Two Wills for One Business Owner Untangle a Family and a Partnership

The situation

Amrit had spent a decade building an electrical contracting company in Tillsonburg, incorporated jointly with a business partner, Fiona, each holding half the shares. The company had steady commercial and residential contracts, a handful of employees, and, on paper, real value. Amrit's spouse, Kenneth, worked as a registered nurse, and between the two incomes the family was comfortable, if not wealthy. They had a young child and a second on the way.

Neither of them had a will. They had talked about it the way most young parents do, in the abstract, until a colleague of Kenneth's died suddenly and left a spouse to sort out a tangle of accounts, a mortgage, and no clear instructions. That was enough. They came to Treadstone Law wanting straightforward wills, guardianship provisions for their children, and whatever else a lawyer thought they were missing.

What they were missing turned out to be more than a standard will could fix. Amrit's estate wasn't just a house and a savings account. It included half of a private corporation, and that changes the math on almost everything.

What the review found

When one will is drafted for a person who owns shares in a private company, everything in the estate — the house, the bank accounts, the car, and the company shares — usually has to pass through probate together. Probate is the court process that confirms a will is valid and gives the estate trustee legal authority to act on it. In Ontario, going through probate means paying the Estate Administration Tax, a tax calculated on the value of everything in the estate that needs a probate certificate.

Amrit's half of the company was worth roughly $650,000 based on a rough valuation the accountant had done a year earlier for financing purposes. If that value flowed through one probated will along with the house and other assets, the estate would pay tax on the full amount — roughly $9,700 on the shares alone, on top of whatever the rest of the estate generated. Private company shares almost never need to be probated in the first place, because there's no external registry or land title office demanding a court certificate before they can be transferred. A well-drafted structure can keep those shares out of the probated estate entirely and avoid the tax on them without avoiding it on anything the couple actually needed probate for, like the house.

That was the tax problem, and it was the easier one to solve. The harder problem surfaced once our team asked to see the company's shareholders' agreement, the contract between Amrit and Fiona that governs what happens to each of their shares in various circumstances, including death.

The agreement had a mandatory buy-sell clause: on the death of either shareholder, the surviving shareholder had the right to buy the deceased's shares at a formula price, and the deceased's estate was obligated to sell. Amrit had signed it years earlier, before meeting Kenneth, mostly to make sure the company wouldn't end up co-owned by a stranger. It had never occurred to him that it also meant Kenneth would have no choice about keeping or selling the shares if Amrit died — the decision had already been made, years ago, for a fixed price that hadn't been updated since.

Amrit wanted Kenneth to have the flexibility to keep the shares and the income they produced if that made sense at the time, or to sell on fair terms if it didn't. The shareholders' agreement, as written, allowed for neither. Fiona, meanwhile, had her own reasons for wanting the buy-sell clause to stay firm: she didn't want to end up running the company alongside someone with no background in the trade, and she had built her own plans around eventually owning the business outright.

What we did

1. Drafted a primary and a secondary will. The primary will covered assets that require probate — the family home, held jointly with Kenneth in any event, along with personal bank accounts and other property. The secondary will covered the company shares and other assets that don't need a probate certificate to be transferred, such as some personal property held outside any registry. Splitting the estate this way is a long-established and accepted planning technique in Ontario, provided the two wills are drafted carefully so they don't accidentally revoke each other.
2. Flagged the shareholders' agreement before finalizing anything. A secondary will that assigns the shares to Kenneth is worth nothing if a separate contract already dictates that the shares must be sold to Fiona on Amrit's death. Wills and shareholders' agreements have to work together, and the agreement controls where the two conflict. We raised this directly with Amrit rather than drafting around it and hoping it wouldn't matter.
3. Opened a conversation with Fiona and her own lawyer. Amrit and Fiona had built the company together and neither wanted a dispute, so the conversation started early and stayed practical: what did each of them actually need if the other died? Fiona needed certainty that she wouldn't end up co-owning the business with someone unfamiliar with the trade. Amrit needed certainty that Kenneth wouldn't be forced into a rushed sale at a stale, below-market price.
4. Negotiated an updated buy-sell structure. The revised shareholders' agreement kept the mandatory buyout on death, which addressed Fiona's core concern, but changed two things that mattered to Amrit's family. First, the price was tied to an updated valuation formula reviewed every two years rather than a number fixed years earlier. Second, the buyout was funded through a life insurance policy on each shareholder, held by the company, so that Fiona's corporation could pay Kenneth promptly in cash instead of over a slow payment schedule that would have strained the business.
5. Updated the secondary will to match. With the shareholders' agreement resolved, the secondary will directed Amrit's estate trustee to complete the sale of the shares under the new buyout terms and to hold the resulting cash for Kenneth and the children, rather than attempting to leave shares that could never actually pass to them.
6. Named guardians and set up trust provisions for the children. The primary will named Kenneth as the children's guardian if something happened to Amrit, with a backup guardian named in case Kenneth were also unable to act, and set up a trust so that any inheritance the children received directly would be managed by a trustee until they reached a set age rather than paid out in a lump sum.

The outcome

The result was a compromise, not a clean win for either side of the partnership, and it was honest to describe it that way to Amrit. Fiona kept the mandatory buyout, meaning Kenneth will never end up as a working co-owner of the business — that door is closed, and Amrit accepted that as the cost of keeping the partnership functional while he was alive. In exchange, Kenneth is protected from the scenario that worried Amrit most: a forced sale at an outdated price with no cash on hand to pay it. The life insurance funding meant the buyout, when it eventually happens, won't drain the company's working capital or leave Fiona scrambling to finance a purchase she's contractually obligated to make.

On the tax side, the secondary will structure kept the company shares out of the probated estate, saving the family roughly $9,700 in Estate Administration Tax that would otherwise have been payable on assets that never needed a court's involvement to transfer. That saving is modest against the total value of the estate, but it was one part of the plan that didn't require negotiating with anyone else — a straightforward benefit that came simply from structuring the paperwork correctly from the outset.

The whole process, from the first meeting to signed wills and an amended shareholders' agreement, took a little over two months, most of it spent waiting on Fiona's lawyer to review and revise the buyout terms. Amrit and Kenneth now have a plan that reflects how the business actually works, not just what a generic will template would have assumed.

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