When it comes to inheritance planning in Ontario, understanding your options is essential to protecting your assets and ensuring your wishes are followed. Two of the most common tools in estate planning are wills and trusts. Each has unique benefits and potential drawbacks, and choosing the right one depends on your individual circumstances. This article will walk you through the differences between wills and trusts, highlight when each may be appropriate, and explain how an estate lawyer can help you make an informed decision.
What Is Estate Planning and Why Is It Important?
Estate planning is the process of arranging how your assets will be managed and distributed after your death. It can also include planning for incapacity. Whether you have a modest estate or a high-value portfolio, estate planning gives you control, minimizes taxes, and reduces the burden on your loved ones.
In Ontario, dying without a valid will (known as dying intestate) means your estate will be distributed according to provincial laws, which may not reflect your wishes. That’s why understanding your estate planning options, including wills and trusts, is so critical.
What Is a Will?
A will is a legal document that outlines how your property should be distributed after you pass away. It can also name guardians for minor children and designate an executor to manage your estate.
In Ontario, for a will to be valid, it must be:
- Made in writing
- Signed by the testator (the person making the will)
- Witnessed by two individuals who are not beneficiaries
Without a will, your estate will be settled through the Succession Law Reform Act.
What Is a Trust?
A trust is a legal arrangement in which one party (the trustee) holds and manages assets on behalf of another (the beneficiary). Trusts can be established during your lifetime (inter vivos trusts) or upon your death (testamentary trusts).
There are two main types of trusts:
- Revocable Trusts: You maintain control and can modify or cancel the trust during your lifetime.
- Irrevocable Trusts: Once established, these cannot be changed without the beneficiary’s consent, offering more protection but less flexibility.
In Canada, testamentary trusts created by a will can offer certain tax benefits, though recent tax law changes have reduced these advantages for many estates.
Key Differences Between Wills and Trusts
| Feature | Will | Trust |
| Takes effect | After death | During lifetime or after death |
| Probate required? | Yes | No (in most cases) |
| Public record? | Yes (after probate) | No |
| Asset management | No management until death | Can manage assets anytime |
| Legal costs | Typically lower up front | Higher setup/maintenance costs |
Pros and Cons
Wills
- Pros: Simpler to create, lower initial costs, allows for guardianship designation
- Cons: Requires probate, may lead to will disputes, becomes part of public record
Trusts
- Pros: Avoids probate, greater privacy, flexible distribution, helpful for incapacity planning
- Cons: More complex and costly to set up, ongoing administrative requirements
Which Option Is Better in Common Scenarios?
- Blended Families: Trusts can provide greater control and flexibility to ensure children from previous relationships are protected.
- Minor Children: A trust can hold assets until a child reaches a specific age, ensuring responsible management.
- High-Value Estates: Trusts may help reduce taxes and avoid the probate process, saving time and money.
- Privacy Concerns: Trusts are private documents, while wills become public through probate.
How an Estate Lawyer Can Help
Working with an experienced estate lawyer in Ontario is crucial for crafting a legally sound estate plan. They can:
- Help you decide between a will, a trust, or both
- Ensure your documents comply with Ontario law
- Minimize the risk of will disputes
- Guide you on tax implications and family dynamics
If a dispute arises, a lawyer can also represent you in court to defend the validity of your will or trust.
Final Thoughts
Choosing between wills and trusts depends on your personal situation, financial goals, and family dynamics. For many Ontarians, a combination of both may be the most effective solution.
At J. Solomon Law, we help individuals and families across Ontario build estate plans that reflect their values and protect their legacies. Whether you need help drafting a will, setting up a trust, or navigating an existing inheritance planning issue, our experienced team is here to guide you.
Contact us today to schedule a consultation with an estate lawyer and take the next step in your estate planning journey.
References:
- Government of Ontario – Make a Will
- Canada Revenue Agency – Trusts
- Ontario Ministry of the Attorney General – Estate Administration
Disclaimer:
This blog post is intended for informational purposes only and does not constitute legal advice. Every situation is unique, and laws may vary depending on the specifics of your case and jurisdiction. For personalized legal guidance, please consult a qualified estate lawyer licensed to practice in Ontario.