Regarding estate planning in Canada, two standard options to consider are a living trust and a will. Both are valuable tools for distributing assets and ensuring your wishes are fulfilled after passing.
A living trust in Canada allows assets to be managed during the grantor’s lifetime and distributed according to their wishes after death, avoiding probate. A will outlines how assets are distributed after death and may require probate, potentially resulting in longer processing times and higher costs.
Further on, explore the differences between a living trust and a will in Canada, helping you understand each option’s advantages and considerations.
Living Trust in Canada
A living trust, also known as a revocable living trust, is a lawful arrangement that allows you to transfer your assets into a reliable trust during your lifetime. As the trust’s creator, you retain control over these assets and can make changes or revoke the trust at any time. The primary benefits of a living trust in Canada include:
What is Revocable Living Trust in Canada?
A revocable living trust in Canada is a legal arrangement where assets are placed into a trust during the grantor’s lifetime, allowing for flexible management and distribution. Unlike irrevocable trusts, the grantor can alter or revoke it while they are still alive.
Living Trust: Preserving Control and Efficacy
Here are some critical aspects of a trust in Canada:
1. Probate Avoidance
One significant advantage of a living trust is that it will help your loved ones avoid the probate process, which can be quite time-consuming and costly. Upon your passing, the assets that are held in the living trust will be distributed directly to your beneficiaries- without going through probate.
2. Privacy
Privacy matters. Unlike a will, which becomes a public document whilst the probate process, a living trust allows for a more private distribution of assets. The terms of the trust remain confidential, providing increased privacy for your family.
3. Flexibility and Control
With a living trust, you can manage and control all your assets during your lifetime. You can even designate a successor trustee to manage the trust, just in case of your incapacity or passing, ensuring that your wishes are followed.
4. Potential Tax Planning
A living trust may offer opportunities for tax planning, allowing you to minimize the tax burden on your estate and maximize the assets available for your beneficiaries.
Setting Up a Living Trust in Canada
OR
To set up a living trust in Canada, consulting with an experienced estate planning expert is advisable. They will assist you through the process, ensuring all legal requirements are met.
You might wonder how much it costs to set up a trust in Canada. The cost of setting up a trust in
Canada can vary depending on factors like:
- Complexity
- Assets involved
- Legal fees
Based on the number of assets involved, the costs of a living trust can be really high. You should discuss the specific costs with your estate planning specialist. Remember, the laws that regulate trust funds in Canada vary from those in other countries.
What kinds of Assets are Eligible for Inclusion in a Living Trust in Canada?
Whether a foreigner investing in real estate or a Canadian citizen, you have a broad selection. This includes the following:
- Bank accounts
- Real estate
- Insurance policies
- Investments such as property, stocks and bonds
- Tangible personal property like furniture, limited liability companies (LLCs)
- Cryptocurrency etc.
However, certain assets may be more complex to include, and there are exclusions that an estate planning lawyer can advise you on.
Will in Canada
A will, also known as a last will and testament, is a legal document that outlines how your assets should be distributed after your passing. Unlike a living trust, a will only takes effect upon your death.
Canadian Will: Establishing Testamentary Wishes
Here are some critical aspects of a will in Canada:
1.Probate Process
A will must go through the probate process, which involves validating the document and executing the distribution of assets according to its terms. This probation process can take time and may involve legal fees.
2. Testamentary Guardianship
A will allows you to assign guardians for minor children, ensuring their care, help and well-being in the event of your passing.
3. Simplicity
Creating a will is typically more straightforward and less expensive than setting up a living trust. However, it is essential to note that a will provides a different control, privacy, and flexibility than a living trust.
What Types of Assets Can Be Included in a Will in Canada?
A will in Canada allows you to designate how your assets will be distributed after your passing. Here are some common assets eligible for inclusion in a will:
1. Real estate properties, including land, houses, and condominiums.
2. Bank accounts, including savings, checking, and certificates of deposit.
3. Personal property such as furniture, jewelry, and vehicles.
4. Investments, including stocks, bonds, mutual funds, and retirement accounts.
5. Life insurance policies, along with any associated benefits or payouts.
6. Business interests include sole proprietorships, partnerships, and corporation shares.
7. Intellectual property rights, such as patents, trademarks, and copyrights.
It’s vital to note that while many assets can be included in a will, certain assets can have specific legal considerations or restrictions.
Living Trust vs Will in Canada: Which is Right for You?
The decision to establish a living trust or create a will depends on your circumstances and goals. If you desire more control, privacy, and the potential for probate avoidance, a living trust may be the preferred option.
However, if simplicity and lower upfront costs are your primary considerations, a will can still effectively distribute your assets according to your wishes. Not having a will can result in multiple complex issues as time passes.
Safeguard Your Legacy: Plan for the Future You Envision with Dream Property Rentals
Worried about leaving your loved ones feeling lost and unsure during a difficult time? Ensure your wishes are respected, also your legacy lives on with expert estate planning guidance from Dreams Property.
Schedule a consultation today and:
- Gain peace of mind: Knowing your assets are well-protected, and your wishes are clearly outlined.
- Empower your loved ones By providing them with a roadmap for confidently navigating your estate.
- Craft a personalized plan: Our experienced professionals will work closely with you to create a will or living trust that reflects your unique needs and goals.
Don’t wait to secure the future you envision for your loved ones. Visit our website or contact us today and take the first step towards a legacy of peace and clarity.
The Bottom Line
Both living trusts and wills serve valuable purposes in Canadian estate planning. While a living trust provides greater control, privacy, and the potential to avoid probate, a will offers simplicity and lower upfront costs.
It is essential to consult with an experienced estate planning lawyer to determine which option aligns best with your specific needs and goals.
By planning your estate, you can ensure that your assets are distributed according to your wants, providing peace of mind for you and your loved ones.
Disclaimer: This blog post intends to serve informational purposes only and should not replace professional legal advice. It is recommended to consult with a qualified estate planning lawyer for personalized recommendations.
