Wills vs. Trusts: Which Is Right for Your Estate Plan?
We at Baker & Baker in Corpus Christi, Texas, often speak with clients who are trying to decide between a will or a trust for their estate planning. The two documents might seem similar in purpose, as they both lay out your wishes for how your property and assets should be handled.
In reality, a will and a trust function very differently and can have distinct advantages and drawbacks in Texas. Selecting the right tool involves understanding not only the nature of these instruments but also how they fit into broader estate planning goals.
By exploring wills and trusts in more depth, we aim to help you clarify which option—or if both—can best support your family’s future.
Estate Planning
Estate planning often begins with a simple question: “How do I make sure my loved ones receive my assets without hassle?” The process might seem distant if you’re relatively young or have modest assets.
Yet, we firmly believe that putting together a comprehensive plan makes sure that matters like inheritances, guardianship, and health directives are managed effectively. Though many people focus on the idea of a will, trusts can also play a pivotal role in your estate planning, offering possibilities that a will can’t.
In Texas, both wills and trusts must comply with certain legal requirements to stand up to scrutiny. For instance, a valid will typically needs to be signed by the testator (the individual creating it) and at least two witnesses. Trusts have their own legal structures depending on their type.
A key difference is that a will only takes effect at death and must go through probate, while trusts can operate during a person’s lifetime or after death—often bypassing or limiting the probate process.
By examining each approach, you may find that your estate planning goals align more strongly with one or the other, or that you need a combination of both.
What Wills Provide
A will—often called a “last will and testament”—allows you to specify how you want your property distributed upon your death. This document can also name a guardian for any minor children and designate an executor to oversee the probate process.
Wills tend to be simpler to create compared to certain trust arrangements, making them a popular choice for individuals who want a straightforward estate planning tool. Still, clarity is essential. Vague or contradictory language can lead to confusion and disputes among beneficiaries, potentially dragging out the probate process.
In Texas, one advantage of a will is that if it’s drafted and executed correctly, the probate system is relatively streamlined. However, the property covered by a will often can’t pass to heirs until the probate court authorizes the executor to do so.
That means it might take months—sometimes even longer—before beneficiaries receive the assets left to them. If your estate planning objective is to pass property on quickly without probate, you might prefer a different mechanism.
Still, for many people, a will is sufficient. If your estate isn’t exceedingly large or complicated, if your main concern is naming guardians for minor children, or if you don’t foresee matters like ongoing trusts for beneficiaries, a will might meet your estate planning needs effectively.
Should your circumstances change, you can modify or revoke a will through a codicil or by drafting a new one, as long as you follow the formalities set by Texas law. An experienced estate planning attorney, like those at our firm, can help with this.
When Trusts Come Into Play
A trust creates a legal structure where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary). You, as the grantor, establish the trust and decide how it will function. Trusts come in various forms—revocable living trusts, irrevocable trusts, special needs trusts, and more—each serving different estate planning objectives.
One of the key draws is that properly funded trusts often bypass probate, meaning your beneficiaries may receive property more quickly. Moreover, a trust offers additional control. You can specify conditions under which certain assets are distributed.
For instance, you can direct that a beneficiary only gains access to funds upon reaching a certain age, or that trust assets be used solely for educational expenses. This level of control isn’t available through a standard will.
Privacy is another factor in favor of using trusts. While a probated will becomes part of the public record, trust documents generally remain confidential. If you’d prefer to keep your affairs out of the public eye, a trust can be a strong solution.
However, trusts can be more intricate to set up. They may require time and effort to “fund”—transferring assets like real estate, bank accounts, or investments into the trust name. If funding is overlooked, those assets might not receive the trust’s benefits, potentially leading to partial probate.
Comparing Wills and Trusts
Although both wills and trusts serve as estate planning tools, their mechanics and implications differ. A side-by-side look might clarify which features matter most to you:
Probate
Will: Usually must pass through probate in Texas, which can be time-consuming and public.
Trust: Often avoids or reduces probate, saving time and keeping personal matters private.
Control Over Assets
Will: Distributes assets in a lump sum. Once the estate is settled, beneficiaries own the property outright.
Trust: Allows conditions or ongoing management. A trustee can release assets over time or when certain milestones are reached.
Difficulty and Cost
Will: Generally simpler and cheaper to create, though probate might be more expensive later.
Trust: Often more expensive and time-consuming to establish, but can potentially lessen costs and hassles after death.
Adaptability
Will: Can be amended or revoked through certain legal procedures as life circumstances change.
Trust: Revocable trusts can be altered or dissolved if set up as a living trust; irrevocable trusts, however, have more rigid rules.
