Wills and Trusts: Choosing the Right Estate Planning Tool

Wills and trusts are the two foundational documents in estate planning, and understanding the differences between them is essential for paralegals working in this practice area. While both serve the purpose of directing how assets are distributed after death, they operate in fundamentally different ways and offer distinct advantages and limitations. This guide provides a thorough comparison to help you support attorneys and clients effectively.

What Is a Will?

A will (also called a last will and testament) is a legal document that directs how a person's property should be distributed after death. It takes effect only upon the testator's death and must go through probate, the court-supervised process of authenticating the will, paying debts and taxes, and distributing assets to beneficiaries.

Key features of a will:

Revocable during lifetime: The testator can amend or revoke the will at any time while alive and competent
Names an executor: The will designates a personal representative (executor) to manage the estate through probate
Guardianship nominations: A will is the only document that can nominate a guardian for minor children
Requires probate: Assets passing under a will must go through the probate process, which can be time-consuming and costly
Public record: Once admitted to probate, the will becomes a public document that anyone can access

What Is a Trust?

A trust is a legal arrangement in which one person (the grantor or settlor) transfers property to another person or entity (the trustee) to hold and manage for the benefit of designated beneficiaries. A revocable living trust, the most common type used in estate planning, is created during the grantor's lifetime and can be amended or revoked at any time.

Key features of a revocable living trust:

Avoids probate: Assets held in the trust at death pass directly to beneficiaries without going through court
Privacy: Unlike a will, a trust is not filed with any court and remains a private document
Incapacity planning: If the grantor becomes incapacitated, the successor trustee can manage trust assets without court intervention
No tax advantages during lifetime: A revocable living trust is a "grantor trust" for tax purposes, meaning all income is reported on the grantor's personal tax return
Must be funded: The trust only controls assets that have been transferred into it; unfunded trusts provide no probate avoidance

Key Differences: Wills vs. Trusts

Understanding the practical differences helps clients choose the right approach:

Probate: A will requires probate; a trust does not. Probate can take months to years, involves court fees and attorney costs, and is a public proceeding. Trusts allow for private, relatively quick distribution.

Cost: A will is generally less expensive to create than a trust. However, the cost of probate may make the total cost of a will-based plan higher over time, especially for larger estates or estates with real property in multiple states.

Multi-state property: If a person owns real property in multiple states, a will-based plan requires probate in each state where property is located (ancillary probate). A trust avoids this by holding all properties in a single entity.

Incapacity: A trust provides a built-in mechanism for managing assets if the grantor becomes incapacitated. A will has no effect until death, so a separate durable power of attorney is needed for incapacity planning under a will-based plan.

Contest vulnerability: Both wills and trusts can be contested, but trust contests are generally less common because there is no public probate proceeding to trigger challenges.

Guardianship: Only a will can nominate a guardian for minor children. Even clients who use trusts as their primary planning tool should have a simple "pour-over" will that includes guardianship nominations.

The Pour-Over Will

Most trust-based estate plans include a pour-over will as a safety net. This type of will directs that any assets not already in the trust at the time of death should be "poured over" into the trust and distributed according to its terms. The pour-over will still requires probate for those assets, but it ensures that nothing falls outside the trust's distribution plan.

When to Recommend Each Approach

While the attorney makes the final recommendation, paralegals should understand the general guidelines:

A trust-based plan is typically recommended for clients with significant assets, real property in multiple states, privacy concerns, or complex distribution wishes
A will-based plan may be sufficient for younger clients with modest assets, clients in states with simplified probate procedures, or clients whose assets pass primarily through beneficiary designations
Every client should have at minimum a will, a durable power of attorney, and a healthcare directive, regardless of whether a trust is also used

The Paralegal's Role in Estate Planning

Paralegals assist with estate planning by gathering client information through questionnaires and interviews, preparing drafts of wills and trust documents, coordinating trust funding (retitling assets into the trust), maintaining tickler systems for periodic reviews, and assisting with trust administration after the grantor's death.

Deepen Your Estate Planning Knowledge

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Wills vs. Trusts in Estate Planning: A Paralegal's Comprehensive Comparison