Wills and trusts are both estate-planning documents that provide direction for your family and loved ones after your death. However, you might think of them almost like vehicles. A will is a simple bike that can take you from one place to another. A trust can transform into a car, truck, bus, or semi-truck, designed to achieve your goals. It can perform various functions and carry multiple loads (responsibilities).
“A will answers, ‘How do you give your assets to someone when you die?’ ” said certified financial planner Bryson Roof of Fort Pitt Capital Group of Pennsylvania and Florida. “A trust can be used in the same fashion, but tends to be used for more complex situations or when someone wants to retain a level of control. To me, trust equals control.”
What’s the Difference Between a Trust and a Will?
Wills and trusts may seem similar, but they are means to accomplish different goals. Here’s how they differ.
|Purpose||Assign a guardian, divide assets||Very flexible but provides more control over assets|
|When It Takes Effect||After death||Varies|
|Probate Court||Almost always goes through probate court||May be able to avoid probate court|
|Cost To Create||$395-$1,000||$850-$3,050|
A will is a document intended to simply divide your assets and explain whom you wish to take care of your child if you die. For example, a will outlines who should be provided guardianship, or custody, of any minor children if both parents die. You can also name the person you want to handle your financial affairs after death.
A trust is a way to transfer your assets but can serve various functions, depending on the trust type and what the attorney includes. The uses of a trust can include:
- Minimizing estate taxes
- Protecting beneficiaries from creditors
- Preserving assets for minors until they’re adults or reach specific ages
- Benefiting a charity
- Managing property in multiple states
- Providing for a special needs child
As an example, Roof said parents often use a trust if a young adult is involved. “If you have a kid in college, do you really want them to inherit a million dollars and blow it on cars, gas, and motorcycles?” Roof said. A trust can stipulate that the money is given out in chunks at ages 18, 25, and 35. Or you can insert rules stating that funds must be used for health, maintenance, education and support, he said.
There are two main trusts: revocable and irrevocable living trusts. Each type of trust has different advantages and disadvantages.
When It Takes Effect
A will becomes effective at death. If you’re incapacitated through mental or physical disability, the will won’t yet be accessible or effective in court.
In contrast, a trust can be set up so it takes effect even while you’re alive. For example, you can set up a trust so money, property, and other assets can be managed by someone else if you’re sick or incapacitated. A trust can also kick in after you have passed away or lost mental capacity. Trusts are far more flexible with regard to when they take effect.
A will must almost always go through probate court to ensure the will’s validity. The probate process will be publicly available information. Probate court can be expensive and take longer. Assets in each state must go through probate in that state.
Some states, such as Minnesota, define the value of smaller estates that need not go before probate court.
Costs To Create
A will is simpler and less expensive to create and administer compared to a trust. Some firms may charge $395 to around $1,000 to create a will for a single person. Pricing depends on your situation and if your will package contains items such as a health care or financial power of attorney.
A trust requires more of an attorney’s time to discuss options that apply to your situation, then draft a document. The typical estimated cost to create a trust could vary widely depending on your situation and what you want the trust to accomplish. Expect to see pricing anywhere between $850 and $3,050 for a single person.
Of course, you can also use online will and trust sites to create the documents for $0 to $200, although there is controversy about DIY wills and how valid these documents may be.
If you hire a professional trustee to manage a revocable living trust while you’re alive, that person will also likely charge a fee of around 0.5%-2.0% of the total property amount in the trust.
“You can elect to have a family member such as your mother or daughter to manage your trust, and they may not charge a fee,” Roof said. “We often see this with aging parents in nursing homes, and a son or daughter will manage the trust on behalf of their parents without charging a fee.”
Some assets may not need to go through probate, even if you only have a will. For example:
- Joint bank accounts and jointly held property
- Bank, retirement, life insurance, and other accounts where the deceased named someone as a beneficiary
- Some property, depending on how it’s titled
Transfer-on-death deeds available in many states can transfer property to someone you name, after your death.
Which Is Right for Me?
Each person’s circumstances are different and there is no set formula for deciding which route you should take. However, there are some questions you can ask yourself, and those answers can guide you into choosing between a will or a trust.
A simple will may be right for you if you:
- Want to choose who handles your affairs after death
- Have children and want to decide on their future guardians
- Want to direct where your assets go after death versus the state (if you have no will)
- Don’t have many or complicated assets
Some type of trust may be right for you if you:
- Want to appoint a trustee to manage your assets, even while you’re alive
- Have assets in multiple states
- Are concerned about privacy
- Want more control over how and when assets are distributed
- Are concerned about an adult child’s spending
- Have a loved one who is special needs, or not a U.S. citizen
- Hope to provide your beneficiaries with easier, faster access to your assets
Some attorneys may also suggest a trust for nursing-home planning, tax planning, or gift planning.
A Best-of-Both Worlds Option
Many people could benefit from having both a will and a trust. The right vehicle(s) for you depends on your situation, state law, and what you hope to achieve after your death.
In fact, you can establish a trust within a will, and name your trustee for those trusts. Even if you set up a revocable trust—which can be seen as similar to a will—you’ll likely still set up what’s called a “pour over” will to address any assets you didn’t address and to establish a guardian for your minor child.