Privacy
Will: Typically a matter of public record once probated.
Trust: Generally remains private, with no public filing requirement in most cases.
We often find that individuals who prize simplicity and have modest estates lean toward a will-based plan. Those concerned with a faster, more private transfer of assets or who want to set conditions for inheritance might opt for a trust-based approach.
Funding and Maintaining a Trust
If you decide a trust should form the backbone of your estate planning, you must take steps to transfer assets into it. For real estate, this might involve signing a deed that places the property under the trust’s name.
For bank or investment accounts, you might need to change the account ownership or list the trust as a beneficiary. Life insurance policies can similarly name the trust as beneficiary, making sure the payout flows through the trustee for distribution.
We see frequent oversights here. People sign trust documents but never retitle their house or financial accounts. This renders the trust less effective, since property left outside the trust may still be subject to probate or fail to benefit from the trust’s provisions.
A trust also requires ongoing maintenance. If you purchase a new piece of property or open a new account, you might want to name the trust as the owner or beneficiary from the outset. Staying on top of these details can make sure your estate planning remains aligned with your preferences.
Potential Tax Implications
For most Texans, federal estate tax remains a non-issue unless their estates exceed the federal threshold, which is currently in the multi-million dollar range. Yet, changes to tax laws occur, and if your estate grows in size or invests in significant assets, paying attention to potential exposure can matter.
Neither a simple will nor a basic revocable trust necessarily confers major tax benefits on its own. However, advanced planning strategies such as irrevocable life insurance trusts or other specific trusts may shield certain assets from taxes.
Income taxes can also come into play in certain trust arrangements, especially if you create irrevocable structures that file their own returns. In that scenario, the trust might pay taxes at trust tax rates rather than passing the burden to beneficiaries.
But for many everyday estate planning scenarios, these issues remain minimal, provided you keep an eye on changing laws and consult with legal and financial professionals.
Handling Minor Children or Dependents
Families with minor children often wonder which estate planning tool best safeguards them. A will can name guardians for the children, making sure that if something happens to both parents, the right individual will step in.
You can also establish a children’s or minor’s trust that kicks in upon death, dictating how and when funds are used for the child’s benefit.
If you rely solely on a will without specifying a trust arrangement for minors, the inheritance might pass to the child but be subject to court supervision until they turn 18. That might not align with your wishes if you want a child to wait until age 25 to manage funds independently.
In such cases, we often recommend pairing a will with a testamentary trust or considering a standalone trust as part of your estate planning. This approach can better make sure that children receive ongoing support in a structured way.
The Blended Family Dynamic
For those in second marriages or blending families, a trust can bring clarity and fairness. Perhaps you want your current spouse to live in the family home for life but eventually pass that property to children from a prior relationship.
A trust can specify these conditions, preventing inadvertent disinheritance.
While you could attempt to craft a will that states something similar, once the property is left outright to a spouse through a will, you lose control over what that spouse does with it. A trust, by contrast, can keep a remainder interest for your children, making sure your assets flow as intended.
Reviewing and Updating Plans
It’s important to remember that estate planning isn’t a one-and-done event. Changes in your life—births, deaths, divorces, marriages, new business ventures—might demand a revision of your documents. We urge clients to revisit their estate plans every few years or after significant life events.
If you rely on a will, you might need a codicil or a full rewrite if your intentions shift drastically. If you rely on a trust, you might need to adjust the trust’s terms or add new assets. Whenever you update your plan, you can verify that the documents meet current Texas law and reflect your true wishes.
Deciding Factors
Given the differences between wills and trusts, how do you decide which route suits your estate planning in Texas?
Estate Details: A large, complicated estate with varied assets might benefit from a trust for smoother management.
Desire for Privacy: If keeping your distributions out of the public record matters to you, a trust is appealing.
Probate Concerns: Wills go through probate, which can be time-consuming, while a trust might streamline the process.
Ongoing Control: If you want to place conditions on how heirs receive property, a trust offers more possibilities.
Budget and Simplicity: A will is typically simpler and less expensive to set up. For those with fewer assets, it may be sufficient.
Many families ultimately rely on both—a will that covers any assets not placed in trust and addresses guardianship issues, plus a trust that handles major assets or special instructions. This combination can offer broad coverage without leaving any property unaccounted for.
Contact Us
We at Baker & Baker in Corpus Christi, Texas, guide clients through the ins and outs of estate planning, helping them choose between wills, trusts, or a combination of both.
By exploring how wills and trusts operate, funding a trust properly, and understanding the special rules Texas imposes, you can craft an estate plan that suits your life’s goals. Reach out to us today.
