Most people have heard of wills and trusts. Fewer are sure what each one does—or why an estate planning attorney might recommend one over the other.
That confusion is understandable. Wills and trusts are rooted in centuries of law, and the terminology does not always help.
The good news is that you do not need a law degree to understand the basic difference.
The real question is not simply:
“Do I need a will or a trust?”
A better question is:
“What do I want my estate plan to accomplish during my lifetime, if I become incapacitated, and after I die?”
Once you start there, the difference between a will-based plan and a trust-based plan becomes easier to understand.
What Does a Will Do?
A will is primarily a death-planning document. It tells your executor and the court what should happen to certain assets after you die.
Under Virginia law, a traditional will is generally in writing, signed by the person making it, and witnessed by two competent witnesses present at the same time. Virginia also recognizes a holographic will—one written entirely in the testator’s handwriting and signed by the testator. It does not have to be witnessed when signed, although after death at least two disinterested witnesses must establish that it is wholly in the testator’s handwriting.
Notarization is not required to make either type of will valid. However, a witnessed will can include a notarized self-proving affidavit, which may eliminate the need for witnesses to later appear in court to prove the will.
A well-drafted will can:
- identify who should receive your probate assets;
- nominate an executor to administer your estate;
- nominate guardians for minor children;
- create trusts for children or other beneficiaries after your death; and
- establish how and when beneficiaries receive their inheritance.
One important point is often misunderstood:
A will does not avoid probate. A will provides instructions for probate.
It also generally does not control assets that pass through beneficiary designations, survivorship rights, or other nonprobate arrangements.
What Does a Revocable Living Trust Do?
A revocable living trust can operate during your lifetime, during incapacity, and after your death.
You create the trust and typically serve as your own trustee while you are capable. You can use, invest, buy, sell, or spend trust assets as before. Because the trust is revocable, you can generally change or cancel it while you have capacity.
The trust also names a successor trustee who can take responsibility when necessary.
The Big Difference: What Happens If You Become Incapacitated?
A will does nothing for you while you are alive. If you become unable to manage your financial affairs, it still waits for your death before becoming operative.
A will-based estate plan therefore typically relies heavily on a durable power of attorney for lifetime financial management. Your agent may need to work with banks, investment companies, real estate professionals, and others on your behalf.
A trust-based plan provides another layer of incapacity planning. If your assets are properly held in your revocable living trust and you become incapacitated, your successor trustee can generally step in and manage those assets under your instructions.
For many people, that continuity—not probate avoidance—is one of the most compelling reasons to consider a trust-based plan.
The Other Big Difference: Probate
Probate is the legal process for administering assets that pass through a deceased person’s estate.
In Virginia, a will admitted to probate is recorded with the circuit court clerk. A personal representative who qualifies to administer an estate generally must file an inventory with the Commissioner of Accounts and, unless an exception applies, subsequent accountings as administration progresses.
Probate is not inherently bad. It provides an established legal process for administering an estate and resolving certain issues.
But it also involves formalities, filings, oversight, time, and expense. Some records become part of the court system rather than remaining private, and Virginia imposes a probate tax on estates above the statutory threshold.
A properly implemented revocable trust can reduce the property that passes through probate because assets already owned by the trust can continue to be administered by the successor trustee after death. This may provide greater continuity and privacy and simplify administration.
But there is an important catch.
Signing a Trust Does Not Automatically Avoid Probate
Imagine Susan signs a beautifully drafted revocable living trust, puts it in a binder, and does nothing else.
Her investment account and vacation property remain solely in her name, with no effective beneficiary designation or other transfer arrangement.
Susan has a trust document, but she may not yet have an effective trust-based estate plan for those assets.
Why? Because creating the trust and funding the trust are two different things.
Funding means coordinating ownership of appropriate assets with the trust—often by retitling assets, assigning property, or coordinating beneficiary designations.
A trust can avoid probate only for assets connected to it in the appropriate way. This is why implementation and ongoing maintenance are important parts of trust planning.
If I Have a Trust, Do I Still Need a Will?
Usually, yes.
This is why “will versus trust” is not quite the right comparison.
A trust-based estate plan commonly includes a pour-over will. Among other things, it can direct certain assets left outside the trust into the trust through the estate after death. A will is also the traditional place to nominate guardians for minor children.
