Living Trust vs. Will: What’s the Difference? - NerdWallet (2023)

The main difference between a last will and testament and a living trust is when they take effect and whether they go through the probate process. A last will and testament takes effect upon death and must go through probate; a living trust takes effect when a person is alive and does not go through probate.

  • A last will and testament is an important estate planning document that most people will need to designate where their assets will go upon their death. However, wills are typically subject to a public, court-supervised probate process to distribute the person’s assets.

  • Living trusts, also called inter vivos trusts, are effective during your lifetime and won’t go through probate. They can protect your assets if you become incapacitated, and in some cases, they can help you avoid certain estate taxes. However, they can’t designate guardianship for minor children like a will can.

  • Though living trusts can be revocable or irrevocable, the term “living trust” usually refers to a revocable living trust.

  • Living trusts and wills have key differences, but they can be used together to take advantage of both documents' benefits.

» Estate planning? Here’s a 7-step checklist to get started

Deciding factors




Around $0 to $1,000, depending on the complexity and size of the estate and how it is created (DIY, online, via an attorney).

Up to $600 for a simple online trust; around $3,000 and up for complex trusts.

Better for

People with minor children or dependents, and those who have specific wishes for end-of-life care.

Those who want their beneficiaries to receive assets while they’re still alive and potentially avoid estate taxes and probate after their death.


Straightforward process.

More complex process, with more paperwork.


  • Effective after one's death.

  • Usually comes secondary to trusts.

  • Provides guardianship for minor children.

  • Effective once signed and funded.

  • Generally takes precedence over wills.

  • Does not provide guardianship.


Wills do not avoid estate taxes, though estate tax generally only applies to assets over $12.92 million in 2023.

Irrevocable trusts can provide tax benefits and protect your estate from creditors. Revocable trusts generally do not provide these things.


Wills may be subject to probate, which is a public legal process.

Trusts bypass probate and are less likely to be successfully challenged, which keeps your finances private.

Protection during incapacity

Wills take effect after your death, so they do not protect your assets if you become incapacitated.

Trusts protect your assets if you are incapacitated while still alive.

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» Writing a will? Here are our top picks for online will makers

Living Trust vs. Will: What’s the Difference? - NerdWallet (1)

Best for: Ease of use. Cost: One-time fee of $159 per individual or $259 for couples. $19 annual membership fee thereafter.

Living Trust vs. Will: What’s the Difference? - NerdWallet (2)

Best for: Users who want an all-inclusive experience. Cost: $99 per year for Starter plan. $139 per year for Plus plan. $209 per year for All Access plan.

Living Trust vs. Will: What’s the Difference? - NerdWallet (3)

Best for: State-specific legal advice. Cost: $89 for Basic will plan. $99 for Comprehensive will plan. $249 for Estate Plan Bundle.

(Video) How To Plan Finances When Your Family Is Expanding | NerdWallet

How does a living trust work?

A revocable living trust, often just called a “living trust,” allows you to put your assets in the name of a trust, which is a separate legal entity. You’ll choose a trustee to manage the assets for you and your beneficiaries if you die or become incapacitated.

  • A revocable living trust, as its name indicates, is changeable.

  • An irrevocable living trust generally can’t be undone, but it can help avoid certain estate taxes.

  • Living trusts aren’t the same as testamentary trusts, which activate after your death.

Advantages of a living trust

  • Effective once signed and funded. Living trusts take effect as soon as assets are retitled in the name of the trust. Wills only take effect after your death.

  • Protects in case of incapacity. Unlike a will, a living trust takes effect whenever the owner becomes unable to handle their own affairs due to illness or injury.

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  • Avoids probate. Probate is the court-supervised legal process needed to validate your will. In some states, probate can be costly and time-consuming. Probate does not apply to assets in a trust. This also preserves your privacy, because probate proceedings are part of the public record.

  • Less likely to be contested. Living trusts generally take legal precedence over wills, and because they bypass probate, they’re less likely to be contested in court.

