Two of the most common estate planning tools are trusts and wills. Both serve the purpose of passing on your estate to loved ones, but they do so in different ways, with distinct advantages and limitations. Understanding the differences between a trust and a will can help you decide which one—or combination of both—best suits your estate planning needs.

What is a will?

A will is a legal document that outlines how a person’s assets will be distributed after their death. It also may name guardians for minor children and designate an executor to carry out the instructions. Wills are only effective after death and go through a legal process called probate. A will only comes into effect after the person’s death. Until then, it has no legal power.

What is a trust?

A trust is a legal arrangement in which a person (the “trustor” or “grantor”) places their assets into the care of a trustee, who manages and distributes those assets according to the trust’s terms. A trust can be used both during the trustor’s lifetime (revocable trusts) and after their death (irrevocable trusts). A trust can take effect immediately after it is created. This is particularly true for revocable living trusts, which allow the person to maintain control of the assets during their lifetime and ensure the smooth transfer of assets upon their death.

What is the Probate Process for Wills and Trusts?

A will must go through probate, a court process that validates the will and oversees the distribution of assets. Its contents become public record during this process. This can take several months or even years, depending on the complexity of the estate, and can be expensive due to legal and court fees.

Assets in a trust generally do not go through probate, speeding up the distribution process and reducing costs, preserving the privacy of the estate plan. Upon the trustor’s death, the trustee can distribute assets without the need for court involvement.

Control & Management Over Assets

A will simply specifies who will inherit your assets and in what amounts. It doesn’t offer much flexibility in how or when those assets are distributed. A will also does not provide for the management of assets if the person becomes incapacitated. It only takes effect upon death. A trust can provide greater control over how and when your assets are distributed. For example, you can specify that a beneficiary only receives assets when they reach a certain age or if they meet certain conditions. This makes trusts ideal for minor children, beneficiaries with special needs, or anyone you want to ensure receives their inheritance in a specific way. A trust can provide for the management of your assets in the event of incapacitation. A successor trustee can step in and manage the assets if the grantor becomes unable to do so, ensuring that your financial needs are met during your lifetime.

Costs and Complexity

Wills are generally less expensive to create than trusts, as they are simpler, straightforward documents. They may need to be updated regularly to reflect changes in your estate or personal circumstances. The probate process can be costly and time-consuming, potentially outweighing the initial savings.

Trusts tend to be more expensive to set up initially because they require more legal documentation and may require more complex planning. However, since they avoid probate and offer ongoing management, they have more flexibility and the long-term costs can be lower.

Which is Right for You?

Whether you need a will, a trust, or both depends on your individual situation. If you have a simple estate and want to name beneficiaries and a guardian for your children, a will might be sufficient. However, if you want to avoid probate, maintain privacy, or have more control over how your assets are distributed, a trust may be the better option.

Many people choose to create both a will and a trust to ensure that their estate plan is comprehensive. A will can address any assets not included in a trust, while a trust can manage the distribution of your more significant assets.

Consulting with an estate planning attorney is always a good idea when making decisions about your estate plan, as they can help you navigate the legal complexities of both wills and trusts to create the best plan for your family and assets. Please contact the legal experts at O’Brien Law to discuss your options.