Are you dealing with inheritance planning, and you are wondering if you should use a Will or a Trust? This article was written by one of our senior inheritance law lawyers.
What is a trust?
A trust divides the ownership of assets into legal ownership and beneficial ownership. A settlor puts assets into the trust, a beneficiary receives the benefit of the assets in the trust, and a trustee manages the assets in the trust. Trusts are generally used to give the beneficiary the benefits that derive from the assets in the trust without giving them legal control of the assets.
There are basically two kinds of trusts: testamentary and inter vivos. A testamentary trust is a trust created by a Will that arises upon an individual’s death. Further, an inter vivos trust (also known as a living trust) is a trust created by a settlor while he or she is still alive.
A trust can act as a Will by providing for the distribution of the settlor’s property after his or her death to the named beneficiaries of the trust.
Do you need a lawyer to prepare a Will?
While there is no requirement to use a lawyer in preparing a Will, it is recommended. A lawyer will ensure that your Will is drafted and executed properly and will ensure that it fulfills your wishes.
What is the importance of estate planning?
If you don’t decide in advance who is to receive your estate, you won’t have any control over what happens to it upon your death. Estate planning is important because it ensures that your assets are disposed of in the way that you want them to be and it minimizes tax consequences.
Will or a Trust
An estate is everything that an individual owns including land, real estate, possessions, securities, cash, and other assets. Further, an individual’s estate is distributed after their death according to the terms of their Will or if there is no Will, pursuant to the laws of intestacy.
Are living trusts effective at avoiding probate?
Yes, inter vivos trusts are not probated. Because the transfer of ownership occurs during the settlor’s lifetime, the trust assets do not form part of the settlor’s estate upon his or her death and therefore they avoid probate.
What is the law of inheritance in Ontario?
How an estate is distributed depends on whether or not the deceased left a Will.
When a person dies with a Will, the estate is distributed in accordance with the Will.
When a person dies without a Will, they are said to die “intestate”. The Ontario Succession Law Reform Act sets out the way that the estate of a person who died intestate is distributed among their relatives.
Also, the deceased’s spouse will receive the first $200,000 The rest will be divided among the spouse and the deceased’s children. If the deceased doesn’t have a surviving spouse or children, their parents are next in line to inherit.
This is followed by their siblings, and then their nieces and nephews.
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What is the difference between heir and next-of-kin?
An heir broadly means “one who inherits” or in other words “one who receives anything from another upon their death”. However, in a legal sense, heirs are all persons who are entitled to share in the distribution of an estate. This happens where there is no Will.
Next-of-kin broadly means nearest blood relations. However, in the Ontario Succession Law Reform Act the term “next-of-kin” is used to describe the relation of a deceased who will inherit the estate if the deceased did not leave a Will and they have no surviving spouse, children, parents, siblings, nieces or nephews.
Will or a Trust?
In conclusion, the time between filing the probate application and the grant of probate varies greatly. It depends on the court registry at which the application is filed.
In small cities, the delay can be as little as a few weeks. Whereas in a large city like Toronto, it can take many months. Further, delays in probate have increased in light of Covid-19. The delay in Toronto is currently about eight to nine months.
Author: Alistair Vigier is the CEO of ClearWay Law