Trust vs. Will: Which One Is Right for You?

When you think of trust funds and wills, what’s the first thing that comes to mind? For many Americans, they might think “that doesn’t apply to me” or “that’s for the super wealthy.” You would be wrong in that assumption, and throughout this guide you’ll learn why you need an estate plan and if a trust or will is right for you.

According to a 2024 caring.com survey, 68% of Americans do not have a will or trust in place. Still, nearly everyone would benefit from creating a suitable plan. Knowing you need estate planning and understanding how it should be constructed are two different things, however, and that is exactly what we’ll work through in this article.

This isn’t just about getting your affairs in order on a legal basis; it’s about creating peace of mind for yourself and your family. An estate plan, including wills and trusts, provides you with control over how your assets are distributed while you’re alive and after you’ve passed. You have the ability to control how you’ll protect your family and create a legacy. By foregoing proper planning, your loved ones are left with a tremendous burden that could include probate court, additional expenses, and familial disputes during a time of grief. All of this can be avoided with a solid estate plan.

#What is a Will?

Very simply, a will is a legal document that doesn’t take effect until after you die. It directs your assets according to your pre-planned wishes and determines how your children (if still minors) will be taken care of both financially and personally. Most wills go through something called probate court, but there are some instances where it can be bypassed. The contents of a will can become public information, especially when they go through probate. We’ll discuss all of this further in subsequent sections.

#Wills are the Foundation of the Estate Plan

A last will and testament, or colloquially known as a will, is the foundation of your estate plan. Essentially, it is your final instructions to your loved ones on who gets what, who takes care of your dependents, and who is responsible for carrying out your wishes. A will can cover many things including:

• Asset distribution: This is who inherits your property, money, and any other valuables.
• Guardian designation(s): This specifies who will raise your minor children after your passing. You can designate who will make legal and financial decisions for them, which could be two separate people or the same person for both.
• Executor appointment: This is the person you designate to manage your estate through probate and carry out the wishes in your will.
• Pet care: You can designate a caretaker for your pets.
• Final arrangements: These are your wishes for your funeral and/or burial.

The probate process is fairly straightforward, but can be slow to complete. Probate can take anywhere from 3 to 18 months and typically costs anywhere from 3% to 7% of the value of the estate. The fees and associated costs include legal fees, court costs, and potentially executor compensation.

Your will becomes public record during probate. Anyone can access information regarding what you owned and who inherited it. For most, this is inconsequential, but if privacy matters to your family, it is absolutely worth noting.

If you die without a will, your estate will enter what is called “intestacy”. Your state laws will then determine who inherits your assets. This, of course, opens up the possibility that your assets won’t be distributed in the way you wanted. By creating even the simplest of wills, you can avoid this.

#What is a Trust?

A trust is a legal entity you create while alive that holds your assets. There are two main types of trusts, revocable and irrevocable, but for the sake of this post, we are referring to revocable living trusts. In this type of trust, you maintain full control of the things that you put into the name of the trust during your lifetime, but upon your death your assets pass directly to beneficiaries according to the terms of the trust and no probate is required. It helps maintain privacy and can save significant time and money.

This guide will help you understand some of your options when it comes to wills and trusts, while gaining knowledge on the pros and cons of each. The goal is that you’ll be able to determine which approach, or perhaps a combination of both, will work for you and your family. Whether you are just beginning adulthood or are deep in a career and managing life’s complexities financially, professionally, and personally, understanding these concepts will give you the confidence to make an informed and tailored decision.

Please note: Monarch is not a law firm and this information should not be considered legal advice. The information provided below is for educational purposes only. Please consult an attorney before making any estate planning decisions.

#Trusts Mean More Control, But Also More Complexity

A trust is a legal arrangement where you, as the grantor, transfer assets to a trust entity, which then “holds” the assets for your chosen beneficiaries. When people discuss trusts, they are most likely referring to a revocable living trust.

A revocable living trust works by creating it when you’re alive. Typically, you serve as both the trustee and the beneficiary. A trustee is essentially the manager of the trust. As long as you’re alive you maintain complete control over the trust. You can buy, sell, give away trust assets as you did before establishing the trust. You can make modifications or even dissolve the trust.

