Understanding The Difference Between A Will And A Trust

Wills and trusts both help you control what happens to your assets after you die, but they work in fundamentally different ways. Understanding these differences helps you make informed decisions about which tools belong in your estate plan.

Our friends at Hirani Law explain these distinctions to clients daily, since confusion about wills versus trusts is universal. A will lawyer can assess your specific situation and recommend the approach that best protects your interests and your family.

How A Will Works

A will is a legal document that takes effect only after your death. It names beneficiaries for your assets, designates guardians for minor children, and appoints an executor to manage your estate through probate.

Your will remains a private document during your lifetime. You can change it whenever you want, and nobody needs to know what it says until you pass away. After your death, the will becomes public record when it enters probate court.

Probate is the legal process where a court validates your will, authorizes your executor to act, and oversees asset distribution. This process typically takes several months to over a year, depending on your estate’s size and whether anyone contests the will.

Every asset titled solely in your name at death goes through probate if you only have a will. This includes real estate, vehicles, bank accounts, and personal property without designated beneficiaries.

How A Trust Works

A trust is a legal entity that holds and manages assets according to instructions you provide. You can create a trust during your lifetime (a living trust) or have one established through your will after death (a testamentary trust).

With a revocable living trust, you typically serve as the trustee during your lifetime, maintaining complete control over the assets. You can modify or dissolve the trust anytime. After your death, a successor trustee you’ve named takes over and distributes assets according to your instructions.

Assets placed in a trust avoid probate entirely. Your successor trustee can begin distributing property immediately after your death without court involvement. This happens privately, without public records or court supervision.

Creating a trust requires transferring asset ownership from your individual name to the trust’s name. This process, called funding the trust, is necessary for the trust to function as intended. Unfunded trusts provide no benefits.

Key Differences That Matter

Probate Avoidance

Wills guarantee probate. Trusts bypass it completely for any assets properly transferred into the trust. This difference affects timing, privacy, and costs.

Privacy Concerns

Wills become public documents during probate. Anyone can access them and see what you owned and who received it. Trusts remain private. Your asset distribution stays confidential, and the public has no right to review trust documents.

When They Take Effect

Wills only activate after death. Trusts can manage assets during your lifetime, which becomes valuable if you become incapacitated. Your successor trustee can step in and manage trust assets without court intervention if you’re unable to do so yourself.

Cost Differences

Wills cost less to create initially. Basic wills might run a few hundred dollars. Trusts require more upfront investment, often several thousand dollars for drafting and funding.

But total costs tell a different story. Probate expenses for will-based estates often exceed the upfront cost of creating a trust. Court fees, executor compensation, and attorney fees during probate can consume 3-7% of your estate’s value.

Flexibility and Control

Both documents offer flexibility, but in different ways. You can modify a will or revocable trust anytime during your lifetime. Trusts provide additional control options, like distributing assets to beneficiaries gradually over time rather than in a single lump sum.

When A Will Makes Sense

Wills work well for straightforward situations. If you have a modest estate, few assets, and adult beneficiaries who can handle inheritance responsibly, a will might suffice.

• Your estate falls below your state’s probate threshold

• You don’t own real estate in multiple states

• Privacy isn’t a major concern

• You want the most affordable option upfront

• Your family relationships are stable and uncontested

Young parents often start with wills because naming guardians for minor children is their primary concern. Wills accomplish this effectively and affordably.

When A Trust Makes Sense

Trusts benefit people with larger estates, multiple properties, or specific control needs. According to AARP, trusts are particularly valuable for avoiding probate on real estate in multiple states.

You should consider a trust if you own property in different states, want to maintain privacy about your assets and beneficiaries, need to provide for someone with special needs, want to control when beneficiaries receive their inheritance, or wish to minimize estate settlement time and costs.

Business owners frequently use trusts to facilitate smooth business transitions. Parents with young adult children often prefer trusts because they can delay distribution until children reach certain ages or milestones.

People with blended families benefit from trusts because they can specify exactly how assets get distributed among various children and stepchildren, reducing potential disputes.

You Might Need Both

Many comprehensive estate plans include both a will and a trust. The trust holds most assets and avoids probate. The will, often called a pour-over will, catches any assets not transferred to the trust and names guardians for minor children.

This combination approach provides backup protection. If you forget to transfer an asset into your trust, your pour-over will directs it there during probate. You get the benefits of trust-based planning while maintaining a safety net.

Making Your Decision

Your ideal estate plan depends on your specific circumstances, not generic advice. Asset types, family dynamics, privacy preferences, and long-term goals all factor into the decision.

We help people evaluate these considerations every day and develop plans tailored to their unique situations. Whether you need a simple will, a comprehensive trust, or a combination of tools, the right approach protects your assets and provides clarity for your loved ones. Take time to explore your options and create documents that reflect your wishes and values.