Planning for the future involves making decisions about how your assets will be distributed after you’re gone. Many people assume that having a will is enough, but in some cases, a trust may offer additional benefits. Relevant factors on deciding on whether to get a trust include the complexity of your estate, your age, whether you are married, whether you own a home or other real estate, and how you want your heirs to receive their inheritance.
What Do We Mean When We Decide Between a Will or a Trust
For any estate plan, we always recommend including a will. However, in some cases, clients may also choose to include a revocable living trust. When a revocable living trust is used, a will is always included as well. Therefore, the decision is not really between a will or a trust, but rather between having just a will or both a will and a trust.
That said, when discussing estate planning options, it is common to refer simply to a “will or trust” for ease of conversation.
Another important point to note is that there are many different types of trusts, each serving different purposes. In the absence of additional context, when a lawyer or financial professional refers to a trust, they are usually talking about a revocable living trust. That is the type of trust discussed in this article.
Understanding the Difference Between a Will and a Trust
Both a will and a trust allow you to dictate how your assets will be handled, but they work in different ways.
- A Will is a legal document that takes effect after your death. It specifies who will inherit your property, who will serve as your executor, and who will become the guardian of any minor children. Any assets disposed of by a will must go through probate, a court-supervised process that can take months or even years.
- A Trust is a legal arrangement that takes effect immediately once created and funded. It allows you to transfer assets into a trust and name a trustee to manage them. Depending on the type of trust, you may still control your assets during your lifetime, and after your death, they can pass to your beneficiaries without going through probate.
- Although use of a Trust is a robust way of disposing of all assets without the need for probate, there are other methods that can work for specific types of assets, such as beneficiary designations, or payable on death bank accounts.
Do You Need a Trust If You Have a Will?
For some, a will alone is sufficient. For others, a trust provides advantages that a will cannot. Below are some factors to consider when deciding whether to set up a trust in addition to having a will.
Do You Want to Avoid Probate?
In New Hampshire, probate is generally simpler and less expensive than in some other states. However, it still involves legal fees, court filings, and delays. If avoiding probate is a priority—whether to protect privacy, prevent delays, or simplify things for your heirs—a revocable living trust can help. Assets placed in a trust pass directly to beneficiaries, bypassing probate entirely.
Do You Own Real Estate?
If you own real estate, you can place it in a trust during your lifetime, allowing the trust to distribute the property according to your instructions after your death—without the need for probate. While New Hampshire has recently enacted transfer on death (TOD) deeds as an alternative way to transfer real estate without a trust, it remains unclear how effective this solution will be in practice. If you own real estate outside of New Hampshire, your estate will likely be subject to ancillary probate in each state where you hold property. This could mean multiple probate proceedings, adding time and expense to the process. A trust eliminates this issue by allowing out-of-state property to pass directly to beneficiaries.
- Do You Have Minor Children or Beneficiaries Who Shouldn’t Inherit Everything at Once?
A will allows you to name a guardian for your minor children, but it offers less control over how they receive their inheritance. While you can create a testamentary trust within a will—one that only comes into existence upon your death—a living trust may provide a more comprehensive way to leave money to minors, disabled beneficiaries, or anyone who should have restricted access to funds. Without a trust, children could inherit a lump sum at age 18, which may not be ideal. A trust allows you to establish rules—such as delaying distributions until a child reaches a certain age or limiting funds to specific purposes, like education and necessities.
- Do You Have Concerns About Privacy?
A will becomes part of the public record once it goes through probate, meaning anyone can see who inherited your assets, the value of our estate, and any creditors making claims against it. A trust, on the other hand, remains private. If keeping your estate matters confidential is important, a trust may be a better option.
- Do You Have a Blended Family or Complex Family Dynamics?
A trust allows for more control over how assets are distributed, which can be especially important in blended families. If you want to ensure that your spouse is cared for while preserving assets for your children from a previous marriage, a trust can help structure the distribution in a way that meets your wishes.
- Do You Worry About Incapacity?
A will only takes effect after death—it does nothing to protect your assets if you become incapacitated. A revocable living trust allows a successor trustee to manage your assets on your behalf if you are unable to do so. A springing power of attorney can also grant someone authority to handle your affairs, but a trust offers more detailed instructions and safeguards for the person managing your assets. This can be a crucial protection, helping to prevent court intervention if you become seriously ill or disabled.
When a Will May Be Enough
Not everyone needs a trust. If your estate is simple, your assets will easily pass through beneficiary designations (such as life insurance or retirement accounts), and you have no strong desire to avoid probate, a will may be sufficient.
A will ensures that your wishes are legally documented, but a trust can provide additional benefits, including avoiding probate, maintaining privacy, and managing assets for beneficiaries over time. If you’re unsure whether you need a trust, consulting with an estate planning attorney can help you decide based on your unique circumstances.
Planning ahead can provide peace of mind—not just for you, but for those you leave behind. Our team at Cohen and Winters can help with estate planning. Contact us today for a consultation.