Updated: December 22, 2022
Both trusts and testamentary wills (Last Will and Testament) are estate planning techniques which can be used alone or together to pass on your assets to your beneficiaries. To determine whether a trust is preferable to a will for passing along your estate it is helpful to be aware of the differences between them.
The living will and a living trust are very different. A living trust is an estate planning technique, while a living will outlines your choices about medical procedures you want or don’t want if your health becomes critical and does not address your estate.
|Effort to create||
|Upkeep||Update with life changes, ongoing management of trust, and consultations||Update with life changes and review every 3 years|
|Allows revisions and revocation||
|Avoids probate court||Yes, may not be an advantage for small estates||No|
|Protects assets from estate taxes||
|Protects assets from creditors||Yes, if you are not the trustee||No|
|Requires a notary||Yes||No, but better if you do|
|Names an executor||No||Yes|
|Names a trustee||Yes||No|
|Names guardians for children||No, a will must be created to do this||Yes|
|Can be contested by heirs||Yes - Although less likely, can be done up to 5 years after your death||Yes - Usually limited to 30-120 days after your death|
|Can distribute your assets to your beneficiaries both before and after your death||Yes||No|
|Automatically revokes spouse’s right to inherit or act as fiduciary after a divorce||No||Yes, in most states|
A trust contains inheritance instructions like a will, but it is more complicated.
It is important to know that to designate guardians for minor children and other dependents you need to add a pour-over will or have a Designation of Guardian for Minor Children form legal in some states. Like a last will and testament, failure to do so will result in the probate court assigning a guardian.
Once you understand the differences between a will and trusts, your decision should be made based on the nature and value of your assets, the age and capabilities of your heirs, tax planning considerations, your location, and the complexity of your bequests. A professional estate planner can help you with your decision.
As with joint ownership assets and other methods to preserve your estate, it is important to avoid any discrepancies between your living trusts and your will. If there is conflict between them that is discovered after your death it is the trust that usually supersedes the will for a number of reasons.