How does a revocable living trust in Alberta differ from a will for estate planning?
Executive summary
A revocable living trust in Alberta is an inter vivos trust that can be altered or ended by the settlor while alive and is often used to manage assets during incapacity and to keep post‑death distributions out of the public probate record, whereas a will takes effect only on death, is simpler to draft, and becomes a public document subject to probate supervision [1] [2] [3] [4]. The practical differences in Canada—and Alberta specifically—are shaped less by dramatic probate‑avoidance savings than by tax, funding, and provincial administration realities that make trusts a more specialized tool than in the United States [4] [5] [6].
1. What the instruments are and when they operate
A will is a testamentary instrument that appoints executors and gives post‑death directions; it only “works” after death and can create testamentary trusts that arise under the will [3] [7]. A revocable living trust (an inter‑vivos trust) is established during the settlor’s lifetime, can be changed or revoked by them while competent, and may begin managing or distributing assets immediately under its terms [1] [8].
2. Probate, privacy and timing of access to assets
One of the headline contrasts is probate: assets held in a fully funded living trust can pass to beneficiaries without the same court probate process, keeping distributions private, while assets that pass under a will typically go through probate and become part of the public record [2] [4] [5]. However, Canadian probate regimes often entail lower fees and simpler procedures than many U.S. jurisdictions, which reduces one of the living‑trust’s typical advantages and explains why trusts are less uniformly adopted here [4].
3. Tax treatment and Canadian special rules
Canada treats trusts as distinct taxpayers and applies specific attribution and deemed‑disposition rules; these tax features mean revocable trusts in Canada carry different tax consequences and planning considerations than their U.S. counterparts, and can make revocable trusts less common or attractive without careful tax advice [4] [6] [7]. Several sources flag that moving trusts across borders, collapsing U.S. revocable trusts, or transferring assets into trusts can trigger tax events in Canada that require advance planning with lawyers and accountants [6] [4].
4. Incapacity planning and ongoing asset management
A practical advantage of a living trust is incapacity planning: because it functions while the settlor is alive, a successor trustee can step in to manage the trust assets if the settlor becomes incapacitated—something a will cannot do on its own [2] [1]. This ongoing management and control option is why some Canadians use living trusts where family businesses, complex asset management, or continuous oversight are concerns [5] [9].
5. Cost, complexity and provincial context (including Alberta)
Drafting and funding a revocable living trust typically involves greater upfront legal work and administrative upkeep—assets must be retitled into the trust to realize its benefits—whereas a will is usually simpler and less costly to prepare [2] [8]. Provincial differences matter: Alberta’s probate and administration context, like other Canadian provinces, often produces lower probate costs than many U.S. states, which reduces the dollar‑for‑dollar savings from avoiding probate via a trust [4]. Local Alberta estate‑planning counsel point out that trusts can provide tax‑planning opportunities (e.g., income allocation strategies) but these depend on complex rules and may have unintended tax consequences if mishandled [10] [6].
6. Practical takeaway, tradeoffs and limits of reporting
For many Albertans a will remains the cornerstone of a basic estate plan because it is straightforward, inexpensive, and can be paired with powers of attorney and testamentary trusts; a revocable living trust is best considered a specialized tool when privacy, incapacity management, complex family or business arrangements, or very particular tax strategies justify its costs and administrative burden [3] [11] [1]. Reporting across legal and financial sources converges on one practical prescription: trusts and wills often work together (for example, a “pour‑over” will with a trust), and professional legal and tax advice is essential because Canadian attribution and trust tax rules materially affect outcomes—this analysis is limited to published guidance and does not substitute for province‑specific legal advice [3] [7] [6].