British Columbia residents interested in probate and estate planning issues may want some information on the different types of trusts. Depending on how they are used, there may be issues with the trust changing categories.
In estate planning law, there are two major types of trusts: inter vivos and testamentary. Testamentary trusts are created at the time that the person passes away. This generally happens through either a will or by a court order. All other trusts are categorized as inter vivos trusts.
There are some specific issues regarding the timing and creation of a testamentary trust, which may affect the type of trust that it ultimately is. For instance, if the testamentary trust was created by someone other than the person who is deceased, this may not qualify as a testamentary trust. If the property under the trust is not properly distributed as ordered in the will, the trust may become an inter vivos trust instead. The testamentary trust also faces the possibility of conversion to an inter vivos trust if two conditions are met. First, it was created in any tax year following December 2002. Second, the trust guarantees or pledges to pay a debt in a transaction where a beneficiary is an interested party.
There are other ways that a trust may be converted, some depending on whether or not the trust was created before or after Nov. 20, 1981. Understanding the particular rules of trusts, wills and other estate planning vehicles can be difficult without the help of a lawyer. The lawyer may be able to assist a person in setting up their estate plan, as well as taking care of the estate administration in order to help ensure that assets are distributed according to the client's wishes.