Both transfer an estate to heirs, but only a trust can skip probate court
Reviewed by Lea D. Uradu
Fact checked by Jared Ecker
:max_bytes(150000):strip_icc():format(jpeg)/living-trust-68520a8be0eb4438a99c95ff1483a19a.jpg "Couple talking with a financial advisor about funding their living trust.")
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Will vs. Trust: An Overview
A will is a legal document that provides instructions for distributing property to beneficiaries after death. A trust is a legal structure that allows an individual (the grantor or trustor) to transfer assets to a trustee for management and distribution according to the grantor’s wishes. Trusts can be used both during a person’s lifetime and after death, while wills only take effect after death. Both can be practical estate planning tools, either separately or together.
Key Takeaways
- A will is a legal document that specifies how your affairs will be handled and how assets will be distributed after death.
- A trust transfers assets to a trustee, who manages them according to the terms specified by the grantor for the benefit of designated beneficiaries.
- Trusts can be structured to operate during the grantor’s lifetime or after death, while wills are only effective upon death.
Will vs. Trust: Key Differences
| Feature | Will | Trust |
| Cost | Can range from $0 (if done yourself) to $1,000+ if created with an attorney. | Simple trusts or DIY trusts can range from a few hundred dollars to over $1,500. Complex trusts typically cost $5,000 or more. |
| Ideal For | People with minor children, dependents, or specific wishes for end-of-life care. | Individuals who want to distribute assets while alive, reduce estate taxes, or avoid probate after death. |
| Setup Process | Simple to set up, especially with online tools or DIY methods. | More complex, requiring legal documents and a formal setup process. |
| Effective Date | Takes effect after death. | Comes into effect once signed and funded, often taking priority over a will. |
| Guardianship for Minor Children | Yes, you can designate guardians for children in your will. | Does not include guardianship provisions for minor children. |
| Estate & Tax Considerations | Does not avoid estate taxes, which can range from 18% to 40% for estates over $13.99 million in 2025 or over $15 million in 2026. | Irrevocable trusts can reduce estate taxes and protect assets from creditors. Revocable trusts do not offer tax benefits but can avoid probate. |
| Privacy | Subject to probate, which is a public process; possible for will to be contested. | Trusts bypass probate, offering more privacy for assets and beneficiaries. |
| Protection if Incapacitated | Only becomes effective after death, offering no protection during incapacity. | Can provide asset management if the grantor becomes incapacitated. |
What Is a Will?
A will is a legal document that specifies how a person's assets will be distributed to their heirs after death. It provides guidance for handling the estate, helping to prevent disputes among beneficiaries. A will may include instructions for decisions after death, like the appointment of an executor of the will, guardians for minor children, or funeral arrangements.
Wills must be signed and witnessed according to state law and filed with a probate court. The probate court oversees the distribution of assets and can handle any disputes. Since probate is a public process, anyone can access the details of the will. Individuals can revise a will multiple times as personal or financial situations evolve or change.
If you die without a will, your estate will be subject to intestacy laws, meaning the court will decide how your assets are distributed, typically favoring close family members. A probate court will appoint an administrator to manage the estate and distribution of assets. Following common law, the property commonly goes to a surviving spouse first, then to children, extended family, and descendants. If no family exists, the property typically reverts to the state.
A will can also include provisions for creating a trust or appointing a trustee to manage assets for beneficiaries, particularly minor children.
What Is a Trust?
A trust is a legal arrangement in which a grantor transfers assets to a trustee, who manages the assets for the benefit of beneficiaries. The trustee is a fiduciary obligated to handle the trust assets by the terms of the trust document and solely in the best interests of its beneficiaries.
Trusts are flexible and can be used during the grantor’s lifetime (living trusts) or after death (testamentary trusts).
- Living trust: Created during the grantor’s lifetime and allows assets to be transferred outside of probate, providing more privacy and quicker distribution to heirs.
- Testamentary trust: Set up through a will and takes effect after the grantor’s death.
Trusts offer several advantages, such as bypassing probate, maintaining privacy, and providing more control over asset distribution. A trust can specify how assets should be distributed over time (e.g., in installments or at a certain age), making them useful for managing inheritances for minors or beneficiaries who may not be financially responsible. Creating a trust to avoid probate may not be beneficial and more expensive than it's worth to create and manage if the value of an estate isn't significant or assets are limited.
Important
Establishing a revocable trust to hold and distribute assets doesn’t protect the assets from estate taxation if the estate’s value exceeds the federal estate tax exemption. It’s set at $13.99 million for individuals in 2025. In 2026, the exemption will increase to $15 million for individuals and $30 million for couples filing jointly, based on a provision of the “One Big Beautiful Bill Act,” which was signed into law in July.
Types of Trusts
Revocable Trust
A revocable trust, or living trust is created during the grantor's lifetime and can be altered, amended, or revoked at any time. The grantor retains control of the assets in the trust and can use, sell, or transfer them as desired. Because the trust is revocable, it does not provide asset protection against creditors but offers flexibility and control during the grantor's lifetime. Assets in a revocable trust pass outside of probate but are included in the grantor’s taxable estate.
| Pros | Cons |
| Avoids probate, ensuring that assets pass to beneficiaries quickly and privately. | Does not provide protection from estate taxes or creditors. |
| Allows the grantor to maintain control and flexibility over the assets. | More expensive and complex to set up compared to a simple will. |
| Can be used to manage assets in case of the grantor’s incapacity by designating a successor trustee. | Assets in the trust are still included in the grantor's taxable estate. |
Irrevocable Trust
An irrevocable trust cannot be altered or revoked once it is created. The grantor relinquishes control over the assets placed in the trust, and the assets are no longer considered part of the grantor's estate for tax purposes. This type of trust can provide significant asset protection and estate tax savings, but it offers no flexibility if the grantor wants to change the terms.
