What Are the Key Differences Between a Will and a Trust?
Estate planning is an important step in making sure your assets go where you want after you're gone. Two of the most common tools used in estate planning are wills and trusts. While both serve to distribute assets, they work in different ways and offer unique benefits.
Understanding the key differences between a will and a trust can help you decide which option is best for your situation. Fortunately, you don’t have to figure it all out on your own.
Our estate planning attorney is standing by at the Law Office of Justin S. Epper, LLC, ready to assist. Our firm can help you through the process so you have the confidence needed to move forward.
The Basic Definitions You Should Know
Before getting into the differences, it helps to understand what each document does. Here are the definitions so you can understand the similarities and differences between wills and trusts:
Will: A will is a legal document written by an estate planning attorney that outlines how a person wants their assets distributed after their death. It also allows someone to name guardians for minor children and appoint an executor to handle the estate.
Trust: A trust is a legal arrangement where a person (the grantor) places assets into a trust for the benefit of designated beneficiaries. A trustee manages the assets according to the trust’s terms, which can take effect during the grantor’s lifetime or after death.
Now that we’ve covered the basics, let’s take a moment to have a closer look at the key differences between the two.
How and When They Take Effect
One major difference between a will and a trust is when they take effect and how they operate:
A will only becomes effective upon the death of the person who created it. Until then, it has no legal authority.
A trust, depending on the type, can take effect during the grantor’s lifetime and continue after death.
A living trust allows the grantor to manage assets while they’re alive and appoints a trustee to manage or distribute them after death.
A will must go through probate before assets are distributed, while a properly structured trust can bypass probate altogether.
Because of these differences, deciding between a will and a trust often depends on whether you want immediate control and asset management or are only concerned with what happens after your passing.
The Probate Process
The probate process is another key difference between wills and trusts. Probate is the court-supervised process of validating a will and distributing assets:
A will must go through probate, which can be time-consuming and costly.
Probate proceedings are public, meaning anyone can access records about the estate.
A trust avoids probate, allowing assets to transfer directly to beneficiaries without court involvement.
Since trusts don’t go through probate, the distribution of assets can happen much faster.
For those who want to minimize court involvement and make asset distribution easier for loved ones, a trust formed by an estate planning attorney may be the better option.
Privacy Considerations
Some people prefer to keep their estate matters private. A trust offers more confidentiality compared to a will:
Wills become public record once they go through probate.
Anyone can access information about a will, including asset distribution and named beneficiaries.
Trusts remain private because they don’t go through probate.
Only the trustee and designated beneficiaries know the details of a trust’s terms.
If privacy is important to you, using a trust can help keep details of your estate out of the public eye.
Costs and Maintenance
The costs and effort involved in setting up and maintaining a will or trust with an estate planning attorney also differ:
Creating a will is usually more affordable upfront.
A trust typically costs more to establish due to its intricacies and legal requirements.
A will requires minimal maintenance, though it should be updated as life circumstances change.
A trust requires active management to transfer assets into it and make sure it remains valid.
While a will is simpler and cheaper initially, a trust may save money and hassle in the long run by avoiding probate and allowing for ongoing management.
Control Over Assets
Both wills and trusts provide control over how assets are distributed, but in different ways:
A will directs how assets should be distributed after death but doesn’t offer any control over them during the creator’s lifetime.
A trust allows for detailed control over when and how beneficiaries receive assets.
Trusts can include provisions for staggered distributions, meaning beneficiaries receive portions of their inheritance at different times.
Wills generally result in a lump-sum distribution of assets unless otherwise specified through other estate planning tools.
For those who want to set conditions on inheritance or stagger distributions over time, a trust is often the better choice.
Protection for Incapacity
If a person becomes incapacitated, a trust can offer significant advantages over a will:
A will doesn’t provide any protection in case of incapacity.
If a person only has a will, a court may need to appoint a guardian or conservator to manage their affairs.
A living trust allows a trustee to step in and manage assets without court involvement if the grantor becomes incapacitated.
This can prevent financial disruptions and give loved ones immediate access to necessary funds.
Since life is unpredictable, having a trust in place written by a skilled estate planning attorney can provide security if you're ever unable to manage your affairs.
Guardianship for Minor Children
For parents of young children, naming a guardian is a crucial part of estate planning. Here are a few ways guardianship is handled in wills and trusts:
A will allows parents to designate a guardian for minor children in the event of their death.
A trust, by itself, doesn’t allow for guardian appointments.
While a trust can manage financial assets for minors, a will is necessary to establish legal guardianship.
Many estate plans include both a will and a trust to cover all bases.
If you have minor children, using both a will and a trust is often the best approach to protect their future.
Flexibility and Customization
The flexibility of a will or trust depends on an individual’s needs and goals. Here are some ways you can customize your will or trust to fit your needs:
A will provides a straightforward way to distribute assets after death.
A trust offers more customization, such as controlling how and when beneficiaries receive assets.
Trusts can include specific instructions for how funds should be used, such as for education, medical expenses, or charitable donations.
If a person wants to place conditions on inheritance, a trust is usually the better option.
For those who want greater control over how their assets are used after their passing, a trust provides more flexibility than a will alone.
Which One Is Right for You?
Deciding whether to use a will, a trust, or both depends on your personal situation and goals. Here are some factors to consider with your estate planning attorney:
If you want a simple way to distribute your assets and name guardians for your children, a will might be enough.
If avoiding probate and maintaining privacy are priorities, a trust is a better choice.
If you want to plan for potential incapacity, a trust provides better protection.
If you have minor children, you may need both a will (for guardianship) and a trust (for financial management).
Taking these factors into account can help you determine the best estate planning approach for your needs.
Contact Us Today
Both wills and trusts are valuable estate planning tools, but they serve different purposes. Consulting with our estate planning attorney at the Law Office of Justin S. Eppler, LLC can help you create the right plan for your needs. Located in Anchorage, Alaska, we serve clients in Fairbanks, Juneau, Wasilla, Palmer, and Anchorage, Alaska. Give us a call today to get started.
