Ontario Living Trust Guide: Setup, Costs, and Benefits

Living trusts are a powerful estate planning tool in Ontario, offering increased privacy, asset protection, and control over your assets during your lifetime and after. In this comprehensive guide, we'll walk you through the process of establishing a living trust in Ontario, the associated costs, and the key benefits you can expect. Whether you're just starting to consider a living trust or are ready to take the next step, this guide has you covered.

• What is a Living Trust?
• Benefits of an Ontario Living Trust
• Living Trust vs. Will in Ontario
• Establishing a Living Trust in Ontario
• Costs of an Ontario Living Trust
• Ontario Trustee Responsibilities
• Revoking or Amending a Living Trust
• FAQs

What is a Living Trust?

A living trust, also known as an inter vivos trust, is a legal arrangement where you (the grantor) transfer ownership of your assets to a trust, which is then managed by a trustee for the benefit of you and your beneficiaries. Unlike a will, which only takes effect after your death, a living trust allows you to maintain control and management of your assets during your lifetime.

In Ontario, living trusts are governed by the Trustee Act and the Substitute Decisions Act. These laws outline the legal requirements, responsibilities, and protections associated with establishing and managing a living trust in the province.

Benefits of an Ontario Living Trust

There are several key benefits to establishing a living trust in Ontario:

Privacy: Living trusts are not a matter of public record, unlike wills, which can provide increased privacy for your financial affairs.

Avoiding Probate: Assets held in a living trust do not have to go through the lengthy and sometimes costly probate process, allowing your beneficiaries to receive their inheritance more quickly.

Asset Protection: Living trusts can help protect your assets from creditors, lawsuits, and other claims, as the assets are no longer technically "yours".

Incapacity Planning: A living trust can ensure your assets are managed according to your wishes if you become incapacitated, without the need for a court-appointed guardian.

Well, here's the thing - these benefits can be hugely valuable for Ontario residents looking to take control of their estate planning and ensure their wishes are carried out, both during their lifetime and after they're gone.

Living Trust vs. Will in Ontario

While both living trusts and wills are important estate planning tools, they have some key differences:

Probate: As mentioned, assets in a living trust bypass the probate process, whereas a will must go through probate before your assets can be distributed to your beneficiaries.

Lifetime Management: A living trust allows you to maintain control and management of your assets during your lifetime, whereas a will only takes effect after your death.

Privacy: Living trusts are private documents, while wills become part of the public record during the probate process.

Flexibility: Living trusts can be amended or revoked during your lifetime, while wills are more difficult to change.

Ultimately, many Ontario residents choose to have both a living trust and a will as part of their comprehensive estate plan. The living trust handles the bulk of their assets, while the will addresses any remaining loose ends.

Establishing a Living Trust in Ontario

The process of establishing a living trust in Ontario typically involves the following steps:

1. Consult an Estate Planning Lawyer: Working with an experienced estate planning lawyer is crucial to ensure your living trust is set up correctly and aligns with Ontario's legal requirements.
2. Identify Your Assets: Make a comprehensive list of all the assets you want to transfer into the living trust, such as real estate, investments, bank accounts, and personal property.
3. Choose a Trustee: Select a trustee (which could be you, a family member, or a professional trustee) to manage the assets held in the trust.
4. Draft the Trust Agreement: Your lawyer will draft the legal document that outlines the terms of the living trust, including your wishes for asset management and distribution.
5. Transfer Assets into the Trust: Once the trust agreement is signed, you'll need to re-title or re-register your assets in the name of the living trust.

It's important to note that establishing a living trust in Ontario is a more complex process than creating a simple will. Working with an experienced estate planning lawyer is highly recommended to ensure everything is done correctly.

Costs of an Ontario Living Trust

The cost of establishing a living trust in Ontario can vary depending on a few key factors:

• Complexity of the Trust: A relatively simple, single-grantor living trust will generally cost less than a more complex, multi-grantor trust with extensive asset holdings.
• Attorney Fees: The fees charged by your estate planning lawyer will depend on their level of experience, the firm's billing rates, and the overall scope of work involved.
• Asset Transfer Costs: There may be additional costs associated with re-titling or re-registering your assets in the name of the living trust, such as transfer fees or registration costs.

As a general guideline, the total cost to establish a living trust in Ontario can range from $2,000 to $5,000 or more, depending on the complexity of your situation. It's important to discuss the expected costs upfront with your estate planning lawyer.

Ontario Trustee Responsibilities

The trustee you appoint to manage your living trust in Ontario has several key responsibilities, including:

• Administering the Trust: The trustee is responsible for managing and administering the assets held in the trust according to the terms of the trust agreement.
• Investing Prudently: The trustee must invest the trust's assets in a prudent manner, with the goal of preserving and growing the principal.
• Distributing Assets: The trustee is responsible for making distributions to the trust's beneficiaries as outlined in the trust agreement.
• Keeping Accurate Records: The trustee must maintain detailed records of all trust-related transactions and make them available to the beneficiaries upon request.
• Avoiding Conflicts of Interest: The trustee must act in the best interests of the trust and its beneficiaries, and avoid any conflicts of interest.

Choosing the right trustee is a critical part of establishing a living trust in Ontario. Many people opt for a professional trustee, such as a trust company or a trust department at a bank, to ensure their trust is managed properly.

Revoking or Amending a Living Trust

One of the key benefits of a living trust in Ontario is its flexibility. As the grantor, you have the ability to revoke or amend your living trust at any time during your lifetime, as long as you are mentally capable.

To revoke a living trust, you would need to work with your estate planning lawyer to draft a revocation of trust document. This document would effectively dissolve the trust and transfer the assets back to you as the original owner.

Alternatively, you may choose to amend your living trust to make changes to the terms, such as adding or removing beneficiaries, adjusting the distribution of assets, or changing the trustee. To do this, you would work with your lawyer to draft an amendment to trust document that outlines the specific changes you wish to make.

It's important to note that any revocation or amendment to your living trust should be done with the guidance of your estate planning lawyer to ensure it is executed properly and in accordance with Ontario's laws.

FAQs

What is the difference between a living trust and a will in Ontario?

The main differences are that a living trust allows you to maintain control and management of your assets during your lifetime, while a will only takes effect after your death. Living trusts also avoid the probate process and provide increased privacy, whereas wills become part of the public record.

How much does it cost to set up a living trust in Ontario?

The cost to establish a living trust in Ontario can range from $2,000 to $5,000 or more, depending on the complexity of your situation and the fees charged by your estate planning lawyer. Factors that can impact the cost include the size and complexity of your asset portfolio, the need for any asset re-titling or re-registration, and the overall scope of work involved.

Who should be the trustee of my Ontario living trust?

The trustee you appoint to manage your living trust in Ontario can be yourself, a family member, or a professional trustee such as a trust company or bank. Many people choose to work with a professional trustee to ensure their trust is managed properly and their wishes are carried out, without the potential for conflicts of interest.

Can I revoke or amend my living trust in Ontario?

Yes, one of the key benefits of a living trust is its flexibility. As the grantor, you have the ability to revoke or amend your living trust at any time during your lifetime, as long as you are mentally capable. This is done by working with your estate planning lawyer to draft the necessary legal documents.

What assets can be included in an Ontario living trust?

A wide range of assets can be included in a living trust in Ontario, such as real estate, investments, bank accounts, personal property, and even some business interests. The key is that the assets must be re-titled or re-registered in the name of the living trust in order to be properly transferred and managed by the trustee.