Will vs. Trust: Key Differences, Pros and Cons, and When to Create Them in Estate Planning

As we enter pre-retirement, many start considering who will handle things for us as we age. Interestingly, a 2024 study by Caring.com found that nearly 60% of American adults still do not have a will or living trust in place (Caring.com 2024 Wills and Estate Planning Study​(SeniorCare)).

Let’s talk about it if we are a part of the 60% that still don’t have estate planning as we are approaching and planning or seriously thinking about retirement. Estate planning is also part of the retirement plan, and two essential tools are wills and trusts. Both make sure that assets will be distributed the way we want after passing away, but each serves a different purpose. Deciding which is the best choice—and when to set it up—depends on our unique financial situation and goals.

In this message, we’ll learn the differences between wills and trusts, help us acknowledge which option might be best for us, and discuss when we should get started.

Key Points:

• Wills and trusts are essential for estate planning but serve different functions.
• A will becomes effective after death, whereas a trust can provide benefits during and after your lifetime.
• Trusts offer privacy and help avoid probate, while wills are more straightforward and affordable.
• It’s never too early to begin estate planning, and having a will and trust may provide the most comprehensive protection.

---

What Is a Will?

A will is a legal document that writes how you want your assets to be distributed after death. It can also specify guardianship for minor children, name an executor to manage your estate, and include instructions for things like funeral arrangements.

Pros:

• Simple and affordable: Wills are generally easier to create and cost less than trusts.
• Guardianship: Allows you to name guardians for minor children or dependents.
• Covers personal assets: It applies to assets solely in your name at death.

Cons:

• Probate process: Wills must go through probate, a court-supervised process that can be lengthy.
• Contests: A will can be contested by unhappy beneficiaries.
• Limited control: You have less control over how your assets are distributed after death than a trust.

---

What Is a Trust?

A trust is a legal arrangement where one party (the trustee) holds and manages assets on behalf of another party (the beneficiary). The most common type is a revocable living trust, which allows you to manage your assets during your lifetime and distribute them after death.

Pros:

• Avoids probate: Trusts bypass probate, ensuring your estate is settled faster and privately.
• More control: You can specify when and how your assets are distributed, even setting conditions.
• Financial support during life: A trust can provide asset management or financial support for beneficiaries while you’re still alive.

Cons:

• Higher cost: Trusts are more expensive and complex to set up than wills.
• Ongoing management: You must manage the assets in the trust during your lifetime.
• Funding required: A trust will only cover assets if properly transferred into it.

---

Will vs. Trust: A Quick Comparison

To help you decide between a will and a trust, here’s a side-by-side comparison:

Criteria	Will	Trust
When It Takes Effect	After death	Can take effect during life
Cost	Less expensive	It can take effect during life
Probate	Must go through probate	Avoids probate
Privacy	Public process	Private Process
Control Over Assets	Limited control after death	More control over timing and conditions

When Should You Set Up a Will or Trust?

Estate planning is not exclusively for older individuals. Drafting a will or establishing a trust early can provide reassurance, ensuring your family members are cared for according to your desires.

Here are some significant milestones in life when it’s important to think about establishing or revising your estate plan:

• Marriage: A will or trust can make sure your spouse is provided for.
• Birth of a child: Name guardians and designate inheritances.
• Purchasing a home or acquiring property: Include it in a trust for smoother asset management.
• Retirement: Having an estate plan before retirement is crucial for asset protection.

If you’re nearing retirement, now is an ideal time to ensure everything is in order. Wills can be created quickly, but trusts require more time for proper setup and funding.

---

Should You Choose a Will, a Trust, or Both?

Which one you need depends upon your circumstances.

• A will is an excellent option if you have minor children or a simple estate and want a straightforward way to distribute your assets.
• A trust is better if you want to avoid probate, maintain privacy, or have more complex estate needs, like owning multiple properties or significant investments.

For many people, the best solution is to have both. A will can cover more straightforward assets, while a trust can manage larger ones like real estate and investments. Together, they provide comprehensive protection for your estate.

Consult a Lawyer or Professional

Estate planning can be complex, and the best solution often depends on the details of your financial and family situation. It’s always a good idea to consult an estate planning attorney or financial advisor for personalized advice.

As a final thought

Both wills and trusts are important tools in estate planning, and the best choice depends on your specific needs. A will is simpler and more affordable, making it ideal for smaller estates, while a trust offers more flexibility, control, and privacy, especially for larger or more complex estates. No matter which option you choose, having an estate plan in place is one of the most important steps you can take to protect your family and ensure your wishes are carried out.

As you approach retirement, remember to review your retirement checklist—a key item should be making sure you have your will or trust set up. This way, you can enjoy peace of mind knowing your loved ones will be cared for.

“Estate planning isn’t about fearing the future—it’s about creating peace of mind for your loved ones.”