What is the Difference Between a Will and a Trust?

Estate planning often includes several legal documents that serve different purposes. Two of the most common are a will and a trust. Although both can help direct what happens to your assets, they work in different ways and may be used together as part of a broader estate plan.

What Does a Will Do?

A will is a legal document that generally takes effect after you pass away. It can identify the person who will serve as executor, explain how certain assets should be distributed, and name guardians for minor children.

Assets controlled by a will typically pass through probate, which is the court-supervised process of administering an estate. The executor is responsible for carrying out the instructions in the will, paying eligible debts and expenses, and distributing the remaining property to the designated beneficiaries.

What Does a Trust Do?

A trust is another estate planning vehicle, but it can take effect during your lifetime or be created after your death.

One of the most common types is a revocable living trust. It can be created and funded while you are living, allowing you to retain control of the assets placed inside it. The trust can also name a successor trustee who may manage those assets if you become incapacitated or after you pass away.

A trust may also be established through a will. For example, a will could direct that assets be placed into a trust for minor children after a parent’s death.

How Probate Affects Wills and Trusts

One of the primary differences between a will and a properly funded trust is how assets are transferred.

Assets passing through a will generally go through probate. Assets that are properly titled in a trust may avoid probate and instead be distributed according to the trust’s instructions.

However, simply creating a trust may not be enough. Assets generally need to be properly transferred into the trust for the trust document to control them.

Why You May Still Need a Will

Even when a revocable living trust is the primary estate planning document, a separate will may still be necessary.

A pour-over will can direct assets that were left outside the trust to be transferred into it after death. A will is also generally used to name guardians for minor children, which a trust does not typically accomplish on its own.

Do You Need Both a Will and a Trust?

Not every estate requires a revocable living trust, but most adults should consider having a will. Depending on your family structure, assets, privacy preferences, and estate planning goals, using both documents may provide a more complete plan.

An estate planning attorney can help determine which documents are appropriate and ensure they work together properly. Your financial advisor can also help coordinate the financial components of the plan, including account titling and beneficiary designations.

If you have additional questions about how a will or trust may fit into your broader financial plan, reach out to schedule a complimentary consultation with Wiser Wealth Management.

Schedule a complimentary consultation and discover how our services can help you achieve financial freedom.