| Pros | Cons |
| Offers protection from creditors since the grantor no longer controls the assets. | Once the trust is established, the grantor loses all control over the assets and cannot alter the trust. |
| Reduces estate taxes by removing the assets from the grantor’s taxable estate. | More expensive and complex to establish and maintain compared to a revocable trust. |
| Can provide tax benefits, particularly for charitable purposes, by offering deductions or exemptions. | Income generated by the trust is taxed at higher rates than personal income. |
Charitable Trust
Tax law provides special benefits for certain irrevocable trusts that benefit charities while providing some economic return to their grantor or beneficiaries.A charitable remainder trust is an irrevocable trust that provides current income to the grantor or noncharitable beneficiaries and a partial tax deduction based on the valuation of the contributed assets. The contributed assets are distributed to charities upon expiration of the trust's term, which may be no more than 20 years or a term based on the life of one or more noncharitable beneficiaries.
| Pros | Cons |
| Allows the grantor to support charitable causes while potentially receiving tax deductions. | Once assets are transferred, they cannot be reclaimed since charitable trusts are irrevocable. |
| Can provide income to the grantor and beneficiaries during their lifetime, with the remainder going to charity. | May be complicated to set up and requires ongoing legal and administrative management. |
| Reduces estate taxes by transferring assets to charity, which are then excluded from the taxable estate. | Beneficiaries may only receive a portion of the income, with the remainder designated for charity. |
Special Needs Trust
A special needs trust is a legal arrangement that enables individuals with disabilities to receive financial support from the trust for particular purposes without jeopardizing their eligibility for federal and state public assistance programs, such as Supplemental Security Income (SSI) and other benefits.
| Pros | Cons |
| Preserves the beneficiary’s eligibility for public assistance programs like Medicaid and SSI. | Requires careful management to avoid jeopardizing the beneficiary's eligibility for public benefits. |
| Provides flexibility by allowing the trustee to use trust assets to meet the beneficiary’s needs beyond what public assistance covers. | Establishing and maintaining the trust can be costly and legally complex. |
| Protects trust assets from creditors, ensuring the beneficiary’s financial resources are secure. | The trust can only benefit the individual with disabilities and not other family members or individuals. |
Note
Natural or adopted children have a statutory right to inherit but a will allows parents to disinherit a child. Provisions for disinheritance must comply with state laws. Detailed rules also enable a person to disinherit a spouse whether in a common law state, a community property state, or an equitable distribution state.
Designating Beneficiaries
Other legal arrangements can facilitate transferring assets directly to heirs such as beneficiary designations for retirement and other financial accounts, and gifts of funds and other assets during a lifetime. These arrangements transfer property without probate after death.
Account holders can designate their beneficiaries for IRA and 401(k) retirement funds. Married couples' joint ownership of bank accounts and real estate can provide a right of survivorship that doesn't require probate if they're properly structured and documented.
Will vs. Trust: Which Is Best?
A will may be the least expensive and most efficient choice for small estates with easily transferred assets and simple bequests. A trust without a will can present problems concerning assets outside the trust that become subject to intestacy laws. Larger and more complex estates may benefit by using both arrangements.
It's usually advisable to have a carefully drafted will even if most assets are held in ways that avoid probate. A will and a trust can complement each other, allow swift asset transfers, maintain confidentiality concerning sensitive assets and directives, and prevent intestacy concerning estate assets whose disposition isn't governed by a trust or other arrangement for individuals of means and those with privacy concerns.
Why Is a Will Important?
Leaving clearly explained directions for distributing assets may prevent potential disputes among heirs, children from more than one marriage, a dependent parent or relative, or offspring whose financial resources vary greatly. Many online willmakers offer tools for generating legal forms and documents but individuals should consult legal counsel and other appropriate experts as necessary.
What Are the Tax Implications of a Trust?
Irrevocable trusts can provide tax advantages by removing assets from your taxable estate. However, revocable trusts do not offer this benefit, and assets are still considered part of your estate for tax purposes.
Are Wills or Trusts Needed If Beneficiaries Are Designated on an Account?
Many assets, such as IRA and 401(k) retirement funds, can be transferred outside probate. Individuals can designate beneficiaries for such accounts with their bank, investment adviser, or employer during their lifetime. Married couples' joint ownership of bank accounts and real estate can provide a right of survivorship that doesn't require probate if they're properly structured and documented.
Does Transferring Property to a Trust Protect It From Creditors?
The vulnerability of trust assets to the claims of a grantor’s creditors is largely determined by state law. Courts usually treat assets in an irrevocable trust as beyond the reach of creditors if they have relinquished control and rights over the assets. If a trust is set up to avoid creditors, it might not offer protection if it's deemed fraudulent.
How Does Estate Planning Affect Unmarried LGBTQ+ Couples?
Estate planning is the same for an LGBTQ+ legally married couple. However, for unmarried couples, estate planning is crucial to ensure the surviving partner can access legal benefits and that guardianship provisions are in place for any children who have not been legally adopted. State laws may favor blood relatives over partners. The goal is to ensure the surviving partner can access all the legal benefits despite not being legally married.
The Bottom Line
It's important to establish an estate plan sooner rather than later. Careful use of wills, trusts, or both can ensure that assets and possessions are distributed as intended. Making an estate plan a priority can save time, money, and help loved ones avoid potential financial hardship and conflicts.