However, when you pass away, or if you become incapacitated, you will have named a successor trustee who then immediately steps in to manage or distribute the assets within the trust according to predetermined instructions. There is no court involvement needed. Assets held within your trust are then able to bypass the probate process.

#Trust Terminology to Learn

There are plenty of legal and financial terms thrown around in estate planning. It’s crucial to have a basic understanding of them and their roles within trusts and wills.

• Grantor/Settlor: This is the person who creates the trust (you).
• Trustee: The person or institution managing the trust assets is the trustee.
• Successor Trustee: This is the person who takes over when you pass away or become incapacitated.
• Beneficiaries: A beneficiary is the person who receives the trust assets after your death or incapacitation.
• Funding the trust: This means you have transferred asset titles into the trust’s name.
• Irrevocable trust: This type of trust cannot be changed once it is created. It is mainly used for asset protection and advanced tax planning.
• Testamentary trust:This is created by your will after you die. However, it will go through probate.
• Special needs trust: This type of trust provides for beneficiaries with disabilities and doesn’t disqualify them from government benefits.
• Spendthrift trust: This trust is created to protect beneficiaries from creditors and potentially detrimental financial decisions.

#Trusts vs. Wills

Let’s compare and contrast trusts vs. wills in various scenarios.

#The Pros and Cons of a Will

There’s a lot of good a will can do when properly drafted, but they are not perfect. Let’s dive into some advantages of wills first.

First and foremost, wills are simple, accessible, and mostly straightforward. You can use an online tool or work with an estate planning attorney. Wills do not require ongoing maintenance, but should be reviewed upon every major life update (marriage, divorce, births, deaths, etc.) It is crucial to store your will in a safe place.

Wills also automatically cover all of your assets. Your will is a catch-all for all the assets you own at the time of your death. Even if you acquire assets after creating your will, they will still be covered.

Only a will can determine guardians for your children, which is why all parents should have a will in place, even if they also have a trust.

Creating one is relatively inexpensive and most range between free - $1,000. If you are just beginning your estate planning journey, putting a will into place for a few hundred dollars is the best place to start.

Lastly, probate court provides the guidance and oversight that’s necessary to ensure your will is carried out properly. This could include protecting your heirs from bad actors, executor mismanagement, and making sure debts are paid and remaining assets are distributed.

Having a will in place is important, but it's not a perfect document. There are some downsides you should consider. However, these shouldn’t deter you from creating your will.

First, probate will likely be mandatory and can slow asset distribution to beneficiaries by several months. It may also cost anywhere between 3% to 7% of the estate’s value as well. Beneficiaries cannot access the estate’s assets without court approval.

Wills do not provide much in the way of privacy. When it’s filed with the court, it becomes a matter of public record. Wills also don’t help in cases of incapacity. If you are alive but mentally incapacitated, your will does not come into play. You need other estate planning documents such as powers of attorney and trusts in the case of incapacitation.

Wills are also easy to contest. If you have disgruntled family members, they can challenge your will in court and potentially delay the distribution of your assets for months or years. Also, if you have real estate in multiple states, your executor will need to go through probate proceedings where the property is located. This can add significant costs and time.

#The Pros and Cons of a Revocable Trust

Some of the main advantages of a trust include its ability to bypass probate. This is truly one of the main reasons families create trusts. Assets are passed to the beneficiaries directly and in a much more time efficient manner. There’s no court involvement, and thus, no public record. Trusts maintain privacy. This can have a secondary effect of protecting your family from potential scammers.

Trusts allow you to plan for incapacitation. If you are alive but mentally or physically unable to manage your assets or financial affairs, your successor trustee can immediately step in to do so. This provides continuity to you and your beneficiaries.

When you have a trust you can also include instructions regarding when and how beneficiaries receive the assets within the trust. If you don’t want your kids inheriting money at 18, you can bump the age up to 25 or have certain amounts distributed at different age milestones. If you want to ensure your money isn’t spent on illegal things or poor life decisions, you can require drug testing for a beneficiary. If you want to stipulate that the money can only be used for education, home buying, or starting a business, you can do that as well. A trust can give you the flexibility you need and legacy protection you want.

The flexibility of a trust also enables you to handle multi-state property in a more efficient way. One trust can hold homes in multiple states and avoid costly and time consuming multiple probate proceedings.

