A will and a trust both answer the same big question: what happens to your property, and who takes care of things, when you're gone. But they work differently, cost different amounts, and fit different families. Here is a clear comparison to help you decide which belongs in your plan, or whether you need both.
How a will works
A will is a document that takes effect when you die. It names who receives your property, who will manage your estate (an executor or personal representative), and, importantly for parents, a guardian for minor children. A will generally goes through probate, the court process of settling an estate, and once filed it usually becomes a public record.
How a living trust works
A revocable living trust is an arrangement you set up during your life. You transfer property into the trust, usually serving as your own trustee while you're alive, and name a successor trustee to take over when you die or can't manage your affairs. As Nolo explains, property held in a properly funded living trust can pass to your beneficiaries without probate, and the trust generally stays private.
The catch is funding: a trust only controls property that has actually been transferred into it. A trust that's signed but never funded won't avoid probate.
Side by side
- Probate: a will usually goes through probate; a funded trust usually avoids it.
- Privacy: a will becomes public in probate; a trust generally stays private.
- Incapacity: a will only works at death; a trust lets your successor trustee manage trust property if you become unable to.
- Guardians for children: you name them in a will, not a trust.
- Cost and upkeep: a will is usually simpler and less expensive; a trust costs more up front and needs maintenance as you acquire property.
Who often benefits from a trust
- Homeowners, especially with property in more than one state
- Families who value privacy or want to avoid probate delays
- Parents who want to control how and when children receive money
- Blended families with specific wishes for each side
- Anyone concerned about managing assets if they become incapacitated
Who may be well served by a will
Younger people, renters, and those whose main assets already have beneficiary designations (life insurance, retirement accounts, pensions) may find a well-drafted will, plus updated beneficiaries and powers of attorney, covers their needs. As the American Bar Association puts it, there's no one-size-fits-all answer.
Most trust plans still include a will
Even with a trust, you typically need a “pour-over” will to catch anything left outside the trust and to name guardians for minor children. And regardless of which you choose, a complete plan usually includes financial and health care powers of attorney.
A note for first responders
Police officers, firefighters and EMTs face real risks on the job and often have pensions and line-of-duty benefits that pass by beneficiary designation. Read why a first responder needs an estate plan.
Questions to ask yourself before you decide
- Do I own a home, or property in more than one state?
- Would my family benefit from avoiding probate delays and keeping things private?
- Do I have minor children, or a family member who needs help managing money?
- Who would manage my finances if I became seriously ill or injured?
- Are my beneficiary designations on life insurance, retirement accounts and pensions up to date?
Your answers point toward the right mix of documents. Many families end up with a will, powers of attorney and updated beneficiaries; others add a living trust.
Common questions
Is a trust only for wealthy people?
No. Many middle-income families use living trusts to avoid probate and plan for incapacity, especially homeowners.
Can I change a will or a revocable trust later?
Yes. Both can be updated during your life, and you should review them after major life events.
Does a trust protect assets from creditors?
A revocable living trust generally does not shield assets from your creditors while you're alive. Other planning tools serve that purpose.
Learn more about our estate planning services.
If you have questions about your situation, First Response Legal serves clients across Northwest Indiana and the Chicagoland area from our Hammond and Chicago offices. Schedule a consultation.
Sources
- Living Trust vs. Will: Which One Does Your Family Need?, Nolo
- Wills and Revocable Trusts: One Size Doesn't Fit All, American Bar Association
This article is for general information and is not legal advice.