» MORE: Contesting a will: Who can do it, how it works

Disadvantages of a living trust

  • More complex and costly process. You can probably write your own will more easily — and at a lower cost — than you can create any type of trust. You’re also more likely to need an estate planning attorney to set up a trust, which can be expensive depending on the complexity of your assets. Transferring assets into the trust can also be time-consuming and complicated.

  • Cannot designate guardianship for minor children. You can use a will to name guardians for your children, but trusts typically only concern financial assets.

  • Does not provide tax benefits. Revocable living trusts can be changed or canceled by the owner at any time, so the assets in the trust are still considered the owner’s property. Because of this, revocable living trusts are still part of the owner’s estate and thus may be subject to estate tax when the owner dies. (Irrevocable trusts remove the assets from the owner’s estate, thus providing potential estate tax savings.) This also means that a revocable trust does not protect you against current or future creditors in the event of your death.

» What kind of trust works for you? Compare revocable vs. irrevocable trusts

How does a will work?

A will outlines where your assets should go when you die. You can use a will to designate who should inherit your property, name guardians for your children and make requests for funeral arrangements and other final wishes. Like a living trust, you can change your will at any time while you’re still alive.

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Wills generally don’t include assets with named beneficiaries, such as 401(k) accounts or life insurance policies, or any assets that are held jointly. You’ll name an executor to carry out the instructions in your will after your death, though the document must first go through the probate process before assets can be distributed.

If you die without a will, which is called “dying intestate,” your property will be distributed according to your state's laws.

Advantages of a will

  • Simpler to create. You can write your will yourself, with an online will maker or with the help of an estate planning attorney for what will probably be a lower cost than a living trust. There’s no extra step of transferring assets; you just need to list the property you own and where it should go.

  • Can designate guardianship for minor children. You can use a will to name a guardian to care for minor children in the event of your death.

Disadvantages of a will

  • Does not protect in case of incapacity. Because wills only have legal standing after death, they can’t protect your assets if you become unable to handle your own affairs (as a living trust can).

  • Usually must go through probate. Wills typically need to be validated in probate court before the estate’s assets can be distributed. Probate can be a long, costly process in some states, and proceedings are part of the public record. People can contest wills if they believe they have a claim to certain assets in the estate.

  • Does not provide tax benefits. Like revocable living trusts, wills don’t reduce estate taxes or protect assets from creditors. The federal estate tax ranges from rates of 18% to 40% and generally only applies to assets over $12.06 million in 2022 or $12.92 million in 2023. However, estates as small as $1 million may be subject to state-level estate taxes.

» Writing a will? Here are our top picks for online will makers

How to integrate a living trust and a will

(Video) Is A Real Estate Investment Trust A Good Idea?

Trusts can be a great financial estate planning tool, but they deal with specific assets, not everything you own. It’s likely you’ll still need a will if you set up a trust, especially if you have minor children.

In most cases, a pour-over will is the best way to integrate both a living trust and a will into your estate plan. A pour-over will is a type of will with a provision to “pour” any leftover or unallocated assets in a person’s estate into a living trust when the person dies. When you create a living trust with online software or with an estate planning attorney, you’ll likely be offered a pour-over will as a counterpart.


Living Trust vs. Will: What’s the Difference? - NerdWallet? ›

The main difference between a last will and testament and a living trust is when they take effect and whether they go through the probate process. A last will and testament takes effect upon death and must go through probate; a living trust takes effect when a person is alive and does not go through probate.

What is the downside of a living trust? ›

One of the primary drawbacks to using a trust is the cost necessary to establish it. This most often requires legal assistance. While some individuals may believe that they do not need a will if they have a trust, this is sometimes not the case.

What's the difference between will and living trust? ›

A living trust, unlike a will, can keep your assets out of probate proceedings. A trustor names a trustee to manage the assets of the trust indefinitely. Wills name an executor to manage the assets of the probate estate only until probate closes. Trusts tend to be more expensive and more complex to maintain than wills.

What are three advantages of a living trust in comparison to a will? ›

Most of the advantages of having a revocable living trust compared to a Will involve avoiding probate and making the process of transferring your assets to your beneficiaries easier, faster, and more affordable.