Lastly, trusts are difficult to contest and the burden of proof is much higher. Because trusts remain private and not in the public record, families can maintain security and privacy far more easily.

Much like wills, trusts also aren’t perfect and do have downsides as well. First and foremost, the creation of a trust is somewhat cost prohibitive. It can typically cost between $500-$3,000 to establish a trust with a licensed attorney.

Trusts also require maintenance throughout your life. Just creating the will isn’t enough. You’ll need to transfer asset titles (ownership) into the trust's name. If you forget to retitle an asset, it will be left out of the trust and will go through probate when you pass. After you create a trust, you must properly fund it.

Trusts aren’t as easy as wills to complete. They require more paperwork, a number of decisions and coordination. You’ll need to work with banks and other financial institutions to retitle assets in order to fund the trust. Again, trusts also can’t name guardians for minor children. You’ll need a will to handle this and any additional assets that are not part of the trust.

Lastly, there are risks associated with mismanagement, refinancing, and other complications when it comes to trusts. Since there is no court oversight, a trustee could mismanage the assets within a trust and it may not become known until beneficiaries discover the issue. This likely wouldn’t happen under the supervision of a probate court. If there is real estate held within the trust and you wish to refinance a mortgage attached to the property, some lenders may require you remove the real estate from the trust, refinance, and then put the real estate back into the trust. This means extra costs, paperwork, and time.

#The Cost of Wills and Trusts at Various Levels

Costs associated with estate planning can vary widely, and often depend on complexity and the level of wealth involved. Let’s have a look at what you can likely anticipate paying for each based on the size of the estate.

Setup Expenses for a Simple Will:

• Online tools to create will: free-$300
• Attorney drafted simple will: $300-$1,000
• Attorney drafted complex will: $1,000-$2,000

Setup Expenses for a Living Trust:

• Online tools to create trust: $500-$1,000
• Attorney created individual trust: $1,500-$2,500
• Attorney created joint trust: $2,000-$3,500
• Complex trust with associated tax planning: $3,000-$5,000+

While the initial setup fees are much higher with a trust, when settling an estate, a trust can save a tremendous amount of money. Let’s have a look at the cost differences between settling a will versus a trust after your death. Remember, probate, in general, can cost between 3% and 7% of the total estate.

$500,000 Estate Settlement Costs:

• Probate with will: $15,000-$35,000
• Trust administration: $2,000-$5,000

$1,000,000 Estate Settlement Costs:

• Probate with will: $30,000-$70,000
• Trust administration: $3,000-$7,000

You can see in these above examples that for estates with even modest assets, having a trust can mean significant savings. Be sure to consult an estate planning attorney before making any decisions for your personal situation.

#Doing Nothing is Costly

The greatest cost you can expect is if you do nothing and do not do any estate planning. Intestate succession, which means dying without a will, requires probate and additional court proceedings to determine the appropriate inheritors.

Dying without a will and/or a trust can skyrocket the costs to exceed 50% or more of planned estates. The process is lengthier and costlier, all while beneficiaries are grieving the loss of a loved one. The odds of creating family conflict over how assets should be distributed also skyrockets in these situations.

So how does one determine if they need a will, a trust, or both? Let’s discuss a simple framework to help you to make the appropriate decision.

You only need a will if:

• You’re under 40 years old with only modest assets.
• You have a simple estate that maybe includes one home, savings, and retirement accounts.
• All of your property is contained to one state.
• You have minor children
• You don’t have a need for additional privacy and are okay with probate court oversight and procedures.
• Most of your assets have beneficiary designations (common with retirement accounts and life insurance).

You should consider a trust if:

• Your estate exceeds $500,000 in value.
• You own real estate in multiple states.
• Privacy is important to you and your family.
• You want your assets distributed quickly after your death.
• You are concerned about a family member or beneficiary challenging your wishes.
• You want to have someone you trust manage your assets if you become incapacitated.
• You have a blended family with multiple or complex inheritance wishes.
• You own a business that requires continuity planning.

You likely need both a will and a trust if you’ve already created a trust. In this case, you should make what’s called a “pour-over will.”

