Trust vs. Will – Dhillon Marty CPA Advisory

Author- Sonia Dhillon, CPA, MBA

A Trust is a legal arrangement in which a grantor transfers assets to a trustee, who manages the assets for the benefit of beneficiaries. The trustee is a fiduciary obligated to handle the trust assets by the terms of the trust document and solely in the best interests of its beneficiaries.

A Will is a legal document that specifies how your affairs will be handled and how assets will be distributed after death.

Important

Establishing a revocable trust to hold and distribute assets doesn’t protect the assets from estate taxation if the estate’s value exceeds the federal estate tax exemption. It’s set at $13.99 million for individuals in 2025. In 2026, the exemption will increase to $15 million for individuals and $30 million for couples filing jointly, based on a provision of the OBBBA which was signed into law in July, 2025.

Feature	Trust	Will
When it Takes Effect	Immediately upon signing and funding (transferring assets). Often taking priority over a will.	Only upon death and court validation.
Probate	AVOIDS PROBATE—Assets held in the trust bypass the court process.	REQUIRED—Must go through the public, court-supervised process.
Cost	Higher initial setup cost (attorney fees and re-titling assets).	Lower initial setup cost.
Privacy	Private—The trust document is not filed with the court and remains confidential.	Public Record—The Will and the inventory of assets become public once filed for probate.
Incapacity Planning	Excellent—The named Successor Trustee can seamlessly step in to manage assets without court involvement (like a guardianship proceeding).	Poor—The Will is useless while you are alive. Requires a separate Durable Power of Attorney and may still lead to a costly, public guardianship court process.
Real Estate in Multiple States	Excellent—Avoids ancillary probate (a separate probate case) in every state where you own property.	Poor—Requires separate, expensive probate proceedings in every state where you own real estate.
Flexibility	Total Control—You can change, amend, or revoke it completely at any time while you are alive and competent.	It can be contested more easily.
Naming Guardian for Minors	No—You still need a Will for this.	Yes—This is the only way to legally nominate a guardian for minor children.
Estate & Tax Considerations	Irrevocable trusts can reduce estate taxes and protect assets from creditors. Revocable trusts do not offer tax benefits but can avoid probate.	Does not avoid estate taxes, which can range from 18% to 40% for estates over $13.99 million in 2025 or over $15 million in 2026.

Key Takeaway: The Benefit of Avoiding Probate

The most significant benefit of a Trust is avoiding probate.

Probate is the legal process of proving the validity of a Will, paying the decedent’s debts, and distributing the remaining property. In many jurisdictions, this process can be:

Costly: Involving attorney fees, executor fees, and court costs, often taking a sizable percentage of the estate.
Time-Consuming: It can often take anywhere from six months to over a year (and sometimes much longer) to complete, delaying the distribution of assets to your heirs.
Public: The Will, the asset list, and the beneficiaries are made available for anyone to view.

By transferring assets into a Trust while you are alive, they are legally owned by the trust, and therefore, they pass directly to your beneficiaries according to the trust’s terms upon your death, outside of the probate court’s control.

The Hybrid Approach (Most Common Strategy)

Even with a Trust, you still need a Will, typically referred to as a “Pour-Over Will.” This Will acts as a safety net to:

Name a Guardian for any minor children.
“Pour Over” any assets you accidentally left out of the trust into the trust after your death (though these missed assets still have to go through probate first).

In summary, a Will is better for smaller, simpler estates or as a fallback. A Trust is generally better for providing privacy, planning for incapacity, and ensuring a fast, low-cost transfer of assets to your heirs.