Most attorneys have a package deal for estate planning, Roof said. This includes:
- Last will and testament and a trust, if necessary
- Medical power of attorney
- Advanced medical directive
- Financial power of attorney
The Bottom Line
A trust can be a powerful tool to manage your financial legacy in this lifetime and after you die. A will is a more straightforward tool to distribute your assets and request a specific person for guardianship of a minor child.
Depending on your situation, you may choose one or both—but it’s wise to consult on an appropriate approach. Without a will or trust, your state’s courts may be making all the big decisions. “Typically, the way the state deems your assets to be distributed is not the way you intended,” Roof said.
Frequently Asked Questions (FAQs)
Can I change my trust or will?
You can always make changes to a will or revocable trust by following your state’s laws regarding changes. Crossing out sections probably won’t hold up in court. You should consider updating your will in the event of a significant life change, moving to a new state, tax-law change, or your property’s value and type change dramatically. You cannot change or revoke an irrevocable trust, which is why it’s rarely used.
Can I make my own will or trust?
Numerous forms and online services offer DIY wills and trust-making, and some states allow holographic wills that are handwritten. However, if you don’t follow state law, your will may not be followed, and your property may not go to the people you wish. Only an experienced attorney can ensure your estate plans achieve your goals and don’t run afoul of state laws.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
Was this page helpful?
Thanks for your feedback!
Tell us why!
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
American Bar Association. "Probate Process."
American Bar Association. "Guidelines for Individual Executors & Trustees."
Office of the Minnesota Attorney General. “Probate and Planning: A Guide to Planning for the Future,” Page 7.
New York State Unified Court System. "Last Will and Testament."
North Carolina State Bar Legal Assistance for Military Personnel. "Setting the Record Straight on Living Trusts."
A will is a legal document that spells out how you want your affairs handled and assets distributed after you die. A trust is a fiduciary arrangement whereby a grantor (also called a trustor) gives a trustee the right to hold and manage assets for the benefit of a specific purpose or person.What's the difference between a trust and I will? ›
A will is a simple legal document that provides instructions on how to distribute property to beneficiaries after death, while a trust is a complex legal arrangement that allows you to transfer ownership of property, is managed by a third party, and is distributed to beneficiaries at any time determined by the creator ...What are the disadvantages of putting your house in trust? ›
- Protection Against Future Incapacity. ...
- It May Save Money on Estate Taxes. ...
- It Can Avoid Probate. ...
- Asset Protection. ...
- Trusts Can Cost More to Maintain. ...
- Your Other Assets Are Still Subject to Probate. ...
- Trusts Are Complex.
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? ›
- 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. ...
A trust is a legal contract that ensures your assets are managed according to your wishes during and after your lifetime. Among the many benefits trusts offer are potential tax benefits and the ability to set parameters for how and when your assets will be used and distributed.Why set up a trust? ›
After all of the years that you have worked to build up a legacy, you want to make sure you efficiently transfer your assets to your beneficiaries. A trust can help you optimize the legacy you leave to the people and causes you care about.What is the negative side of trust? ›
The major disadvantages that are associated with trusts are their perceived irrevocability, the loss of control over assets that are put into trust and their costs.Why do rich people put their homes in a trust? ›
One of the main reasons you may place your home in a trust is so your family can avoid a lengthy and expensive probate process after you die.What is the best trust to put your house in? ›
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.
Trusts provide for the management and distribution of your assets during lifetime and after death. A Will, on the other hand, allows you to do things like name guardians for your children, appoint an executor for your estate, and declare your final wishes.What are 3 advantages of a trust over a will? ›
- Avoid probate. Probate is the court-supervised legal process in which your estate is distributed according to your last will and testament. ...
- Protect your loved ones' privacy. ...
- Have greater control and flexibility. ...
- Protect your assets during your lifetime.
Using an irrevocable trust allows you to minimize estate tax, protect assets from creditors and provide for family members who are under 18 years old, financially dependent, or who may have special needs.
To make sure your Beneficiaries can easily access your accounts and receive their inheritance, protect your assets by putting them in a Trust. A Trust-Based Estate Plan is the most secure way to make your last wishes known while protecting your assets and loved ones.What Cannot be held in trust? ›
The assets you cannot put into a trust include the following: Medical savings accounts (MSAs) Health savings accounts (HSAs) Retirement assets: 403(b)s, 401(k)s, IRAs.What Cannot be in a trust? ›
There are a variety of assets that you cannot or should not place in a living trust. These include: Retirement accounts. Accounts such as a 401(k), IRA, 403(b) and certain qualified annuities should not be transferred into your living trust.What are the three forms of trust? ›
With that said, revocable trusts, irrevocable trusts, and asset protection trusts are among some of the most common types to consider. Not only that, but these trusts offer long-term benefits that can strengthen your estate plan and successfully protect your assets.What are the four major types of trusts? ›
Basic trust types: The four main types of trusts are living trusts, testamentary trusts, revocable trusts, and irrevocable trusts.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.