What is the Difference Between a Will and a Trust?

The primary difference between a will and a trust is when it takes effect. A will, which is considered a simple document, doesn’t become effective until after the death of the person who made the will, called the testator. On the other hand, a trust becomes effective immediately. A trust allows the owner to transfer assets as they see fit while alive and after death. It can also help loved ones avoid the hassle and costs of the probate process. 

What Is a Will? 

A will is a formal document that outlines how the author wants their estate and assets handled after death. A will can: 

• Provide direction on guardianship for children or pets
• Outline how assets are to be divided and to whom
• Designate an individual or organization to be the estate’s executor

Able to be revoked or changed, a will is a basic document that outlines what to do after the estate holder passes away. Importantly, a will cannot prevent the probate process. It simply takes the guesswork out of handling final affairs, which can speed up the probate process and prevent unneeded stress for loved ones. 

How Is a Trust Different From a Will?

A trust is a legal contract that protects assets during and after an individual’s life. Once signed and funded, a trust allows the owner to specify how, when, and why assets are distributed. A trust differs from a will because: 

• A trust can be revocable or irrevocable, meaning the owner chooses whether it can be changed after it’s set up.
• A trust establishes a trustee, or someone who handles the trust’s affairs. This individual pays bills, files tax returns and performs other fiduciary functions.
• A trust is more complex than a will, which may be beneficial for those with extensive assets.
• A trust bypasses probate, saving loved ones time and money.
• Unlike a will, a trust may provide tax benefits that reduce the estate’s expenses.

Is It Beneficial To Create a Will and a Trust?

Unless there are minimal assets or few beneficiaries, it may be beneficial to have both a will and a trust. A trust provides protection for assets while the owner is alive and after death.

On the other hand, a will clearly lays out important final wishes, such as who is named guardian over children or pets. Having both a will and a trust in place provides enhanced protection and reduces the eventual burden loved ones assume of managing final arrangements.