Difference Between a Will and a Trust (Plain English)
Our team is here to answer your questions and help you protect your legacy. If you’d like guidance tailored to your situation, schedule a time to talk with us.
Book a Free ConsultationWhat's the Difference Between a Will and a Trust?
If you're thinking about estate planning, you've probably heard about wills and trusts. But what's the difference? Let me break it down for you in simple terms, like I would explain to a friend over coffee.
What Is a Will?
A will is a legal document that tells everyone what you want to happen to your stuff after you die. Think of it as your final instructions.
Here's what a will does:
- Says who gets your assets when you're gone
- Names a guardian for your minor children
- Picks someone to handle your affairs (called an executor)
- Only takes effect after you die
Quick example: Sarah's will says her house goes to her daughter, her savings go to her son, and her sister becomes the guardian of her minor children.
What Is a Trust?
A trust is like a box that holds your assets. You put your stuff in the box and give instructions about how to manage it. The cool thing? It works while you're alive and after you're gone.
There are several types of trusts, but the most common for families is a living trust, which you create while you're alive and can modify as needed.
Here's what a trust does:
- Holds and manages your assets
- Works during your lifetime and after death
- Avoids the court process called probate
- Keeps your business private
- Can protect assets if you become unable to manage them
Quick example: Mike puts his house and investments in a trust. If he gets sick and can't manage his affairs, his brother (the backup trustee) takes over. When Mike dies, everything goes to his kids without court involvement.
The Big Differences
When They Work
A will only kicks in after you die. A trust starts working as soon as you create it and fund it with assets.
Court Process (Probate)
Wills go through probate. This means a court has to approve everything. It's public, can take months or years, and costs money.
Trusts skip probate entirely. Your assets transfer privately and quickly to your beneficiaries. If you're specifically concerned about probate, you might want to learn more about how trusts avoid probate and why this matters for your family.
Privacy
Wills become public records. Anyone can see what you owned and who got what.
Trusts stay private. Nobody knows your business except the people you choose to tell.
If You Become Incapacitated
A will can't help if you're alive but unable to manage your affairs. You'd need a separate power of attorney document.
A trust has you covered. Your successor trustee steps in and manages everything according to your instructions.
Cost and Complexity
Wills are simpler and cheaper to create upfront. But probate costs can add up later.
Trusts cost more to set up and require ongoing management. But they often save money and hassle in the long run.
Which One Do You Need?
A Will Might Be Enough If:
- You have a simple estate
- You don't mind the probate process
- You want the most affordable option upfront
- You have young children (you'll still need a will even with a trust)
Consider a Trust If:
- You want to avoid probate
- You value privacy
- You have complex assets or family situations
- You want protection if you become incapacitated
- You have minor children or beneficiaries who need ongoing management
The Decision-Making Process
Choosing between a will and trust isn't always black and white. Your decision should depend on your specific circumstances, family dynamics, and financial goals.
Consider your assets first. Do you own real estate in multiple states? Complex investments? Business interests? These situations often benefit from trust planning.
Think about your beneficiaries too. Are they financially responsible? Do they have special needs? Trusts offer more control over how and when beneficiaries receive their inheritance.
Age matters as well. Younger people with simple estates might start with a will and upgrade to a trust later. Older individuals often prefer the immediate benefits trusts provide.
Common Misconceptions
Many people think trusts are only for the wealthy. Not true! Middle-class families often benefit significantly from trusts, especially for avoiding probate and protecting minor children's inheritance.
Another myth? That trusts are too complicated to manage. While they require more initial setup, most people find them straightforward once established.
Some folks believe wills are "good enough" for everyone. But if you've spent years building wealth and want to protect your family from court delays and public exposure, a will alone might not cut it.
Can You Have Both?
Absolutely! Many people have both. Even with a trust, you typically need a "pour-over" will. This catches any assets you forgot to put in your trust and pours them into it after you die.
You also need a will to name guardians for minor children. Trusts can't do that.
This combination approach gives you the best of both worlds: comprehensive asset protection through your trust and important family protections through your will.
Real-World Example
Let's say Tom has a house, investment accounts, and two teenage kids. He creates a trust and transfers his house and investments into it. He also has a will that names his brother as guardian for his kids and catches any assets not in the trust.
If Tom dies, his house and investments transfer immediately to his kids through the trust (no probate needed). His will handles guardianship and any forgotten assets.
This setup protects Tom's kids from court delays while ensuring they have proper care and supervision.
Timeline and Implementation
Creating a will typically takes a few weeks once you've decided what you want. The process involves drafting the document, reviewing it, and signing it with proper witnesses.
Trusts take longer to implement fully. You need to create the trust document, then "fund" it by transferring assets into the trust's name. This might involve changing property deeds, updating investment account titles, and re-registering other assets.
Don't let this complexity discourage you, though. The extra time invested upfront pays dividends later in terms of family protection and peace of mind.
When to Review and Update
Both wills and trusts need regular updates. Major life events trigger review needs: marriage, divorce, births, deaths, significant asset changes, or moves to different states.
Wills should be reviewed every three to five years at minimum. Trusts need ongoing attention too, particularly regarding asset funding and beneficiary designations.
The key is staying proactive rather than reactive with your estate planning documents.
The Bottom Line
Both wills and trusts help protect your family, but they work differently. Wills are simpler but go through probate. Trusts are more complex but offer more benefits like privacy and probate avoidance.
The best choice depends on your situation, assets, and goals. Many people benefit from having both. To understand the full scope of what you might need beyond just these basic documents, check out our guide on what else you need besides a living trust.
Consider talking to an estate planning attorney to figure out what works best for your family.
Remember, the most important thing is having some plan in place. Don't let perfect be the enemy of good when it comes to protecting your loved ones.
