Wills vs. Trusts: What’s the Difference and Which Do You Need?

Key Takeaways

Wills are easier to set up
When wills activate, they enter public records through a lengthy probate process
Trusts are better for more complex assets
Trusts provide more privacy and control

Wills vs. Trusts: What’s the Difference and Which Do You Need?

Many people are under the misconception that wills and trusts are interchangeable. While both serve important roles in estate planning, they work differently. Understanding the differences can help you choose the best fit for your situation.

In this guide, we will break down how wills and trusts work, the pros and cons of each, and how to decide which is better for you.

What Is a Will?

A will is a legal document outlining how your assets will be distributed after your death. Its key elements include:

Beneficiaries: You name those who get to receive your assets

Executor: Wills require an executor, someone who will be tasked with managing your estate. You can appoint an executor to manage your estate in your will

Guardians: You can also designate guardians for any minor children you have. For example, you may want to name a relative as your children’s guardian in case you pass away

Names beneficiaries: You can easily name your beneficiaries and inheritors in a will.

Wills become activated after your death. They must go through a probate process, which is court-supervised and can take months or years.

Benefits

Wills are simple and affordable to create. You can even create a will online through LegalZoom within an hour or thirty minutes.

Downsides

Wills are simpler and more straightforward. However, they tend to be easier to dispute. Beneficiaries or people close to you who are not named may dispute the will and challenge its validity.

Probate, the process during which the will is handled after your death, can be lengthy and expensive. Probate lawyers and the court can make it take months or years before your assets are distributed.

Best for

Wills are typically best for:

Individuals with modest or simple estates
Parents naming guardians for children
Those seeking a basic, straightforward plan

Of course, even if you have a complex estate or situation, you may still want to leave a will. Wills enter public record through the probate process and have their own benefits. For example, if you want your will to be public and confirmed by a court, it may be helpful to write a will for this purpose.

What Is a Trust?

The definition of a trust is a legal arrangement where you (the grantor) put assets into a trust that will be managed by a trustee. The trust is for the benefit of your designated beneficiaries.

Types of trusts

Revocable Living Trust: Can be changed or dissolved during your lifetime.

Irrevocable Trust: A permanent trust that cannot be dissolved. It offers tax and asset protection benefits.

Trusts become active while you’re alive. They continue on after your death. A probate process is not necessary.

Benefits

A key advantage of using a trust is that you can avoid probate. Probate is a court-supervised process involving the distribution of assets. It can be expensive and time-consuming. Beneficiaries may find probate stressful and challenging.

Since probate records are generally public, they can be viewed by anyone. If you avoid probate by opting for a trust, you can keep your affairs and details private.

In addition, a trust lets you control when and how beneficiaries receive assets. This gives you more control over the timing of asset distribution. The probate process can take a long, unpredictable period of time.

Downsides

Trusts require a greater upfront setup fee than wills. They can also take longer to set up. The administrative burden is real. In addition, it can make managing your estate and assets more complicated. For example, if you need to refinance property but it is listed in your trust, you might have to formally modify your trust first before you can make any changes.

Best for

A trust is generally best for:

Homeowners or those with significant assets
Blended families or special needs planning
Anyone seeking privacy and control
Those who can comfortably afford to set up a trust

Of course, even if you do not meet the above descriptions, a trust might still be beneficial to you. Individual circumstances vary and consulting with a legal expert is a good idea.

Key Differences Between Wills and Trusts

Feature	Will	Trust
When it takes effect	After death	During your lifetime
Probate required?	Yes	No
Cost	Lower cost	Higher setup cost
Privacy	Becomes public record	Stays private
Control	Manages basic instructions	Good flexibility and control
Guardianship for minor children	Yes	No
Digital and personal assets	Yes	Only if included

Essentially, a will handles final wishes and guardianship, whereas a trust provides you with ongoing control and far more privacy.

Do You Need a Will, a Trust, or Both?

You may need a will if:

You have children: If you want to name a guardian for minor children, it is important to have a will.

Straightforward assets: Simple assets are easier to distribute and can be managed through a will. You can also use a will to cover assets that are not titled in your trust.

Budget limits: Do you want a low-cost starting point? If so, a will is typically far more affordable than a trust.

You may need a trust if:

Avoiding probate: Going with a will means there needs to be a probate process. Probate is the court-supervised process of validating the will and distributing assets accordingly. It can be lengthy, expensive, and complex. In addition, probate records are public, which means others will be able to see what you left behind in your will and to whom you left it.

