Will or trust: what does each one do?

Do you need a will or a trust? The documents do different jobs. If a trust makes sense for you, your plan will usually include both.

What a will does

A will states who should receive property that passes through the estate, nominates a personal representative or executor to handle the estate, and lets parents nominate guardians for minor children.

A will operates at death and is handled through the applicable court process. It does not control an asset that passes another way. A retirement account with a beneficiary designation, for example, passes to the named beneficiary rather than under the will.

What a revocable living trust does

A trust holds and governs assets placed into it. While you are alive and capable, you generally remain in control of a revocable trust you created. The trust can name a successor to manage trust assets during incapacity and can direct how those assets are managed and distributed after death.

Properly funded trust assets can often be administered without passing through probate. That is why signing a trust is only part of the work: appropriate assets must be transferred or coordinated with the plan.

Why a trust plan still includes a will

A trust cannot nominate a guardian for a child. A companion will handles that nomination and can direct certain assets left outside the trust into it after death, subject to the court process.

Other documents do separate work too

An estate plan also addresses decisions during life. A durable power of attorney authorizes someone to handle financial matters. Health care documents name decision-makers and record medical choices. The exact documents and terminology vary by state.

Start with the outcome, not the form

First decide what should happen to your children and assets, and who should act for you during incapacity. Then choose the documents needed to carry out those decisions. The plan comes before the forms.