Estate planning may seem scary and complicated from afar, leading millions to put it off. Despite all the confusing jargon and daunting nature, the real goal of estate planning is to protect as much wealth as possible for your heirs.

So let’s break this down

When it comes to estate planning, there are two broad tools that most families end up utilizing: trusts and wills. These two wealth protection vehicles can help create a smooth transition for both your family and your assets when the time comes, and choosing one of them is a top priority.

Trust, simply defined

Trusts are separate legal entities designed to hold, protect, and distribute a person’s assets during their lifetime or once they’ve passed away. 

They come in a lot of unique flavors, but they fall into two main classifications: revocable and irrevocable.

A revocable trust. It means the trust can be changed at any time after it’s created. The grantor (owner) can move assets in and out of the trust, add or remove beneficiaries, and so on at any given time. In this case, the grantor (creator) can also be the trustee (who will manage trust assets).

An irrevocable trust. Well, it’s the opposite. An irrevocable trust cannot be changed after it’s created (unless there's a court order or all the trust’s beneficiaries approve a change). And with an irrevocable trust, the grantor cannot be the trustee.

What about a will?

A Will, also known as a "Last Will and Testament," is considered a "simple" document. It comes with limited control over the distribution of your assets.

It's a basic legal document meant to formally and officially outline where and when your assets go, or to whom, what to do with your investments, businesses, etc.

Key differences

While trusts and wills share many similarities, there are key differences in the benefits they offer. For example, wills aren't shielded from going through probate, a court-supervised proceeding to review your assets and the proper distribution of your assets, which can end up being a lengthy and costly process.

On the other hand, assets you put inside your trust can be passed down to heirs while avoiding probate. And a huge benefit to having a trust is that the distribution of your assets stays private, whereas the distribution of your assets via a will and probate are public.

Deciding which is best for you

There is no objectively “superior” option here. Each one depends on your situation and your needs.

Before deciding, it helps to evaluate things like the value of your assets, how many beneficiaries you might have if you have any ongoing or anticipated legal proceedings, and the complexity of your estate situation. Your answers to these questions will determine which option is right for you.

To make it even simpler — we’ve created a simple assessment that will recommend the right estate plan for your situation. 

Take our assessment(opens in new window)