So the real choice is often between:
a will-based estate plan
and
a trust-based estate plan that also includes a will.
What Neither Your Will Nor Trust Automatically Controls
Signing a new will or trust does not automatically change what happens to every asset you own.
Many assets pass according to their own instructions, including:
- retirement accounts;
- life insurance;
- payable-on-death accounts;
- transfer-on-death accounts; and
- jointly owned property with survivorship rights.
If your IRA names one child as beneficiary, for example, a provision in your will directing that your estate be divided equally among your children does not change that designation.
Good estate planning involves more than drafting documents. Your assets, ownership arrangements, and beneficiary designations must be coordinated with the plan.
Does a Revocable Trust Protect My Assets From My Creditors?
No, not while you are alive.
Because you retain control over assets in your revocable trust, Virginia law generally makes them available to your creditors during your lifetime. Even after death, assets of a trust that was revocable at death may, in certain circumstances, be available for creditors, estate-administration expenses, funeral expenses, and statutory allowances when the probate estate is insufficient.
That differs from the potential creditor protection a properly designed trust may provide for your beneficiaries after your death.
For example, instead of distributing an inheritance outright to a child, your plan may keep it in trust. Depending on the structure, this may provide important protections and controls for the beneficiary.
These protections can be included in either a sophisticated will-based plan or a trust-based plan. A revocable living trust is not the only way to create an inheritance trust.
A Brief Note About Irrevocable Trusts
Irrevocable trusts differ from revocable living trusts. When properly designed, an irrevocable trust may provide meaningful creditor protection for the person creating it if that person gives up certain rights, access, and control over the transferred assets.
The protection depends heavily on the trust’s structure. Simply transferring assets to an “irrevocable trust” does not automatically place them beyond creditors’ reach.
Virginia permits certain specially designed self-settled spendthrift trusts that may provide substantial creditor protection even though the person creating the trust remains an eligible beneficiary. These trusts have specific limitations, timing rules, and drafting requirements and differ greatly from a typical revocable living trust.
For clients with significant asset-protection concerns, irrevocable trust planning may be worth exploring separately.
When Might a Trust-Based Plan Be Particularly Valuable?
A revocable living trust may deserve serious consideration if you:
- want to reduce probate involvement;
- place a high value on privacy;
- are particularly concerned about incapacity;
- own real estate in more than one state;
- want continuity in managing significant assets;
- have a blended family;
- want assets managed in continuing trusts for beneficiaries;
- have beneficiaries who may need additional protection or assistance;
- have complicated assets or family circumstances; or
- want beneficiaries to have the flexibility a trust can provide.
The larger question is whether those benefits are valuable to you and your family
When Might a Will-Based Plan Be Enough?
Not everyone needs a revocable living trust.
Someone with straightforward assets, carefully coordinated beneficiary designations, limited property requiring probate, and no unusual incapacity or beneficiary concerns may be well served by a properly designed will-based plan.
A will-based plan can also include sophisticated tax planning and protective trusts for beneficiaries. Planning through a will does not mean the plan must be simple.
The appropriate plan depends on what you own, whom you want to protect, and what you want the plan to accomplish.
The Bottom Line: Choose the Plan, Not Just the Document
The debate over “wills versus trusts” can make estate planning sound like a choice between two pieces of paper.
It is really a choice about how you want your plan to work.
Ask yourself:
- What happens if I become incapacitated?
- How much probate administration do I want my family to navigate?
- Who should manage my assets if I cannot?
- Do I want assets distributed outright or protected for beneficiaries?
- Are my beneficiary designations and asset ownership coordinated with my documents?
Those questions are more important than whether the binder on your shelf says “Will” or “Trust.”
Ready to learn more? Attend one of our firm’s free educational seminars, Wills vs. Trusts.
Ready to get moving? Our experienced Virginia estate planning attorneys can help you compare the advantages and tradeoffs of will-based and trust-based plans and determine which approach best fits your family, assets, and goals. Put our firm’s 30+ years of serving clients to work for you.
This article is provided for general educational purposes only and is not intended as legal or tax advice. Estate-planning strategies should be tailored to each person’s individual circumstances.
