Wills vs. Trusts: What’s the Difference?

Most people understand the importance of having an estate plan – but only 32%1 of Americans have completed the documentation to create one. Of those without a plan, 43% blame procrastination2, as complex and emotional decisions can cause delays in action.

One area of confusion when getting started is understanding the difference between wills and trusts. To make it easier, we’ve outlined what these solutions are, how they are different and when they might make sense for you and your family.

The Basics of Wills and Trusts

Wills and trusts both seek to provide instructions about the disposition of your assets when you pass.

A last will and testament (“will”) is a legal document typically designed to detail how you want your assets distributed when you die. It can also name guardians for minor children, dependents, or pets. Your will includes a Testator (person writing the will), Executor (person responsible for distributing assets after your death), and Beneficiaries (persons receiving assets as defined in the will).

The document is simple to create and easy to change. While there are online platforms to create your own will, we advise talking with an estate attorney to make sure your will is properly executed. If you pass away without a will – called “intestate” – state laws and courts will determine the distribution of your property and the custody of your dependents.

A trust is a more sophisticated legal document that can direct the administration and management of your assets when you die as well as if you become incapacitated during your life. The structure includes a Grantor (person creating the trust), Trustee (person appointed by the Grantor to hold and administer assets; if you name yourself, you should also name a successor trustee) and Beneficiaries (persons receiving the assets based on the trust document).

Once executed, the trust should be funded. In addition, a “pour-over will” can be established alongside your trust to create a safety net that allows assets that were not included in the trust to be automatically transferred to it after your death.

There are several types of trusts that can be aligned with your specific needs – revocable, irrevocable, credit shelter trusts, irrevocable life insurance trust, asset protection trusts, special needs trusts, and more. EverPar can guide you through the benefits of different types of trusts and recommend the best solutions for your estate plan.

Wills vs Trusts: A Comparison

Although there is some overlap, there are distinct differences between wills and trusts that you should consider as part of your estate planning.

Wills are cost effective, but trusts can help your family avoid probate.
A will is typically less expensive to create than a trust. However, it offers less control over assets and is subject to probate – a legal process that can be costly, time-consuming, and stressful for your family – and makes your information accessible to the public.

A trust will cost more upfront but will enable you to distribute your assets and property to your beneficiaries without subjecting them to probate. This can help protect your family’s privacy, enhance their emotional well-being, and provide greater control over how and when your estate is distributed.

Trusts can help you control your assets if you become incapacitated.
A will does not take effect until you die – and cannot help you direct the management of your assets or affairs if you become incapacitated and unable to make decisions during your lifetime.

While you can create a healthcare proxy and provide instructions for end-of-life care, that proxy is unrelated to the administration and management of your assets.

A trust takes effect immediately after it is executed – and can be structured to allow a successor trustee to manage your assets and property in the event you become physically or mentally incapacitated.

Irrevocable trusts can protect your family from creditors and estate taxes.
Estate, inheritance, and gift taxes can significantly reduce the amount of wealth you can transfer to future generations.

While wills and revocable trusts do not typically provide estate tax benefits, assets and income generated in irrevocable trusts are typically not considered part of your estate after you pass. That can help reduce the tax burden on your family—and shield them from creditors and lawsuits.

This is an important and time-sensitive consideration considering that the current federal estate tax exemptions are scheduled to sunset at year-end 2025.

Trusts can protect family members with special needs.
Although a will allows you to appoint guardians, it does not address ongoing support for dependents with special needs or help preserve wealth for minor children.

A special needs trust – designed in compliance with strict federal and state requirements – allows you to financially support individuals with disabilities without compromising their eligibility for Supplemental Security Income (SSI), Medicare, or Medicaid.

A testamentary trust can hold and manage assets until your heirs reach a specific age or other set of requirements) before passing them on as directed in your will.

Plan Today for Future Generations

Thoughtful estate planning provides the peace of mind that your wishes for your loved ones and legacy will be fully honored.

Wills can be effective if you have a simple estate whereas trusts can be valuable if you have a home or other assets, own a business, have special needs dependents, want your family to avoid the cost or delay of probate, and want to keep your information private.

EverPar can listen to your vision, consider your financial situation, and work with your attorneys and other professionals to create a personalized estate plan that supports generational wealth, including whether a will or trust is best for your situation.

Let’s discuss creating an estate plan that shapes a world of possibilities for you and your family.

1 https://www.caring.com/caregivers/estate-planning/

2 https://www.caring.com/caregivers/estate-planning/wills-survey/

EverPar Advisors LLC (“EverPar”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where EverPar and its representatives are properly licensed or exempt from licensure.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

​​​​​​The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.