Is It Better To Have A Will Or A Trust?
Both wills and trusts are important tools in estate planning, but they serve different purposes and have distinct features.
A will is a legal document that outlines how a person's assets and property should be distributed after their death. It appoints an executor to manage the distribution of assets according to the person's wishes. A will becomes effective upon the person's death and goes through a legal process called probate, which involves validating the will and distributing assets as specified. Wills are important for naming guardians for minor children, designating beneficiaries, and specifying funeral arrangements. They are also subject to public record upon probate, allowing interested parties to access the information.
On the other hand, a trust is a legal arrangement where assets are transferred to a trustee, who manages and holds them for the benefit of specified beneficiaries. Trusts can be established during a person's lifetime (living trusts) or through their will (testamentary trusts). Trusts offer various benefits, such as avoiding probate for assets placed in the trust, maintaining privacy as trusts generally do not go through public probate proceedings, and providing greater control over how assets are managed and distributed. Trusts can be particularly useful for managing complex assets, minimizing estate taxes, and providing for beneficiaries with specific needs.
In summary, a will primarily addresses the distribution of assets after death and goes through probate, while a trust is a legal arrangement that can offer greater control, privacy, and flexibility in managing and distributing assets both during one's lifetime and after death. Both wills and trusts are valuable tools in estate planning, and their suitability depends on an individual's specific circumstances and objectives. Consulting with legal professionals experienced in Canadian estate law can help individuals determine the best approach for their needs.
