Do You Need a Will, a Trust, or Both? | Allworth Financial

It’s not exactly cocktail party conversation, but deciding how your assets pass after you’re gone is one of the most important financial planning decisions you can make. While it might not be thrilling to think about wills and trusts, getting this right is crucial for protecting your legacy, avoiding chaos for your family, and making sure your final wishes aren’t in the state’s best interest instead of your family’s.

While a lot goes into estate planning, let’s keep this conversation simple by talking about wills and trusts. How do you know if you need a will, a trust, or both? Let’s break it down.

A Will: The Blueprint of Your Wishes

A will is a legal document that spells out how your assets should be distributed after your death. It also names guardians for minor children, appoints an executor (the person who carries out your wishes), and can outline your burial preferences.

What it does:
- Distributes assets
- Names guardians for minors
- Appoints an executor

What it doesn’t do:
- Avoid probate (we’ll get to that)
- Provide privacy (wills become public record)
- Control assets during your lifetime

Important side note: A will doesn’t override beneficiaries you’ve named on your financial accounts, like 401(k)s or IRAs. If your will says one thing but your beneficiary designation says another, the beneficiary designation wins, even if it’s your ex.

A Trust: The Control Freak’s Best Friend

A trust is a legal entity that holds and manages your assets. There are many types of trusts, but the most common for estate planning is a revocable living trust. You create it while you’re alive, and you can change it at any time. Upon your death, the trust becomes irrevocable and dictates how your assets are handled.

What it does:
- Avoids probate
- Maintains privacy
- Allows control over when/how assets are distributed
- Helps manage assets if you become incapacitated
- Can reduce estate taxes in some cases

What it doesn’t do:
- Replace the need for a will entirely

When a Will Might Be Enough

For some people, a simple will covers the bases. You may be a good candidate for a will-only approach if:

- Your estate is modest
- You don’t own real estate in multiple states
- You have adult beneficiaries who are financially responsible
- You’re not worried about privacy or probate delays
- You aren’t trying to control asset distribution over time

If you read that and thought, “Yep, that’s me,” great. A will might be all you need. Just make sure it’s drafted correctly and kept up to date.

When a Trust Makes Sense

Here’s where things start getting more strategic. You may benefit from a trust if:

- You want to avoid probate
- You own property in multiple states
- You have young children or beneficiaries with special needs
- You want control beyond the grave
- You’re worried about incapacity
- You have a high-net-worth estate

In short: if your life is more complicated than a vanilla ice cream cone, a trust might be worth considering.

Detour: What’s Probate?

Probate is the legal process through which a deceased person’s estate is administered. Think of it as the court-supervised way of settling someone’s financial affairs after they’ve died.

The main goals of probate are to:

1. Validate the will (if there is one)
2. Appoint an executor or administrator
3. Identify and inventory assets
4. Pay debts and taxes
5. Distribute what’s left to the rightful heirs

Probate is triggered when someone dies with assets in their name alone—and those assets aren’t set to transfer automatically (like through a trust, joint ownership, or a named beneficiary).

For example:

• A bank account held solely in your name? Probate.
• A house with no joint owner or TOD (transfer on death) deed? Probate.
• Your collection of rare coins hidden in the attic? Yep, probate (if someone finds them).

Here’s why people often want to avoid probate:

1. It’s public.

Anyone with enough curiosity can go see what you owned, who got what, and how much. Great if you like transparency. Not great if you’re a private person.

2. It’s slow.

Probate can take anywhere from a few months to a few years, depending on the complexity of the estate, the state laws, and whether Cousin Eddie decides to contest the will because he didn’t get the bass boat.

3. It’s expensive.

Court fees, attorney fees, appraisal fees… probate loves fees. In some states (like California), they’re statutory and can be a percentage of the gross estate value, not the net. So yes, that house with a big mortgage still racks up probate fees based on its full market value.

4. It’s inconvenient.

The executor has to file paperwork, notify creditors, wrangle heirs, and often get court approval for decisions. That can be a full-time job on its own.

Can You Avoid Probate?

Absolutely. Here are common ways assets can bypass probate:

• Living trust: Assets held in a revocable trust avoid probate and go directly to named beneficiaries.
• Joint ownership: Assets titled jointly with rights of survivorship transfer directly to the surviving owner.
• Beneficiary designations: Retirement accounts, life insurance, and many bank accounts let you name beneficiaries who inherit directly.
• Transfer-on-death (TOD) or payable-on-death (POD) designations: These can apply to real estate, vehicles, and bank accounts in some states.

So, Should You Fear Probate?

Not necessarily. Probate isn't always a nightmare. It depends on the size and complexity of the estate, the state you live in, and how well your affairs are organized. But if you like the idea of your heirs avoiding delays, court dates, and excessive fees while they’re grieving, then planning to minimize or skip probate is a potentially smart move.

Because no one ever said, “I hope my loved ones get to experience a drawn-out court process after I’m gone.”

Back to the Main Road: Why You Might Need Both a Will and a Trust

Here’s the kicker: most people with a trust still need a will. Why? Because your trust only governs assets that are retitled into it. If you forget to transfer something or acquire new assets and don’t get around to funding them into the trust, that property won’t be covered.

That’s where a pour-over will comes in. It’s a safety net that “pours over” any assets left outside your trust into it upon your death. This ensures that everything ends up where it should, even if you dropped a ball or two.

Also, remember: only a will can name guardians for minor children. So even if you go the trust route, a will still plays a vital role.

So, What Should You Do?

Start by asking yourself:
- Do I care if my assets go through probate?
- Do I want to keep my estate private?
- Do I have minor children, special needs heirs, or spendthrift beneficiaries?
- Do I want control over how and when my assets are used?
- Do I own property in multiple states?
- Do I want to plan for incapacity?

If you answered “yes” to any of those, it might be time to consider a trust alongside a will. And if your life is relatively simple, a well-crafted will may be sufficient. Either way, the key is to have a plan, not just assume “it’ll all work out.”

Because if you don’t decide who gets what and how, it’ll be decided for you. By the courts. And that’s a trust fall you don’t want to take.

This information is meant for educational purposes and not as direct tax or legal advice. Rules and regulations can shift anytime, so it’s always best to consult a qualified tax advisor, CPA, or attorney for guidance tailored to your specific situation.