When an individual dies, probate is the court process through which the decedent’s estate’s execution begins. However, if the individual has chosen to use a trust as part of his or her estate plans, trust administration may also take place alongside the probate process.
It is helpful for those involved in an Ontario estate – be they executors, trustees or beneficiaries – to understand the differences between the trust administration and probate processes.
Public vs. private
The main difference between probate and trust administration is that probate is court-supervised. Trusts, on the other hand, are managed privately. There are a few reasons people choose to use trusts as part of their estates. It may be a decision made out of financial considerations, as the tax situation could be different with the trust. Another major reason why people might use trusts is to keep the administration of certain items private – such as financial or business information.
In probate, there are costs to consider, such as court costs, estate taxes and compensation to the executor. Private trusts are not without their costs, however. The trustee will likely be compensated. Legal costs should also be considered in either case, with a trust often costing more to set up than a generic estate plan.
Ultimately, both traditional estate administration through probate and trust administration are designed to move assets from a person who is deceased to his or her beneficiaries. The decision of which method to use often depends on an individual’s financial situation and goals in estate planning. Whether you’re creating an estate plan, or you’re responsible for managing estate administration, it may be helpful to connect with an Ontario lawyer to clarify your options and receive guidance throughout the process.