Wills vs. trusts — the difference that matters for your family

This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

Your parent's attorney recommended a trust instead of a will. Your parent asked why. The attorney explained that a trust could avoid probate, could manage assets if your parent becomes incapacitated, could keep affairs private, and could provide for complicated beneficiaries. Your parent said that sounded complicated and expensive. Your parent asked whether a simple will would be enough.

This is a common conversation. Wills and trusts both direct where property goes after death, but they work very differently. A will is simple and familiar. A trust is more complex. But for some families, the benefits of a trust outweigh the complexity. Understanding the difference between wills and trusts helps your parent decide which approach makes sense for their situation.

There's no one answer for everyone. Some families benefit from a trust. Some families don't need one. It depends on your parent's situation, your parent's assets, your parent's family situation, and what your parent wants to accomplish. But understanding what each approach offers helps you make the right decision for your family.

Understanding the Basics

A will is a document you create that directs where your property goes after you die. A will only takes effect after death. A will is simple to create. A will requires probate to implement. A will is public.

A trust is a legal relationship where your parent puts property into the trust during their lifetime. The property in the trust is managed according to the trust's directions. When your parent dies, property is distributed according to the trust's directions. A trust can take effect during your parent's lifetime or after death. A trust is more complex to create. A trust avoids probate. A trust is private.

These are fundamentally different approaches. A will is a document that sits in a drawer until you die. A trust is an active relationship where property is transferred into the trust and is managed according to the trust's rules.

A will requires probate. After you die, the will is submitted to the court. The court validates the will. The executor is appointed. The estate is managed according to the will's directions. Property is distributed to beneficiaries. This process takes months and costs money.

A trust avoids probate. Property in the trust is already owned by the trust. When the person who created the trust dies, the property is already in the trust's name. The successor trustee takes over managing the property and distributes it according to the trust's directions. There's no court involvement. There's no probate.

This difference alone often makes trusts attractive for people with significant assets. Avoiding probate saves money and time.

What Each Approach Offers

A will is inexpensive. It's simple to create. It's a familiar document. A will gives your parent control over where property goes. If your parent's situation is straightforward and assets aren't enormous, a will is often sufficient.

But a will only works after death. If your parent becomes incapacitated during lifetime, the will doesn't help. This is why a power of attorney is necessary alongside a will. A power of attorney lets someone manage your parent's affairs while they're living. A will directs what happens after death.

A will requires probate, which takes time and costs money. For a simple estate with few beneficiaries, probate might not be too onerous. For a complex estate with multiple properties or multiple beneficiaries, probate can be expensive.

A will is public. Probate involves court proceedings, and court records are public. Anyone can look up your parent's will and see where the property went and who the beneficiaries are. For some families, this is no problem. For families who value privacy, this is a disadvantage.

A trust is more expensive to create than a will. A trust involves more complex legal work. The attorney's fee for a trust is usually higher than the fee for a will.

But a trust offers significant advantages. A trust avoids probate, which saves money and time on the backend. For someone with substantial assets, the money saved in probate costs often exceeds the cost of creating the trust.

A trust can manage assets if your parent becomes incapacitated. If you create a trust and put your assets into it during your lifetime, and you name someone as successor trustee, that person can manage your assets if you become incapacitated. You don't need a separate power of attorney (though you might want one for assets not in the trust). The trust provides for management of assets both during incapacity and after death.

A trust is private. Unlike probate, trust administration isn't public. Your parent's affairs stay private. Beneficiaries don't become public record.

A trust can provide for beneficiaries in complicated ways. If your parent has a beneficiary who can't manage money, the trust can direct that the trustee manages that beneficiary's inheritance. If your parent has a beneficiary with substance abuse issues, the trust can be structured to provide support but protect assets. If your parent has a beneficiary with special needs, the trust can be structured to preserve government benefits. These kinds of protections are easier to implement in a trust.

Your Parent's Specific Situation

Consider your parent's assets. Do they have significant assets? Do they have multiple properties? Do they have investments? If your parent's assets are substantial, a trust probably makes sense. The probate costs you'd save often justify the cost of creating the trust.

If your parent's assets are modest, a will might be sufficient. The probate costs might not be worth the cost of creating a trust.

Consider your parent's family situation. Is the family straightforward, or are there complications? If your parent has multiple children and wants property divided among them, a will might be sufficient. If your parent has a blended family, a family situation with potential conflict, a trust might be useful because it can specify clearly how assets should be divided and managed.

Consider your parent's values around privacy. Does your parent care whether their financial information becomes public? If your parent values privacy, a trust keeps affairs private.

Consider whether your parent might become incapacitated. If your parent has health issues that might lead to incapacity, a trust can manage assets if that happens. A will doesn't help if your parent is incapacitated while living.

Consider whether your parent has beneficiaries who can't manage money or who have complications. A child with substance abuse issues, a child who's disabled, a child who's financially irresponsible, a child who's divorced and at risk of spousal claims on inheritance. A trust can provide for these beneficiaries in ways a simple will doesn't.

Consider your parent's timeline. If your parent is in good health and young, there's less urgency. If your parent is older or has health issues, creating a trust sooner rather than later is better because your parent needs to transfer assets into the trust while living.

Taking Next Steps

Meet with an estate attorney. The attorney can assess your parent's situation and advise on whether a will, a trust, or both make sense.

Be honest with the attorney about your parent's assets, your parent's family situation, and your parent's values. The attorney uses this information to make a recommendation.

If the attorney recommends a trust, understand why. What problems would the trust solve? What would the trust accomplish that a will wouldn't? Get a clear understanding of the benefits before committing to the complexity and cost of a trust.

If you decide to go with a trust, understand that creating the trust is just the first step. Your parent also has to transfer assets into the trust. This means retitling property. If your parent owns a house in their own name, the house needs to be transferred to the trust. If your parent has bank accounts in their own name, those accounts need to be transferred to the trust or designated as payable to the trust. This work takes time after the trust is created.

You should also coordinate the trust with other planning. If your parent has a trust, your parent still needs a power of attorney for assets not in the trust and for other financial decisions. Your parent still needs a healthcare power of attorney. Your parent might want a pour-over will, which is a simple will that directs any property not in the trust at the time of death to be added to the trust.

The trust approach requires more ongoing work and attention than the will approach. But for the right situation, the benefits justify that effort.

A will or a trust is not an either-or decision. Some families have both. Your parent might have a trust for most assets and a simple will to cover anything not in the trust. Your parent might have a will and also have beneficiary designations on bank accounts and retirement accounts that accomplish some of the trust's purposes.

The key is understanding what your parent's situation is and what approach would serve your parent and your family best. Meeting with an attorney and having a clear conversation about options is the first step.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.