Trusts and estates aren’t directly comparable. An estate is the property and debts someone has when they pass away. Everyone has an estate. A Trust is a legal instrument that helps transfer property within an estate.
Thinking about what happens to your belongings after you're gone isn't easy, but planning ahead is one of the best things you can do for your family. Estates are complicated, and they’re resolved according to a combination of state law and documents that you leave, like your Will.
A Trust is like a bridge between a person and their estate. A Trust can make it easier for your family to manage your estate when the time comes. In some cases, setting up a Trust lets estate property transfer without going through probate.
An estate is everything someone owns when they die, minus any debts and liabilities. Everyone has an estate, and there are laws governing how estates get handled. An estate can include property like these items:
The probate process is required to oversee the determination of an estate. This includes using estate property to pay a deceased person’s bills and other debts. The probate court also oversees the distribution of the remaining property to heirs as instructed by the deceased’s Will.
If there’s no Will, the probate court uses the state’s intestate laws to decide how to distribute the property. You can sometimes avoid the probate process (or have an estate go through it more quickly) with the help of a Trust.
A Trust is a legal arrangement to benefit someone else by transferring property. You can better understand how a Trust works by knowing its four basic components:
Unlike an estate, a Trust only exists when someone deliberately creates one. It’s one of several tools available when creating an estate plan and doesn’t replace the estate itself. If property is placed in a Trust, it usually avoids probate.
There are three general ways that your representatives will manage your estate:
Everyone should create a Will, and often, a Will is enough to execute your estate. But there are times when your Will on its own may not be enough to take care of your family in exactly the way you want. Trusts can be useful when dealing with these situations:
Planning for the future isn’t easy and can involve difficult decisions. If you’re thinking about preparing a Will or setting up a Trust, it helps to know as much about estate planning as possible.
Our legal plans give you access to provider lawyers who can answer your legal questions. They can also help you prepare a Will or, with a Premium Plan, a Trust. They’ll also confirm that these documents comply with state-specific laws. Learn more about our LegalShield Personal Plans today.
Even if you have a Trust, you may also want what’s called a Pour-Over-Will. This type of Will is used in case an asset does not get transferred to Trust ownership. Used as a sort of safety net, it will still result in probate, but the court will likely place those assets into the Trust at the conclusion of probate. Pour-Over-Will terms often mirror the terms of a Trust just in case the court decides those assets cannot be placed in the Trust.
There are several ways to leave real property to a beneficiary. You can use a Will, which still results in probate of that property; a Trust, which can work outside of probate and transfer more quickly; or you can use a Transfer on Death Deed, which is a direct transfer without probate or through a Trust.
There’s no way to compare Trusts and estates, so neither is “better.” A Trust is one way to manage assets in an estate. Everyone will have an estate, but not everyone will have (or need) a Trust. Instead of asking Trust vs. an estate, the more important question is whether you need a Trust.
If your main goal is to avoid probate, a Trust is often a good choice. If your goal is to reduce your estate taxes, the usefulness of a Trust will depend on the details. This includes the Trust’s terms, the beneficiaries, the amount of property you have, and the cost to create and maintain the Trust.
Yes, as long as you created a Revocable Trust. A Revocable Trust is a Trust that gives its creator greater flexibility to change or terminate it.
If you created an Irrevocable Trust, you typically can’t end the Trust or make changes to it unless a rare exception applies. Read about irrevocable trusts in more detail.
If you die without a Will or without a Trust, each state has default rules that determine how the property in your estate gets distributed. If you don’t have a plan, your state has a plan for you. These rules may not always match your wishes, so if you have preferences, it’s important to talk to a lawyer sooner rather than later.
Content Specialist at LegalShield, creating educational resources about legal and consumer protection topics. She focuses on making complex legal and financial concepts accessible to readers and has contributed to various educational articles on consumer rights and protections.
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