Will vs Living Trust: Which Estate Planning Tool Is Right for You?

Estate planning is the process of arranging for the management and distribution of your assets during your lifetime and after death. Two of the most important tools in estate planning are the Last Will and Testament (commonly called a Will) and the Revocable Living Trust (commonly called a Living Trust). Each serves a distinct purpose, and understanding their differences is crucial for creating an effective estate plan.

What Is a Will?

A Will is a legal document that expresses your wishes about how your property should be distributed after your death. It names an executor (also called a personal representative) who is responsible for carrying out your instructions, paying debts and taxes, and distributing assets to your beneficiaries. A Will can also name guardians for minor children, which is something a Living Trust cannot do.

A Will takes effect only upon death. During your lifetime, you can revoke or amend your Will at any time, as long as you have the mental capacity to do so. A Will must be signed in the presence of witnesses, usually two, and the requirements vary by state. Some states accept holographic (handwritten) wills, but this is not universal.

What Is a Living Trust?

A Revocable Living Trust is a legal entity that you create during your lifetime to hold and manage your assets. You (the grantor or settlor) transfer ownership of your assets into the trust, name yourself as the initial trustee (maintaining full control), and designate a successor trustee who will manage the trust if you become incapacitated or after your death.

The trust document specifies how your assets should be managed during your lifetime, what happens if you become incapacitated, and how your assets should be distributed after your death. Because the trust is revocable, you can modify or dissolve it at any time during your lifetime.

Probate: The Biggest Difference

The most significant practical difference between a Will and a Living Trust is probate. A Will must go through probate, the court-supervised process of validating the will, paying debts and taxes, and distributing assets. Probate can be time-consuming, expensive, and public.

Probate timelines vary by state but typically take six months to two years. In complex estates or contested cases, probate can take even longer. Probate costs include court filing fees, attorney fees, executor fees, and appraisal costs. In some states, attorney and executor fees are set by statute as a percentage of the estate value. In California, for example, the statutory fee is 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, and 1% of the next $9 million.

A Living Trust avoids probate entirely. When the grantor dies, the successor trustee distributes assets according to the trust terms without court involvement. This is typically faster (weeks to months rather than months to years), less expensive, and private.

Privacy

A Will becomes a public record once it is filed with the probate court. Anyone can access the will, see who the beneficiaries are, and learn what assets were distributed. This public nature can invite challenges from disgruntled family members, solicit scams targeting beneficiaries, and expose family finances.

A Living Trust is a private document. It is not filed with any court or government agency. The terms of the trust, the identity of beneficiaries, and the assets held in trust remain confidential. For individuals who value privacy or have complex family situations, this is a significant advantage.

Cost and Complexity

A Will is generally less expensive and simpler to create than a Living Trust. A basic Will can cost a few hundred dollars if prepared by an attorney, and some people create valid Wills using online tools for even less.

A Living Trust is more expensive to create, typically costing $1,000 to $3,000 or more for an attorney-drafted trust. In addition to the cost of creating the trust document, there is the critical step of funding the trust, which means transferring ownership of your assets (real estate, bank accounts, investment accounts, etc.) into the trust. This process requires changing titles and beneficiary designations, which involves additional time and sometimes additional costs.

However, the upfront cost of a Living Trust is often offset by the savings at death. By avoiding probate, the trust can save the estate thousands of dollars in probate fees and attorney costs, particularly in states with high probate costs like California, New York, and Florida.

Incapacity Planning

A Living Trust has a significant advantage over a Will when it comes to incapacity planning. If you become mentally or physically incapacitated, your successor trustee can immediately step in to manage your trust assets without any court involvement. This provides seamless management of your financial affairs during a difficult time.

A Will provides no protection during incapacity because it only takes effect at death. If you have only a Will and you become incapacitated, your family may need to petition the court for a conservatorship or guardianship to manage your affairs. This is a costly, time-consuming, and public process. To address incapacity with a Will-based estate plan, you would also need a Durable Power of Attorney and a Healthcare Directive.

Contestability

Both Wills and Living Trusts can be contested, but Wills are generally easier to challenge. A Will can be contested during probate on grounds such as lack of testamentary capacity, undue influence, fraud, or improper execution. Because probate is a court proceeding, there is a built-in forum for challenges.

Living Trusts can also be challenged, but the process is more difficult. Since there is no probate proceeding, a challenger must file a separate lawsuit. Additionally, because the grantor manages the trust during their lifetime, it can be harder to argue that the grantor lacked capacity or was unduly influenced at the time the trust was created and funded.

Funding the Trust

One of the most important and often overlooked requirements of a Living Trust is funding. Creating the trust document alone does not transfer your assets. You must retitle assets in the name of the trust. Real estate requires a new deed, bank accounts require name changes, and investment accounts require beneficiary or ownership changes.

Any assets not transferred into the trust before death will be subject to probate. To catch these assets, many estate plans that include a Living Trust also include a Pour-Over Will, a simple Will that directs any remaining assets into the trust upon death. The Pour-Over Will must go through probate, but if the trust is properly funded, the assets passing through it should be minimal.

State-Specific Considerations

Probate costs and procedures vary significantly by state, which affects the relative value of a Living Trust. In states with expensive or slow probate processes (California, New York, Florida, Oregon), the cost savings from avoiding probate with a Living Trust can be substantial. In states with simplified or inexpensive probate processes (Texas, Wisconsin, many others that have adopted the Uniform Probate Code), the financial advantage of a Living Trust is less significant, though the privacy and incapacity benefits still apply.

Some states have simplified probate procedures for small estates (typically under $100,000 to $200,000), which can reduce the urgency of creating a Living Trust for individuals with modest assets.

When a Will Is Best

A Will is likely the better choice when your estate is relatively simple, when you live in a state with streamlined probate procedures, when your assets are modest, when you primarily need to name guardians for minor children, or when upfront cost is a concern. Remember that a Will should be accompanied by a Durable Power of Attorney and Healthcare Directive to cover incapacity.

When a Living Trust Is Best

A Living Trust is likely the better choice when you want to avoid probate, when privacy is important, when you own real property in multiple states (each state would require a separate probate for a Will), when you want seamless incapacity planning, when your estate is larger or more complex, or when you want to minimize the risk of a successful contest.

Key Takeaways

• A Will goes through probate, which is public, potentially expensive, and time-consuming. A Living Trust avoids probate entirely.\n- A Living Trust provides privacy; a Will becomes public record.\n- A Living Trust covers incapacity planning; a Will takes effect only at death.\n- A Living Trust costs more upfront but can save money by avoiding probate fees.\n- A Living Trust must be properly funded (assets retitled) to be effective.\n- A Pour-Over Will is recommended as a safety net alongside a Living Trust.\n- Only a Will can name guardians for minor children.\n- Many estate plans use both a Will and a Living Trust together for comprehensive coverage.