Trust vs. Will: What's the Difference?
Many people use the words “trust,” “will,” and “living will” interchangeably — but they are very different estate-planning documents.
A will and a trust can both help determine what happens to your property and assets, but they work differently and may serve different purposes.
Understanding the basic differences can help you have a more informed conversation with an estate-planning professional about what may be appropriate for you and your family.
What Is a Will?
A Last Will and Testament is a legal document that provides instructions for how you want certain property and assets handled after your death.
A will may allow you to:
- Name the people or organizations that should receive your property
- Name an executor to administer your estate
- Name guardians for minor children
- Provide instructions for distributing personal property
A Will Generally Takes Effect After Death
Unlike a living trust, a will generally does not manage your property while you are alive. Its primary purpose is to provide instructions that become effective after your death.
A Will May Require Probate
Property passing through a will generally goes through the probate process. Probate is the court-supervised process used to validate the will, settle certain estate obligations, and distribute property.
The amount of time, expense, and court involvement required can vary depending on the estate and applicable state law.
What Is a Trust?
A trust is a legal arrangement in which property is held and managed according to instructions established in the trust document.
One of the most common estate-planning trusts is a revocable living trust.
A living trust may allow you to:
- Place certain assets into the trust during your lifetime
- Continue controlling those assets while you are able
- Name a successor trustee to manage the trust if necessary
- Specify how trust assets should be distributed after your death
- Allow properly titled trust assets to pass without probate
A Trust Can Operate During Your Lifetime
A living trust begins operating while you are alive. With a revocable living trust, you can generally change its terms, add or remove property, or revoke the trust while you are competent.
The Trust Must Be Properly Funded
Simply creating a trust document is not enough. Assets generally must be properly transferred or titled into the trust for the trust to control those assets.
Trust vs. Will — The Main Differences
Although both can be important parts of an estate plan, they operate differently.
- When it operates: A will generally becomes effective after death, while a living trust can operate during your lifetime.
- Probate: Assets passing through a will may be subject to probate. Assets properly owned by a living trust can generally pass according to the trust without probate.
- Incapacity: A living trust may allow a successor trustee to manage trust assets if you become unable to do so. A will does not provide this type of lifetime asset management.
- Privacy: A probated will generally becomes part of the court record. A trust ordinarily remains a private document.
- Setup: A will is generally simpler to establish. A trust usually requires additional planning and proper transfer of assets into the trust.
Do You Need a Will or a Trust?
It does not always have to be an either-or decision.
Many estate plans include both a trust and a will because the documents perform different functions.
For example, someone with a revocable living trust may also have a pour-over will.
A pour-over will can provide instructions for certain property that was not transferred into the trust before death, although such property may still have to go through probate before reaching the trust.
A Will May Be Enough for Some People
Someone with a relatively simple estate may determine that a properly prepared will, beneficiary designations, and other estate-planning documents adequately meet their needs.
A Trust May Offer Additional Benefits
Someone with a home, significant assets, multiple properties, privacy concerns, or a desire to make administration easier for family members may want to consider whether a living trust provides additional benefits.
What About a Living Will?
A living will is different from both a will and a living trust.
Despite the similar name, a living will generally has little to do with distributing your property.
Instead, it addresses your wishes concerning medical treatment if you become unable to communicate those wishes yourself.
Three Different Documents
- Will: Provides instructions concerning your estate after death.
- Living Trust: Holds and manages assets during your lifetime and can direct their distribution after death.
- Living Will / Advance Directive: Addresses healthcare and medical-treatment decisions.
The similarity in the names can be confusing, but these documents serve very different purposes.
A Complete Estate Plan May Include More Than One Document
Estate planning involves more than deciding who receives your property. Depending on your circumstances, an estate plan may include:
- Last Will and Testament
- Revocable Living Trust
- Pour-over Will
- Durable Power of Attorney
- Healthcare or Advance Directive
- Beneficiary Designations
The appropriate combination depends on your family, assets, goals, and applicable state law.
Common Misconception
“If I have a trust, I don't need a will.”
Not necessarily.
A trust only controls assets that are subject to its terms. Property that was never properly transferred into the trust may require other estate-planning provisions.
This is one reason a will is often included even when a person has established a revocable living trust.
Final Thoughts
A will and a trust are not competing versions of the same document. Each serves a different purpose.
A will primarily provides instructions for your estate after death, while a living trust can manage assets during your lifetime and may allow properly titled trust assets to avoid probate.
For many families, the best estate plan may involve using both.
Important Note
This information is provided for general educational purposes only and should not be considered legal advice. Estate-planning laws and requirements vary by state and individual circumstances. You should consult with a qualified estate-planning attorney regarding the documents and strategies appropriate for your specific situation.