• This will name guardians for your children.
• Catch any assets that are left out of the trust.
• Provide backup instructions if administration of your trust fails.
• Addresses what to do with your personal property, sentimental items, and other valuables.

#Other Considerations

For individuals who are single, as discussed previously, trusts can provide protection if you’re incapacitated. This is particularly important if you do not have a spouse to make decisions or have heirs that don’t live close by.

For couples that are married, joint trusts can work very well for those with shared assets. If you are in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), a joint trust can simplify administration. Common law states may benefit from separate trusts for asset protection.

More than any other asset, real estate is the main driver behind the decision of whether or not to create a trust. If your home is the majority of your net worth and you want to avoid probate, a trust can make sense even for modest levels of wealth.

Trusts are truly invaluable for blended families. A trust can ensure that your current spouse is taken care of financially, while also guaranteeing your children from a previous marriage or relationship receive an inheritance. You maintain complete control which is much more difficult with only a will in place.

#How Monarch Can Help

Before you create your estate plan, it’s crucial to have an accurate understanding of your net worth. Monarch’s net worth tracking and easy account aggregation features will help you see the complete picture of your financial situation. If you’re unsure if a trust makes sense, or preparing information to consult with an estate planning attorney, having your financial picture organized and accessible in Monarch streamlines the process. For couples, Monarch offers collaboration features so you can plan together and become aligned on your estate planning needs. You can even suggest to your attorney that they get access to Monarch for Professionals, a portal that allows financial pros to see their clients’ Monarch accounts.

#Setting Up a Will or Trust

Let’s now get into the steps you’ll need to take in order to set up a will and/or a trust.

#Creating a Will:

• Step 1: Take an inventory of your assets. This means listing out everything you own including bank accounts, investment accounts, retirement accounts, real estate, vehicles, life insurance, business ownership interests, and valuable personal property. You’ll want to note which assets already have beneficiary designations. Again, Monarch’s net worth tracking can essentially track all of these elements for you.
• Step 2: Choose the right people. You’re going to need an executor on your will. You’ll also need to name beneficiaries, guardians (if applicable), and alternates if anyone becomes unable or unwilling. Your executor should be someone you trust to manage your estate. They should be organized, trustworthy, and willing. For the named guardians of your minor children, be sure to have a conversation with them before making it official.
• Step 3: Decide who will create the will. Perhaps you only need an online service, or maybe you need an attorney. Online tools will run you between $100-$300. Attorneys will be more, likely in the $300-$2,000 range.
• Step 4: Execute the will properly. Your will must be signed and witnessed according to your state’s requirements. The witness(es) typically cannot be beneficiaries. You can also add a self-proving affidavit to simplify probate.
• Step 5: Store your documents in a safe and secure place. Your will should be kept in a fireproof safe or with your attorney. Be sure to inform your executor on where they can find the will.

#Creating a Trust:

• Step 1: Choose the trust type. For the majority of people, a revocable living trust is most appropriate. Single people will create an individual trust whereas married couples will need to decide between a joint trust or separate trusts based on their state’s laws and asset protection needs.
• Step 2: Draft the trust document. Since trusts are generally more complex than wills, it’s recommended you seek the advice of a lawyer. Your trust document should lay out the name of the trust, your role as trustee and beneficiary, successor trustees and the circumstances in which they would take over, beneficiaries of the trust and distribution instructions, and instructions for incapacity and death.
• Step 3: Fund the trust properly. If there’s one step where most people make mistakes, this would be it. A trust document is useless if assets are properly placed into the trust. This is a process called “funding” and it requires you to retitle assets into the trust’s name. For real estate, you’ll need to change the deed to transfer the property from your individual name to the name of your trust. This will require a title company and/or attorney. If there’s a mortgage on the property, check with the lender to see if you’ll need to refinance. For bank and investment accounts, you’ll need to contact the financial institution. They will guide you on retitling the account or help you create new accounts in the trust’s name. For vehicles, you’ll have to check with your particular state as some states don’t allow trust ownership of vehicles. If it is allowed, you’ll need to retitle your car at the DMV. If you can’t do that, use a transfer-on-death designation if possible. For personal property, you’ll need to execute an “assignment of personal property” to transfer items of value such as artwork, jewelry, furniture, antiques, or other collections. You’ll need to keep this with your trust documents as well.
• Step 4: Create your pour-over will. This will serve as your backstop to catch any assets that were forgotten by the trust. This is also where you’ll name guardians for children and detail your other wishes postmortem.
• Step 5: Maintain your trust during your lifetime. It’s critical to maintain your trust by updating beneficiaries after major life events. This could include marriage, divorce, births, deaths. You’ll also need to properly title any new assets you acquire. It’s best practice to review your trust every 3-5 years or as tax laws change to ensure accuracy.

