Wills vs. Trusts: Which One Do You Actually Need?

By W Financial Advisors  •  Wealth Wednesday Brief  •  3–5 min read

SCENARIO 

"My neighbor told me everyone needs a trust," Janet said at her planning meeting. "But my brother says his attorney told him a will was perfectly fine. How am I supposed to know which one I need?"

Her advisor smiled. "The honest answer is: both of them might be right, given their different situations. Let me explain the difference, and then we can think through which approach makes sense for you."

The will vs. trust question is one of the most common, and most confused, topics in estate planning. The right answer isn't universal, and the wrong choice isn't necessarily catastrophic. But understanding the distinction may help you make a more deliberate decision.

THE CONCEPT 

A will (formally, a "last will and testament") is a legal document that:

• Names beneficiaries for assets owned in your name alone.
• Nominates guardians for minor children.
• Names an executor to administer your estate.
• Provides instructions to the probate court about your wishes.

The key limitation: a will must go through probate. Probate is the court-supervised process of authenticating the will, inventorying assets, paying creditors, and distributing what remains. It's public (anyone can access the records), it takes time (often six to eighteen months or longer), and it involves legal and court costs.

A revocable living trust is a legal entity you create during your lifetime to hold title to assets. You typically serve as your own trustee during your lifetime, maintaining full control. Upon your death, a successor trustee you have named distributes the trust assets according to the trust's terms, without court involvement.

Key features of a revocable living trust:

• Assets held in the trust avoid probate entirely.
• Distribution is private; trust terms and beneficiaries are not public record.
• Can provide detailed instructions for distributions to specific individuals or over time.
• Can address incapacity: the successor trustee can often step in to manage assets without court involvement if you become incapacitated.

Important: a trust only controls assets that have been transferred into it ("funded"). An unfunded trust, meaning one never properly retitled with assets, accomplishes little.

Example 

Consider two hypothetical situations:

Situation A: Maria is 68, widowed, with a single-family home, a brokerage account, and an IRA. Her children are financially responsible adults. Her estate is modest and straightforward. A well-drafted will, combined with current beneficiary designations on the IRA, may be entirely sufficient. A trust would add cost and complexity without a proportionate benefit.

Situation B: Michael is 70, has a second marriage, adult children from his first marriage, a vacation home in another state (which would require a separate probate proceeding in that state), and a grandchild with special needs. For Michael, a revocable living trust may be highly valuable: it avoids ancillary probate on the vacation home, provides clear instructions for assets to pass between his blended family, and can include a special needs sub-trust for his grandchild that preserves her eligibility for government benefits.

STRATEGY 

Deciding between a will and trust typically involves evaluating:

• Real estate in multiple states. Property in another state triggers a separate probate proceeding in that state; a trust can eliminate this.
• Privacy concerns. Probate is public. If privacy matters to you or your family, a trust keeps distributions confidential.
• Complex family dynamics. Blended families, estranged relatives, or specific distribution wishes (staggered distributions, spendthrift provisions) are better handled through a trust.
• Incapacity planning. A funded revocable trust with clear successor trustee provisions can allow seamless asset management if you become incapacitated, without court intervention.
• Asset types. Accounts with beneficiary designations (IRAs, life insurance) pass outside both wills and trusts. For these, the beneficiary designation controls; a trust is neither necessary nor automatically more protective.

COMMON MISTAKE 

The most common trust mistake is creating a trust but never funding it, meaning failing to retitle assets into the trust's name. An unfunded trust does not avoid probate. The trust document is only as useful as the assets held within it. If you create a trust, work with your attorney to ensure the trust is properly funded before considering the estate planning complete.

KEY TAKEAWAY 

There is no universal right answer between a will and a trust, but understanding the probate process, your asset types, and your family dynamics will help you have a more productive conversation with an estate planning attorney about what makes sense for you.

SOURCES & REFERENCES

1.  American Bar Association, Real Property, Trust and Estate Law Section. The Probate Process. americanbar.org.

Every situation is different. If you would like to think through how this applies to your plan, we are here to help.

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