Living trust vs. will: Key differences explained

A living trust and a will are two estate planning documents you can use to distribute your assets after you pass away. However, they have distinct differences in terms of structure, purpose, and functionality. What’s the difference between them, and which option is the right one for you?

Quick look: Living trust vs. will

What is a will?

A will, or last will and testament, is a legal document that lists your assets and specifies how you want them distributed after you die. This includes your physical property — like your house, car, and pets — and financial assets, like your bank and investment accounts. With a will, you can also name a legal guardian for your minor children.

What is a living trust?

A living trust is a legal arrangement where you choose a trustee to manage your assets for your beneficiaries (heirs). To do this, you transfer your assets into the trust, making the trust the owner while the trustee oversees them.

Living trusts are created and active while you are alive (hence the name). As a result, many people name themselves the trustee of their own living trust, which lets them use and control their property during their lifetime. If you choose this route, you'll name a successor trustee to manage your trust after you pass away or become incapacitated.

What’s the difference between a will and a trust?

Trusts and wills perform a similar function: they are ultimately used to direct how your assets should be distributed after you pass away. Legally, they do this in different ways. Here are four key differences between wills and trusts:

1. Timing: A will takes effect after you pass away, while a living trust takes effect as soon as you create and fund it.
2. Probate: Assets in a will must go through probate, which is the court-supervised legal process of distributing your estate after you pass away. Assets in a living trust skip probate, allowing your heirs to receive them faster.
3. Privacy: A will becomes public record during the probate process. Trusts remain private, which can be attractive to those who want to protect the identity of their heirs and the details of their property.
4. Maintenance: Living trusts require ongoing updates to include new assets. Any time you acquire a new asset — like a home or financial account — you should transfer that asset to your trust as soon as possible. On the other hand, if you have a will, you should update it every three to five years, or whenever you have a big life event (like getting married or having a child).

Living trust vs. will: Which is right for you?

A living trust may be right for you if you:

• Want to avoid probate. If you have a large or complex estate, a trust can speed up the transfer of assets by avoiding the probate process.
• Own property in multiple states. Your property must go through probate in the state where it’s located. If you own property in more than one state, this means multiple probate processes, which can cause delays. A living trust can streamline this by avoiding probate entirely.
• Desire privacy. If you want to keep the details of your estate private, then a living trust may be the right fit for you. Your trust will not be part of the public record, unlike a will, which becomes public during probate.
• Are planning for incapacity. If you were to be incapacitated, a living trust allows your successor trustee to step in and manage your trust without waiting for a court ruling. Learn more about a trustee's responsibilities.
• Have minor children. Children can’t inherit assets until they become adults (typically at age 18). With a trust, you (or your successor trustee) can manage and distribute assets for them until they reach adulthood.
• Have beneficiaries with special needs. A special needs trust ensures that a beneficiary with special needs (for example, someone with a learning or sensory disability) receives assets without losing government benefits.
• Want control over asset distribution. A trust lets you have more control over when your beneficiaries receive their inheritance, instead of receiving it all at once like they would with a will.
• Are part of a blended family. A living trust can help you provide for both your current partner and children from a previous relationship.

Do you need a will or trust?

So is a trust better than a will? Not necessarily! It depends on your specific needs and goals. For many Americans, a last will and testament is an effective way to plan for the future.

FreeWill offers online tools to create both wills and living trusts. Our easy-to-use, best-in-class documents are reviewed by a team of estate planning attorneys and are valid in all 50 states + Washington, D.C. And unlike other online companies, we give you free, unlimited access to your documents, forever.

More than 1 million people have used FreeWill to create their estate plans. Start yours today and gain the ultimate peace of mind.

If you want to make a will but aren’t sure where to start, read our 10 steps to write a will. Want to learn more about trusts? Check out how you can make a living trust.