#Not Everything Should Go in a Trust

Just as you should know what types of accounts should be placed in trust, there are also assets that should absolutely not go into a trust. Let’s review those.

• Retirement accounts. Do not retitle retirement accounts in your trust’s name. It can trigger immediate taxation of the account. Instead, name your trust as the beneficiary of the account, particularly if the beneficiary is a minor child. Usually though, it is best to name individual beneficiaries. This will avoid probate and keep your heirs from any unnecessary headaches.
• Health Savings Accounts (HSAs). Similar to retirement accounts, do not transfer ownership of the HSA to the trust. Simply name the trust as the beneficiary instead if necessary. Still, it is best to name individuals as beneficiaries to avoid probate and complications.
• Vehicles, sometimes. Some states do not allow trust ownership of vehicles and often the process of placing a vehicle is an unnecessary hassle for a relatively low to moderately-valued asset. It’s crucial to check your particular state’s rules. You may want to consider a transfer-on-death registration if available.
• Checking accounts: Most people don’t keep a substantial amount of cash in their checking account. There generally isn’t a need to place a checking account in a trust, especially if the account is used for just daily expenses. You can designate the checking account with a transfer-on-death registration.
• Life insurance is a special case in that it already avoids probate. However, you may consider naming the trust as the beneficiary for a few reasons. First, if the beneficiaries are minors the trust would manage the money until they are of age. Second, if you’d prefer to have structured distributions rather than inheritors receiving lump sums. Lastly, if your estate planning documents require the proceeds be put in the trust.

#Assets That Should Most Likely Go in Your Trust

The assets that are most beneficial if placed in a trust are as follows:

• Real estate. You can place your primary home as well as any vacation or investment properties into a trust.
• Savings accounts including high yield savings, CDs, money market accounts.
• Non-retirement investment accounts. This could be an individual or joint brokerage account.
• Business interests. If you fully or partially own a business, you can place it in your trust.
• Valuable personal property including artwork, jewelry, collections, antiques, furniture, and so on.
• Digital assets. Cryptocurrency, domain names, websites, online businesses, any monetized content are often things that get overlooked. They likely cannot be retitled to the trust’s name, but they should be noted within the trust documents.

#Tax Changes in 2026 Affecting Estate Planning

Estate tax considerations are impactful for high net worth individuals and families. There have been some important changes made to tax law that could come into play.

The federal estate tax exemption for 2026 is set to rise to $15 million for individuals and $30 million for married couples. Estates below this threshold are not subject to federal estate taxes. Above these thresholds and estates face a 40% tax rate.

#State Estate and Inheritance Taxes:

At the state level, there are a handful of states that impose estate taxes, but at much lower thresholds. These states include Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia.

State estate exemptions can range from as low as $1 million to as high as $15 million. If you live in one of these states and anticipate a net worth in this range, estate planning becomes even more essential.

Six states currently have what’s called an inheritance tax. These taxes are not paid by the estate, but by the beneficiaries. Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania currently have inheritance taxes. Rates vary, so be sure to check with your state.

#Why Taxes Matter in Trust vs. Will Decisions

Wills nor revocable trusts provide much in the way of estate tax savings. Assets in a revocable trust are still part of your taxable estate. Trust versus will decisions are mainly about avoiding probate and asset management, not necessarily tax reduction.

If you believe estate taxes will be a concern for you and your beneficiaries, you need specialized planning from an estate planning attorney. They may discuss options for you that include:

• Irrevocable life insurance trusts (ILITs). This removes life insurance proceeds from your estate.
• Qualified Personal Residence Trusts (QPRTs). This removes your home from your estate while you continue to live there.
• Charitable trusts. These reduce your estate taxes while also supporting causes that you care about.
• Annual gifting. You can give individual recipients up to $19,000 each year without using any of your lifetime exemption. This is an estate reduction strategy.

