Trust in a Will vs Living Trust (Part 1): What’s the Difference?

You’ve probably heard that trusts help families avoid probate and protect assets for loved ones. Maybe someone even suggested adding a trust to your will.

While that sounds like a smart solution, most people don’t realize something important: a trust created in your will works very differently from a living trust created during your lifetime.

Both options use the word trust, which makes them seem similar. But the experience your family has after your death can be completely different depending on which type you choose.

In this two-part series, we’ll explain how each type of trust works so you can better understand which approach fits your goals.

• Part 1: What happens when you create a trust in your will

• Part 2: How living trusts work and how to decide which option is right for you

  
  

Let’s start with what happens when a trust is created inside your will.

What Happens When You Create a Trust in Your Will

A trust created in your will is called a testamentary trust.

Unlike a living trust, a testamentary trust does not exist during your lifetime. It only comes into existence after you die and after the probate court establishes it.

For example, your will might say something like:

“Upon my death, I direct that my assets be held in trust for my children until they reach age 25.”

This type of trust allows you to control how and when your beneficiaries receive their inheritance, which can be helpful if you have young children or want to distribute assets over time.

However, there is an important limitation.

A testamentary trust does not avoid probate.

Why Probate Still Happens

All wills must go through probate court.

That means if your will includes a testamentary trust, your loved ones must complete the probate process before the trust can even be created.

Probate can take months or sometimes years, depending on the complexity of the estate.

During this time, your assets may be temporarily frozen, which can create financial stress for your family.

What the Probate Process Looks Like

When someone passes away with a will, their family usually must complete several steps through the probate court:

• Locate and file the original will with the court

• Have the court officially appoint the executor

• Notify heirs and creditors of the death

• Identify, gather, and appraise all assets

• Pay outstanding debts and taxes

• Prepare detailed accounting reports for the court

• Wait for court approval before distributing assets

  
  

Only after the court approves everything can the assets be transferred into the testamentary trust created by the will.

The Costs of Probate

Probate can also involve significant expenses that are paid directly from your estate.

Common probate costs include:

• Court filing fees

• Attorney fees

• Executor compensation

• Asset appraisal fees

• Accounting or administrative costs

  
  

In many states, attorney and executor fees are calculated as a percentage of the estate’s total value, which can significantly reduce the amount your loved ones ultimately receive.

Another important factor is privacy.

Probate is a public court process, which means anyone can access information about:

• What assets you owned

• The value of your estate

• Who inherited your property

  
  

The Hidden Drawback of Testamentary Trusts

A testamentary trust can provide many of the same inheritance protections as a living trust. However, there’s an important difference in timing.

With a testamentary trust:

• The trust does not exist during your lifetime

• Your family must complete probate first

• The trust is created only after court approval

  
  

In other words, your loved ones may face extra time, cost, and court involvement before the trust can even begin operating.

And there’s another important limitation to consider.

What a Will Can’t Do While You’re Still Alive

A will only takes effect after you die.

That means it provides no protection if you become incapacitated before death.

Most people rely on a Power of Attorney (POA) to allow someone to manage their finances if they are unable to do so themselves.

However, a Power of Attorney has a major limitation.

The Power of Attorney Gap

A Power of Attorney automatically ends at death.

This creates a legal gap:

• Your POA agent loses authority immediately

• Your executor has no authority yet

• The probate court must appoint the executor first

  
  

During this period:

• Bank accounts may be frozen

• Bills may go unpaid

• Your family may not be able to access funds

  
  

How Living Trusts Avoid This Problem

A living trust solves this issue because it exists during your lifetime.

If you become incapacitated:

• Your successor trustee can step in immediately

• They can manage assets without court involvement

• Financial decisions can continue without interruption

  
  

When you pass away, the successor trustee can continue managing and distributing assets without waiting for probate court approval.

What Are You Really Trying to Accomplish?

Before deciding between a testamentary trust and a living trust, it’s important to understand what your true goals are.

Many people know they want “a trust,” but trusts can serve different purposes depending on how they’re created.

Here are the key questions to consider.

Q&A: Common Questions About Testamentary Trusts vs. Living Trusts

Q: Do testamentary trusts avoid probate?

A: No. Because they are created inside a will, testamentary trusts must go through probate before they can be established.

Q: Can both types of trusts control when beneficiaries receive their inheritance?

A: Yes. Both testamentary trusts and living trusts can be structured to distribute assets at certain ages or in stages over time.

Q: What happens if I become incapacitated?

A: A testamentary trust offers no protection during your lifetime. A living trust allows a successor trustee to manage your assets if you become incapacitated.

Q: Which type of trust provides faster access to assets after death?

A: Living trusts generally allow faster access because they avoid the probate process.

How to Decide Which Trust May Be Right for You

Your goals will usually determine which option makes the most sense.

A testamentary trust may work if:

• Your main goal is controlling how assets are distributed

• Probate delays or costs are not a major concern

  
  

A living trust may be beneficial if you want:

• To avoid probate

• Greater privacy for your estate

• Protection if you become incapacitated

• Faster access to assets for your family

  
  

Understanding what matters most to you can help clarify which planning approach fits your situation.

Next Week: How Living Trusts Work (Part 2)

In Part 2 of this series, we’ll explain:

• How living trusts work

• How assets are transferred into a trust

• When a living trust makes the most sense for your estate plan

  
  

How We Help You Identify What Matters Most

At Tower Law Group, estate planning begins with understanding what matters most to you and your family.

Our process starts with education and clarity during a Legacy Planning Session.

During your session, we help you:

• Understand what would actually happen to your family if you die or become incapacitated

• Learn the real costs and timeline of probate

• Identify your true priorities and goals

• Create a plan designed to protect the people you love

  
  

Schedule Your Discovery Call

If you’re ready to get started, schedule a complimentary 15-minute discovery call.

During this call, we’ll help you determine whether a Legacy Planning Session is the right next step for you.

📞 Book a free 15-minute discovery call to explore how a Legacy Planning Session protects your whole family.