What are the pros and cons of a trust vs will? ›

What are the pros and cons of wills and trusts? Wills are easier to create, less expensive, and more flexible, but they need to go through probate and become public records. On the other hand, trusts are more complicated and expensive to set up, but they don't require probate and offer privacy and asset management.

What assets should not be in a trust? ›

What assets cannot be placed in a trust?
  • Retirement assets. While you can transfer ownership of your retirement accounts into your trust, estate planning experts usually don't recommend it. ...
  • Health savings accounts (HSAs) ...
  • Assets held in other countries. ...
  • Vehicles. ...
  • Cash.
Jul 1, 2022

Why do rich people put their homes in a trust? ›

Many people put their assets in a trust to make the process of distributing them easier. Trusts also help minimize tax liabilities and keep ownership of high-value assets private.

What is the point of a living trust? ›

A living trust is a legal arrangement that lets you decide how your assets are managed and distributed, both during your lifetime and after you die. A living trust “owns” the property you put into it, while often still letting you control the trust assets.

What is the best trust to have? ›

An irrevocable trust offers your assets the most protection from creditors and lawsuits. Assets in an irrevocable trust aren't considered personal property. This means they're not included when the IRS values your estate to determine if taxes are owed.

What are the advantages of a trust vs will? ›

Trusts are frequently used in estate planning. "Living trusts" created in the grantor's lifetime facilitate the transfer of assets to heirs without the cost and publicity of probate. Transfers by a trust can usually be quicker and more efficient than transfers by will.

What is the best type of living trust? ›

Revocable Trusts

Commonly referred to as living trusts, revocable trusts offer an effective estate-planning tool to lower the costs and hassles of probate, preserving privacy and preparing your estate for ease of transition in the event of death or incapacity.

Why are living trusts today often considered to be more desirable than wills? ›

In addition to affordability, which stems from avoiding the probate process, a living trust will allow you to control what happens to your assets during and after death. Also, unlike a will, a living trust is not public record. Furthermore, you can use a living trust regardless of the size of your estate.

What is the biggest difference between a will and a trust? ›

Will: a legal document that directs who will receive your assets and property at the time of your death. Trust: a legal arrangement where a “trustee” (someone you select) manages and holds title to your assets and property and distributes income to the beneficiaries that you select.

Does Dave Ramsey recommend a living trust? ›

Do I Need a Living Trust? While there's not a one-size-fits-all answer, the vast majority of people can get by without using a living trust. Dave Ramsey says, “A simple will is perfect for 95% of the population.” In other words, unless you have a really big estate, a simple will works just fine.

What is the downside to a will? ›

Disadvantages include:

A will only controls the assets that are titled in testator's (decedent) name. It does not control assets that are titled in joint ownership and go to testator's spouse or another joint owner when he/she dies.

How are trust assets distributed to beneficiaries after death? ›

Distribute trust assets outright

The grantor can opt to have the beneficiaries receive trust property directly without any restrictions. The trustee can write the beneficiary a check, give them cash, and transfer real estate by drawing up a new deed or selling the house and giving them the proceeds.

What are the bad things about a trust? ›

One of the most significant disadvantages of a trust is its complexity. Generally, trusts use very specific language, which can be difficult to understand for those who are not often involved in estate law. Because trusts were once written in Latin, there are many legal terms that still carry over.

What are the pros and cons of putting your house in a living trust? ›

Revocable living trusts have a few key benefits, like avoiding probate, privacy protection and protection in the case of incapacitation. However, revocable living trusts can be expensive, don't have direct tax benefits, and don't protect against creditors.

What is the primary purpose of a living trust? ›

The main purpose of a living trust is to oversee the transfer of your assets after your death. Under the terms of the living trust, you are the grantor of the trust, and the person you designate to distribute the trust's assets after your death is known as the successor trustee.

What is a trust and why are they bad? ›

A trust helps an estate avoid taxes and probate. It can protect assets from creditors and dictate the terms of inheritance for beneficiaries. The disadvantages of trusts are that they require time and money to create, and they cannot be easily revoked.


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