Again, at this level working with a qualified estate planning attorney who specializes in tax planning is necessary. The potential tax savings could be immense.

#It’s All About Peace of Mind

Everyone should do estate planning. However, not everyone will use the same approach or strategies. Each person and family are different in their needs, wealth, and wishes. For young adults and those with modest means, getting a will in place is a great start. As your wealth grows and your life evolves, you may want to establish a trust at some point.

Having a plan in place is demonstrably better than not having one at all. A simple will is always better than dying intestate. A basic trust is superior to leaving your family to navigate probate unsure of your wishes and amidst their grief. An estate plan that gets put off until tomorrow helps no one.

If you’re under 40 with a fairly straightforward financial picture, you can create a will with relative ease online this week. Or perhaps this month you can contact a local estate planning attorney. All it takes is one small action to start building toward peace of mind for yourself and your loved ones.

If you have significant assets, you’ll definitely want to schedule a time to meet with an estate planning lawyer to discuss your options. Here’s a simple list of action steps to start your estate planning journey.

• Calculate your net worth using Monarch.
• List your assets and their locations, user names, passwords. Store it somewhere safe.
• Identify who you’d want to be your executor, trustee, and guardian of your children.
• Decide whether you’ll only need a will or if a trust is beneficial for your situation.
• Create your estate plan using an online tool or with a qualified estate planning lawyer.
• If you’ve created a trust, be sure to properly fund it.
• Inform your executor and trustee about their roles in your estate plan and where they can find the essential information.
• Review and update your estate plan every 3-5 years and also after any major life changes.

These steps will give you and your loved ones clarity and security. Don’t delay estate planning. It may feel uncomfortable at first, but ultimately it provides everyone involved with peace of mind. Outside of the assets you’ll leave your beneficiaries, a well planned estate is a valuable gift in and of itself.

#FAQs

Can you have both a will and a trust?
Yes, and most people who have a trust also have a will. The trust will handle most of your assets, while a “pour-over will” handles anything that’s forgotten. A will also names guardians for minor children which a trust cannot do.

Does a trust avoid probate?
Yes, a trust that is properly funded will avoid probate. Assets titled in the trust’s name pass directly to the beneficiaries according to the trust’s instructions. There is no court involvement. This only works, though, if the assets are properly transferred into the trust. This is where most people make mistakes and missteps.

What are the disadvantages of a trust?
Trusts cost more to create than wills and they require a bit more maintenance. The hardest part is retitling and properly funding the trust. It requires more paperwork and coordination with banks and financial institutions. For smaller estates, these disadvantages could outweigh the benefits.

Is a trust worth it for a small estate?
There’s no one right answer to this question and it truly depends on your personal priorities, not just your level of wealth or type of assets. If you own real estate in multiple states, if you value privacy, or if you worry about family disputes, then creating a trust might be worth it even with moderate assets levels. It’s important to weigh the costs of probate (generally 3% to 7% of the estate) against the cost to create a trust. For a simple and smaller estate, it might not be worth it.

What happens if you die without a will or trust?
If you die without an estate plan, your estate is intestate and state law will then determine who inherits your assets. The courts determining the distribution of your assets in this case may not align with your values and wishes. It can also be more expensive to go through court proceedings than with a planned estate. If you have not named guardians for your minor children, the court will do so for you.

Can a trust override a will?
If an asset is properly titled in a trust, the trust will determine the distribution. The will does not apply to assets within the trust. The will directs the distribution of any assets not held within the trust. Ideally, the two documents will work together and in harmony. They should not be competing.

What is a pour-over will?
A pour-over will is a special type of will used in tandem with a trust. Any assets that are forgotten or left out of the trust will be handled by the will. Again, guardians for minor children are not designated in a trust, only a will. A pour-over will is a safety net.

Does a living trust protect assets from creditors?
No, a revocable living trust does not provide creditor protection. Creditors can reach trust assets just like they can reach assets in an individual’s name. If asset protection is the ultimate goal, you need an irrevocable trust or other specialized planning. Always consult an attorney for more complex strategies.