What’s the Difference Between a Will and a Living Trust?

No one really wants to think about their death, let alone plan for it. Yet that is exactly what is necessary. It is not top priority for many people, but it’s a well know fact that all of us will die.  We just don’t know when.

So when you finally muster the courage to plan, what tool do I use?  When it comes to estate planning, there are two common vehicles: the Will and the Living Trust. But before we look at these, let’s take a look at what happens if you choose to do nothing.

Intestate Succession

If you do not have a Will or a Trust at the time of your death, the state has plan for you!  This is known as dying “intestate.” All of your assets will have to go through a process called Probate. Probate is the state mandated process of:

  • Gathering together a list of all your assets
  • Making sure that those that are owed money receive their money
  • Deciding who will be the new owner of the different assets
  • And finally, making all the legal changes necessary to transfer title to the new owner of those assets.

All of this is done via intestate succession – without regard to what may have been your final wishes. Intestate succession is the set of rules made by the legislators of your state that determines who receives what you own when you die without a valid will.

For instance, even if your verbal wishes were that you wanted your sister to receive the bulk of your estate, the state laws would determine the ownership according to a predetermined list. This list typically goes as follows: spouse, children, parents, siblings, and then other relatives. Therefore, in the case of your sister, unless you die without a spouse, children, or parents, your sister will not get your assets. And if you happen to have more than one sibling…well, you get the point.

So, what should you do? At the very least, you should have a valid Will.

The Will

A Will is a legal document that becomes effective at your death.

It allows the court to:

  • Distribute your property in a way that you direct in the Will
  • Appoint the executor you name in the Will – a person who will make sure that your wishes are followed
  • Allows you to designate a guardian for minor children – although the court will have the final say in this matter, they typically accept the person you designate

Additionally, a Will can be created quickly and easily. In fact, in some states, creating a Will is as simple as writing down your instructions in your own handwriting, known as a “holographic” Will.

Although better than dying intestate, a Will still has to go through the Probate process. Only this time, your chosen executor will be part of the process and your wishes for beneficiaries will be known.

What Is Probate?

Probate is the court process that proves the Will, if any, is valid and carries out the instructions of the Will. Through this process, title is transferred from the name of the person who died to the beneficiaries named in the Will or the intestate heirs.


Once you die, your chosen executor will file your Will with the court. The court then decides if the executor you chose will remain your executor or if they will appoint someone else. After publishing the notification of your death, all of your creditors are contacted. They can then submit claims against your estate. During this same period of time, all your valuables are inventoried. Even if you have a very straightforward estate, the Probate process can take months, perhaps even more than a year. For those estates that are more complex, the process can run several years!


Probate, due to its many laws and regulations can be a costly affair if it is not planned properly. It is quite likely that your executor will need to hire a lawyer. It is also probable they will have to hire an appraiser to get an accurate value of your assets. Finally income tax returns will be required which may create the need for a CPA.  All of this costs money.  Once the courts, lawyers, CPAs, appraisers, etc. are paid the typical administration costs run from 1.5% to 10% of the value of your estate, depending on the state and the circumstances.  All of these fees combined can reduce your estate value.


If you are leaving your worldly goods to your spouse and children, it is obvious that you want them to benefit from those assets. However, while in Probate, your heirs may be delayed in their use of those assets.

This is even true for investments.  If the Will is not properly drafted, the executor will be able to do very little in terms of buying or selling any investments in your portfolio. Although done to “protect” the assets, these rules keep your executor from making wise decisions based on the current market. If your estate holds stocks in a company that is falling while still in Probate, it is quite likely that your estate will lose money. The same is true in reverse. If it is a good time to buy or sell, your executor may be constrained from doing that, thus causing your heirs to lose out on potential profits.

Public Eye

You lose some privacy in Probate.  If your Will is not drafted properly much of what you have and owe can be found at your local courthouse. Also, the state must make public notice of the Probate in the local newspaper, alerting all that they can come look at what’s in the public record. This is more than just a privacy matter. It can be a matter of safety. Opportunists scour the papers, looking for people to con. Having your estate in Probate without proper provisions within your Will leaves your loved ones open to this kind of abuse.

Ability to Contest

Anyone can contest a Will that is in Probate – absolutely anyone. It can be a family member that is not happy with the way your assets were distributed, it can be a creditor claiming you owe more money, or it can just be someone that is hoping to con your heirs into selling off your assets cheaply. The cost of defending a contested Will can be quite expensive. The options for your loved ones are to either settle, thereby getting less than you intended, or fighting in court and getting less than you intended due to the additional lawyer fees and court costs.

Having a Will is far better than dying intestate. However, for some people, a Living Trust may be an even better option.

The Living Trust

Like a Will, a Trust can be changed during your lifetime and like a Will, it keeps you from dying intestate, thus allowing you to determine the beneficiaries of your assets. This is where the similarities end.

A Living Trust is a document that takes effect during your lifetime.

This document helps you manage your assets before you die as well as after you die. There are many good reasons to consider a Living Trust. Let’s look at a few of them:

  1. Some of the issues of Probate – time, expense, privacy, access, and contesting – can be reduced or even eliminated when you use a Trust instead of a Will.
  2. Your Trust can have provisions which allow those you name to take care of you and your assets should you become disabled and unable to make decisions regarding your finances.
  3. If you own property in more than one state, you’ll face probate in each state.  A Trust avoids out of state Probate.
  4. A Trust is a better receptacle than a Will for certain assets, like IRAs, 401 (k)s, annuities.

How does a Trust do all of this? A Trust is the owner of all of your probatable assets. You are the Trustee and the Beneficiary. This means that, in reality, you own nothing. It is your Trust that owns everything probatable. You have total control as the Trustee and you can make changes, invest, buy, and sell your assets as you see fit. From your standpoint, it will feel exactly like owning the assets in your own name like you did before. A Living Trust is just another way to hold title.

However, upon death, since you didn’t actually own any probatable assets, there is nothing to Probate. Your Successor Trustee will distribute the property in the Trust according to your instructions. There is no court, no need for approval, no extra expenses, and no publicity.

Estate planning is for everyone. No matter your age, your financial situation, or your marital status, you will want to plan for the eventuality of your death. Whether you choose to use a Will or a Living Trust depends upon your own circumstances. Seeking advice from a qualified estate planning attorney will benefit you and those whom you love.

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