Deciding between a trust vs will requires the consideration of several personal factors. Depending on your circumstances, however, a trust offers distinct advantages.

Who needs a trust instead of a will? And what are the benefits compared with a last will and testament?

This guide will answer both of these questions and highlight a real-life example so you can make an informed decision.

Let’s dive in.

Note: Keep in mind this is not legal advice. Please speak with a licensed attorney about your specific situation, and also loved ones before deciding to move from a will to a revocable living trust.

What is a Trust vs Will?

A will is a legal document that outlines your wishes regarding the distribution of your assets after your death. It allows you to name guardians for minor children, specify funeral arrangements, health care directives, and designate an executor to manage your estate. 

In contrast, a trust is a fiduciary arrangement that allows a person or group to manage finances on your behalf. This is a third party such as an estate planning attorney, someone experienced with family law, or a loved one/family member.

A trust offers several benefits making it a preferable option to a will. Let’s look at the pros and cons so you can make an informed decision.

Pros of a Trust

The most advantageous benefit of a trust is the immediate transfer of assets to beneficiaries upon your death. There’s no need to go through the probate process, saving time and money for your loved ones. 

Furthermore, a trust provides greater privacy since it does not become part of the public record like a will does during probate proceedings. This means your surviving spouse, children, and other heirs don’t need to worry about unknown bad actors.

Finally, trusts offer more control over how and when assets are distributed. You can set conditions for beneficiaries to receive their inheritance, prepare special needs planning for a designated beneficiary, and even set specific guidelines for heirs to follow.

Cons of a Trust

While there are many advantages to choosing a trust, there are still some drawbacks worth your consideration.

Higher cost, for example, is one of the biggest obstacles for some. Although you can avoid the complications of probate court, you must consider the costs of title transfers, filing fees, and more.

A revocable trust can also be complicated if you don’t work with the right legal team, requiring more time and effort than the average will. You must consider yearly maintenance, meticulous recordkeeping, and tracking all assets (including real estate sales).

Pro Tip: Revocable trusts do not offer Medicaid asset protection. You may be able to use an irrevocable trust, but this is not always guaranteed.

Do You Need a Trust instead of a Will?

Moving from a will to a revocable living trust requires the consideration of your life stage, asset values, and overall estate planning goals. It depends on your situation. 

You may need a living trust vs will if:

1. You Are in a Later Stage of Life

As you take on dependents or reach retirement age, the need for a revocable living trust may become more apparent. This is because a living trust allows for greater control and flexibility in managing assets during one’s lifetime and after death, unlike a will (which only takes effect after death). 

2. You Have High Asset Values

The value of your estate also plays a crucial role, as larger estates may benefit from the privacy, probate avoidance, and potential tax advantages of a living trust. That said, we aren’t talking about being a Rockefeller here. 

We define ‘high asset values’ as anyone with a net worth of at least $100,000. This could be liquid funds or estate assets such as vehicles or real estate.

3. You Want Fewer Disputes Between Heirs

You can’t always control the actions of your family members, but a well-defined trust can help your loved ones carry out your wishes. A well-planned trust can minimize family disputes, ensure timely asset distribution, and protect assets for beneficiaries with special needs or spendthrift tendencies.

Ultimately, deciding between a will and a trust depends on your circumstances. Consulting with a legal professional specializing in estate planning can help you evaluate your options and make an informed decision based on your unique circumstances.

John’s Story: Transitioning From a Will to a Trust

Sometimes a “real story” can help drive the point home. Here is one from a client we once helped with estate planning here in Texas who decided he needed a trust instead of just a will.

John had spent most of his life building a successful business. He initially set up a last will and testament in Texas to outline how his assets would be distributed after his passing. 

But as he delved deeper into estate planning, he learned about the benefits of a revocable living trust. 

He decided to explore his options and compare a living will vs a living trust.

Decision Point 1: Privacy

The first reason John considered changing to a revocable living trust was privacy. He realized that a last will and testament becomes a public record once it goes through probate. John valued his privacy and preferred that the details of his estate be kept confidential.

Decision Point 2: Probate Court

John wanted to avoid the probate process altogether. He had heard stories of lengthy and costly probate proceedings that could tie up assets for months or years. By creating a revocable living trust, John could transfer his assets into the trust during his lifetime, allowing for a smoother transition of wealth to his beneficiaries without the need for probate.

Decision Point 3: Flexibility

Unlike a will, which is a static document that can only be changed through formal amendments or by creating a new will, a revocable living trust can be modified at any time during the grantor’s lifetime. This meant John could update the trust as his circumstances or wishes changed without going through a complex legal process.

Decision Point 4: Continuity

John appreciated the continuity provided by a revocable living trust. In the event of his incapacity, the trust would have provisions for managing his assets, avoiding a court-appointed guardian or conservator.

John’s Final Decision: He Created a Trust Over a Will 

After carefully weighing all these factors, John decided to switch from a last will and testament to a revocable living trust. With the help of his estate planning attorney, he created a comprehensive trust document that reflected his wishes and provided peace of mind for himself and his loved ones.

When John eventually passed away, his family experienced a seamless transfer of assets. They were spared the stress and expense of probate, and John’s legacy continued to benefit future generations.

A Recap of Trust vs Will

Both trusts and wills offer unique advantages and disadvantages. But for many Texas individuals, a revocable trust simply makes more sense. Not only does it allow you to avoid probate court, but it ensures you have additional control over where your assets go.

Thomas-Walters, PLLC can help you make the best decision for your loved ones. Our estate planning attorneys in Fort Worth, Texas ensure you receive personalized and meaningful legal advice. And we work virtually across the entire great state of Texas.

Contact our team at 817-258-5908 to request a consultation regarding wills vs trusts. We would be happy to assign an experienced lawyer and craft a custom estate plan just for you.

FAQs: Trust vs Will

What is the major disadvantage of a trust?

The biggest disadvantage of setting up a trust is the amount of time and attention it demands. It also requires additional fees for trustees, asset management, and similar services.

You also shouldn’t put certain assets in a trust. Retirement accounts, bank accounts, and HSAs are best distributed to heirs according to beneficiary designation. 

If any of these are dealbreakers for you, it may be best to consider a last will and testament.

What are the reasons to not have a trust?

A living trust isn’t right for everyone.

You may not want a trust if:

• You don’t want to commit the extra time and attention.
• You do not have at least $100k of assets.

Who needs a trust instead of a will?

• Someone who would like to avoid probate.
• Families that are interested in maintaining their privacy.
• Persons who would like to set conditions for beneficiaries.

What type of trust is best?

There are more than 15 different trusts available to choose from. Some of the most popular include:

• Irrevocable trust
• Revocable trust (or revocable living trust)
• Special needs trust
• Testamentary trust

There’s no such thing as the ‘best’ trust for everyone since no one’s asset distribution looks exactly alike. Your best bet is to contact one of our estate planning attorneys and discuss the options that make the most sense for you.

Special Note: Please do not try to DIY a trust. It may leave you vulnerable to mistakes or omissions which are realized much too late.