The difference between wills and trusts

When it comes to planning your estate, two of the most common tools are wills and trusts. But what exactly are they, and how do they differ?

Many people know they need a will, but trusts are often seen as a more complex option that’s only for the wealthy. Spoiler alert: that’s not entirely true!

Both wills and trusts have their place, depending on your circumstances and what you want to achieve.

In this guide, we’ll explore the differences between wills and trusts, when you might need one (or both), and how they can work together to ensure your wishes are carried out.

What is a will, and how does it work?

A will is a legal document that outlines how you want your assets distributed after your death. It also allows you to name guardians for your children, specify funeral wishes, and appoint an executor to carry out your instructions.

Your will only takes effect after you pass away, which means it doesn’t play a role in managing your finances while you’re alive. Once you die, the probate process begins—this is the legal procedure of validating the will and distributing the estate.

While probate ensures everything is handled correctly, it can sometimes cause delays and even disputes. If there are probate conflicts, for example, this might prolong the process for your beneficiaries.

If you haven’t created a will, your estate will be divided according to intestacy rules, which may not reflect your wishes. This is why everyone should have a will, no matter how simple their estate might seem.

What is a trust, and how does it work?

A trust, on the other hand, is a legal arrangement where you transfer ownership of assets to a trustee, who manages them on behalf of your chosen beneficiaries. Trusts can take effect while you’re still alive or after your death, depending on the type of trust you set up.

Trusts are especially useful for controlling how and when your assets are distributed. For example, you might want to leave money to a child but only allow them access when they turn 21. Trusts also help protect assets from creditors or inheritance disputes, making them a popular choice for people who want more control over their estate.

Unlike wills, trusts bypass probate, which can save time and money for your beneficiaries. They’re also private, meaning the details of your assets and beneficiaries won’t become public knowledge.

Wills vs trusts: key differences

Let’s dive deeper into the differences between a will and a trust:

Feature	Will	Trust
When it takes effect	After your death	Can take effect during your lifetime or after your death
Probate required	Yes	No
Privacy	Becomes a public document during probate	Remains private
Control over assets	Distributes assets outright to beneficiaries	Allows controlled and conditional distribution
Cost to set up	Typically less expensive than a trust	Can involve higher initial costs

Each has its advantages and disadvantages, and understanding these can help you decide which option (or combination) works best for you.

When do you need a will?

You should absolutely have a will if you want to ensure your wishes are followed after your death. A will is essential for:

• Naming guardians for your children.
• Specifying how your assets are divided.
• Preventing confusion or disputes among family members.

If you’re working with a will writer, make sure they guide you through everything, as they can help you avoid common mistakes in wills that could cause problems later.

For example, forgetting to update your will after major life changes can leave your family facing unnecessary complications.

When do you need a trust?

Trusts can be useful for more complex estate planning, such as:

• Managing assets for young or vulnerable beneficiaries.
• Protecting assets from creditors or legal claims.
• Avoiding probate for faster asset distribution.
• Handling properties or assets in multiple countries.

If you have significant wealth or unique circumstances, a trust can provide the flexibility and protection you need. For example, trusts are often used for families with children from multiple marriages or when leaving inheritances for grandchildren.

Can you have both a will and a trust?

Absolutely! In fact, many people use both wills and trusts as part of a comprehensive estate plan. Think of a trust as a tool for managing specific assets (like property or investments), while a will serves as the broader framework for your wishes.

For instance, you might create a trust to handle property and financial accounts while using a will to name guardians, handle smaller assets, or specify funeral wishes. Remember to keep everything aligned—if your will contradicts the terms of your trust, it could create unnecessary legal headaches.

Common mistakes when managing wills and trusts

Managing wills and trusts effectively requires attention to detail and regular updates. Here are some common mistakes to avoid:

Failing to update your estate plan

Life changes quickly, and so should your estate plan! Major events like marriage, divorce, having children, or acquiring foreign assets should prompt an update to your will or trust. If your plans aren’t up to date, they may not reflect your current wishes.

Not storing your documents securely

Whether you have a will, trust, or both, keeping them safe is vital. Make sure you’re storing your will in a secure location where your executor or trustee can easily access it. A solicitor’s office or a trusted online storage service are good options.

Assuming a will can do everything

A will is a fantastic tool, but it has its limits. If you want to avoid probate, protect certain assets, or manage distributions over time, a trust may be the better option.

How to decide between a will and a trust

Still unsure whether you need a will or a trust? Ask yourself these questions:

• Do you have young children or dependents who need guardianship? If so, a will is non-negotiable.
• Are you concerned about how assets will be managed after your death? A trust can provide ongoing control.
• Do you own property abroad or other complex assets? A trust may simplify the process for your beneficiaries.
• Do you want to avoid probate? A trust is a great way to bypass this process entirely.

For many people, combining both options is the most effective solution. A simple will may be all you need at first, but as your estate grows, adding a trust can provide greater control and protection.

Final thoughts

Understanding the difference between wills and trusts is an important step in effective estate planning. While wills are straightforward and essential for most people, trusts offer additional benefits for those with more complex needs.

By taking the time to plan carefully, update your documents regularly, and store them securely, you can ensure your wishes are respected and your loved ones are protected. Whether you’re working with a professional will writer or exploring trusts for the first time, making informed decisions today can save your family time, money, and stress in the future.