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  • Robyn Saito

Trusts vs Wills: Which Do I Need?

Updated: Dec 29, 2021

A will includes your instructions for getting your belongings, money, and other assets after you die. A will is an essential estate planning document, and most people would benefit from having one.

Since wills must be proven during probate, your assets may go to someone other than your intended heirs if your will is improperly constructed and found to be invalid. The whole process could also be costly and time-consuming. Assets in a trust don’t go through probate, so you have more control over who gets the trust assets.

A trust is a legal entity that you transfer ownership of your assets to so that after you die, the people you chose as beneficiaries of the trust get ownership of the assets. Not everyone needs a trust, but they help you dictate how your beneficiaries can access the assets.

Ultimately, wills and trusts work hand in hand. Having a trust ensures your assets are handled according to your wishes, but only assets in the trust are covered. A will handles everything that isn’t in your trust, and your will can even include instructions for transferring things into a trust.

Do I need a will?

Most people would benefit from having a will. You don’t need a will if you have nothing to pass on, but even if you have very little to pass on, a simple will can be useful and inexpensive. Small estates may not need much of an estate plan beyond a will.

If you want certain individuals to receive certain belongings, then definitely look into creating a will. Without a will, disagreements over who should get your assets can delay probate and the time it takes for your beneficiaries to receive their inheritance. Probate — the process through which a court helps distribute your assets — can be time-consuming and very expensive for your beneficiaries if they seek legal advice or an attorney to help settle the estate.

Here are five reasons to get a will:

  1. Wills are an inexpensive way to pass assets to your intended beneficiaries. (Learn more about how to make your own will with our attorney-approved tools.)

  2. Having a strong will could make probate faster and cheaper for your loved ones. Not having a will could potentially cost your heirs a lot of time and lessen their inheritance because of legal fees.

  3. A good will covers everything in your estate. Other options, like trusts, cover a narrower band of assets.

  4. Wills can also help distribute the proceeds of a life insurance policy if its beneficiaries die before you.

  5. If you have any minor children, you can name a guardian for them in your will.

Should I create a trust?

First of all, trusts are not just for millionaires. Large estates and wealthy estates can indeed benefit from creating a trust, but so can smaller estates. Ultimately, a trust is just a way to control better how your assets are passed on after you die. You can also include instructions in the trust agreement for when and how beneficiaries receive the assets. This can be especially useful in providing for any minor beneficiaries after you pass away. Since a trust is its own legal entity, the rules for distributing its assets are essentially set in stone, and probate will not affect the trust’s assets.

A trust can also work very well in conjunction with a will. You could create a trust without a will, but you’d almost certainly benefit more from having both. One common option is to combine a pour-over will with a trust.

A pour-over will include text that directs assets to be moved into a trust upon your death. Then assets can be distributed from the trust, according to your wishes. Some people choose to create a living trust before they die, and then their will instructs the transfer of assets into the trust. Other people choose to include instructions on how to create trust and what to transfer to it. (A trust created through your will is a testamentary trust.)

Benefits of creating a trust

Consider a trust if you want to avoid probate because trust assets don’t go through probate in most cases. Avoiding probate can provide multiple advantages. Probate is a public process, and probated wills eventually become part of the public record, allowing someone to see what assets you had, how much they were worth, and who your beneficiaries were. Trusts give you more privacy because their contents remain private.

Going through probate could result in someone challenging or contesting your will, potentially making the process long and expensive for your beneficiaries. Disbursing assets through your trust instead of a will could save your heirs time and money in probate since trust assets can pass directly to their beneficiaries. (One exception: assets bequeathed through a testamentary trust created by a will must still be probated.) Keep this in mind if you have many assets or if you have many beneficiaries.

Even if no one challenges your will, the probate court could award assets to someone other than your intended beneficiary if the terms of your will are ambiguous. Again, trusts avoid assets going to the wrong beneficiary. If your beneficiary is unable to receive the assets for some reason, the trust assets belong to the trust until the beneficiary is eligible to receive them.

Benefits of creating an irrevocable trust

An irrevocable trust is a kind of trust where the grantor (the person who opens and funds it) cannot make changes after creation. The grantor completely loses ownership of the assets in the trust, so there are additional benefits they may receive. Irrevocable trusts also allow you to decrease the value of your estate when transferring assets into them. This could help if you’re trying to qualify for Medicaid or a similar income-restricted program. On the other side of the spectrum, an irrevocable trust may help you avoid estate tax.

An irrevocable trust that’s properly structured and managed can also offer asset protection from creditors or anyone else who sues you. They can’t take the trust assets as payment for a legal suit against you.

Cons of having a trust

The main con with a trust is its price. Trusts are usually expensive to establish and maintain. You can generally expect a trust to cost you at least $1,000 to establish if you work with an estate planning attorney. With a living trust — a revocable trust created during your lifetime — you or a trustee must also maintain trust. This could cost money and require extra work, like if the trust earns income and needs an annual income tax return.

However, you can now create a trust using Insure Quality (you'll also get a will when you choose this package). Insure Quality uses attorney-approved tools to guide you through the process.

While trusts can enforce your desires better than a will, they are not immune from legal challenges. Namely, if you mistakenly list a beneficiary for a trust asset and separately name a different beneficiary for the same asset elsewhere, the asset distribution will have to be determined by a court. This can happen with payable-on-death accounts, like an IRA, as well as life insurance death benefits.

Also, remember that only the assets you specifically transfer to your trust are subject to its terms. If you leave anything out, hopefully, your will covers it.


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