, family loans and personal and household effects. Upon the death of the person who made the will, the executor discloses the existence of both wills to the court, but application is made for a limited court order for only the primary will, and matters relating to the secondary will, which often has the most significant value, generally do not become public.
Jointly-held property with right of survivorship and beneficiary designations may be other ways to achieve enhanced privacy of one's estate affairs upon death.
As with any estate planning, including the strategies briefly reviewed above, proper advice from a professional advisor based on a client's particular situation is critical.
- Margaret O'Sullivan
Please watch for our next blog post on the role of charitable giving in your estate plan.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.