You own a home or multiple properties: A trust is better for those who own property or multiple properties.

You want to manage complex or large estates: Do you have complex or multi-state estates? This can make it more difficult to do the probate process. A trust can be much more convenient for dividing up assets.

What about both?

Nobody says you can only get either a will or a trust. They are not mutually exclusive. Some people choose to opt for a pour-over will that works alongside a living trust. This helps ensure that if any assets are overlooked, they can still transfer easily into the trust.

Many people use both a will and a trust to create a complete estate plan so that their assets are properly distributed after they pass away.

The Role of Beneficiaries and Executors

Beneficiaries

A beneficiary is someone who inherits or benefits from something in your will or trust. Beneficiaries must be properly named in both wills and trusts, which means providing key info such as contact details and full names.

Beneficiaries are chosen by you and specifically designated to inherit from you. They are different from heirs. Heirs are automatically chosen to inherit from a deceased person in case there is no will, and the heirs are chosen by state law. These laws tend to prioritize close relatives, such as children and surviving spouses.

It is crucial that your beneficiary designations are updated. Unclear or unupdated beneficiaries can lead to heavy conflicts and disputes after your death. If there is a divorce but you still have your ex-spouse listed as a beneficiary in your trust or will, it can cause a dispute.

Executor (for wills)

The executor for your will will manage the probate process and asset distribution.

Trustee (for trusts)

The trustee is the one who will manage your assets according to your trust’s instructions.

Tip: It is ideal to choose a person or people who are responsible, organized, and impartial as a will executor or a trust trustee. You may want to speak with them about your will or trust before you pass away so you can answer any questions they have.

Cost and Accessibility: Modern Tools That Simplify Both

Traditional route

Lawyers are the traditional route that has been taken for hundreds of years. An attorney can provide personalized advice. However, hiring the services of an attorney can be notoriously costly. Even an hour chatting with an attorney can cost hundreds of dollars. Meeting an attorney in person may also be inconvenient for you.

Online alternatives

Online legal and insurance support can be just as helpful as in-person attorneys. They simplify the process while keeping costs low.

Here are some of the best online tools for preparing wills or trusts.

LegalZoom: Offers affordable will and trust creation with attorney support.

Ethos: An easy-to-use life insurance that complements your estate plan by protecting your loved ones financially.

Tip: Start with the basics online, then consult a professional for complex situations. This article is not legal advice. If you have any worries, consulting an attorney can ensure you receive personalized advice.

Common Myths About Wills and Trusts

“Only rich people need a trust.”

False. Even modest estates can benefit greatly from avoiding probate. The probate process can be time-consuming and confusing for your beneficiaries. It also means that your will’s details will enter public record, being accessible to anyone, so you will lose privacy. Preparing a trust can be of great help both financially and mentally.

“Once I write my will, I’m done.”

Writing a will can take a lot of effort and mental energy. It can also be puzzling or time-consuming, because you need to ensure there are no legal issues with your will. The thing is, estate plans benefit from regular updates. Every time there is a major life event, it is best if you review your will and make necessary updates.

For example, if you divorce your spouse and no longer want to leave them assets, you will need to rewrite your will. Some states have rules where divorced spouses are automatically removed as beneficiaries, but this auto-revoke only applies to certain states. Divorce and death can greatly impact estate plans.

“My family will figure it out.”

False. False. False. As difficult as it is to say, most of the time, families encounter significant conflict if they have to deal with the asset distributions themselves. If there is no will or trust, conflicts often arise. Someone might dispute how the assets are divided if there are no clear words of who gets what. In addition, if you don’t have a trust or will, the state will decide who gets what. Your family does not.

How to Decide What’s Right for You

Everyone has their own life, assets, and wishes. Here are some basic questions and guidelines to help you decide what’s right for you. Remember, these general tips do not constitute legal advice.

Ask yourself:

Do I want my estate to go through probate?
How private do I want my financial details?
Do I have dependents, special needs, or complex assets?

Simple guidelines

Let’s simplify it. Here are some simple steps to consider. If you’re just beginning with estate or legacy planning, start with a will. Wills are easier and faster to write.

As your needs become more complex or your estate grows, you can add a trust. Different types of trust mean better personalization.

For professional help, consult an estate attorney or use online legal tools to ensure your plan is valid in your state. There are state-dependent requirements or laws that can impact how estate planning needs to be done.