Living trusts are heavily promoted in American estate planning literature and media. In Canada — and particularly in Nova Scotia — the calculus is quite different. Understanding the distinction will save you from paying for a solution to a problem you may not have.

What Is a Living Trust?

A living trust (formally, an inter vivos trust) is a trust created during your lifetime. You transfer assets into the trust and name a Trustee (often yourself initially) to manage them. On your death, the assets pass to named beneficiaries according to the trust terms — outside the probate process.

Why Living Trusts Are Popular in the US

In the United States, probate can be extremely expensive, slow, and public — sometimes taking years and consuming significant portions of an estate. A living trust is primarily used there to avoid probate entirely. For many Americans, this is a genuine and significant benefit.

Why They Are Less Compelling in Nova Scotia

Nova Scotia's probate process is relatively straightforward and less expensive than in many US states. The primary benefit driving living trust popularity in the US simply does not apply to the same degree here. Moreover, transferring assets into a living trust can trigger immediate tax consequences in Canada — a deemed disposition at fair market value that may crystallize capital gains you would otherwise defer.

When a Trust May Still Make Sense in Nova Scotia

There are legitimate reasons to use a trust in Canadian estate planning, including:

  • Providing for a disabled beneficiary (a Henson Trust, described in a separate article)
  • Managing assets for minor children until they reach adulthood
  • Certain family income-splitting strategies (with significant tax law constraints)
  • Privacy concerns for high-net-worth estates

The Bottom Line

For most Nova Scotians, a properly drafted Will with designated beneficiaries on registered accounts achieves the main goals of estate planning at far lower cost and administrative burden than a living trust. If you have a specific situation that might benefit from a trust structure, consult an estate lawyer and an accountant before proceeding — the tax implications require professional analysis.