Will vs Trust Explained in 8 Minutes (By an Estate Planning Lawyer)

If you clicked on this video, you're most likely trying to decide whether you need a will, a trust, or both. Now, after more than 3 decades as an estate planning attorney, I can tell you that not understanding the difference between these is the one thing I've watched cost so many families the most money and the most heartache. So in this video, I'm gonna break down how a will works, what a trust does differently from will, and which one your family needs if you want to stay out of probate and protect everything you own. So let's start with a will. What's a will? Because a lot of people get this wrong. A will is simply a document where you write down who you want to get everything once you die. So your house, your bank accounts, your car, all of it. On its own, a will sounds like it should be enough to protect your family, but it is not. A lot of people assume that having a will means their family avoids the courtroom and gets everything handled, but all a will does is leave a set of instructions for a court to follow, and that court process is called probate. If you've never heard the word probate, it's just the legal process where a court takes control of everything you owned and decides how it gets passed on. And going through probate is exactly what you're trying to spare your family from because it's slow, it's costly, and it's completely public. For a simple estate, probate usually takes 9 to 18 months. And during that whole time, your family, until the judge says so, they can't get the house, the bank accounts, or anything else that you left them. And on top of that, there are court costs and attorney's fees, and those usually run $5,000 to over $30,000, all coming straight out of what your family was supposed to inherit. Not to mention the fact that probate is a public court process from start to finish. This means that any neighbor, coworker, a stranger can walk into the courthouse and look up exactly what you owned, what it was worth, and who is going to get it. And this is a huge reason why I run a free live workshop that has helped hundreds and hundreds of families stay out of probate court. So if you want help getting your plan set up, I'll leave link at the top of the description where you can register. Okay, now let's keep going. What does a trust do differently? Okay, let's talk about that. Trust basically does the same job of deciding who gets what, except it never sends your family to court. So it skips almost every problem that we just talked about. Now, the kind of trust almost every family uses is called a revocable living trust, and it's just a document that holds everything you own while you're alive with you in full control the whole time. Word revocable just means You can change it, you can add to it, cancel it, whatever you want. So nothing about your day-to-day life changes. Now, the first big difference with the trust is that it directly prevents you from having to deal with probate court. When you create the trust, you name someone to take over the document the moment that you die, and that person is called your successor trustee, usually your spouse, and then maybe your kids or whoever you trust the most to handle things for the family because the trust already owns your house and your accounts. So there's nothing left for a court to take control of. Control of, so that person you name can hand everything to your family with a very reasonable amount of time, and your family stays out of the long court process entirely. It also keeps everything private since none of it goes through a courtroom, so your family's finances never become public like they would with a will. Second big difference: a trust is all about what happens while you're still alive as well. A will only does things after you die, meaning while you're alive, a will can't do a single thing for you. So let's say you have a stroke or you get diagnosed with dementia or you end up in a serious accident. You're still here, but you can't manage your own money anymore. With a will, your family simply cannot take over for you. They have to go to court and get a judge's permission to manage your money and make healthcare decisions for you right when they're dealing with that crisis. But with a trust, the successor trustee that you've already chosen can take over right away, pay your bills, handle your accounts, and manage everything without ever having gone to court, which obviously is much less of a headache. Now, difference 3, the one I think is the most important, and it's something a will cannot do. With a will, everything you leave your kids gets handed straight to them all at once. The moment everything clears the court process. And for a lot of families, that's the last thing you'd want, especially if your kids are young, not great with money yet, or leaving money straight to a child in the middle of a divorce where their ex could end up with half of it. With a trust, you get to decide exactly how and when you— your kids get that money instead of them getting it all at once. For example, you could release part of it when they turn 25 and then more at 30 and the rest at 35. You can tie it to milestones like college or buying their first home or starting a business, or you can keep it protected inside that trust where a lawsuit, creditor, or a divorce can never get to it. So which one is right for you. And by now you're probably wondering if you should just set up a trust and forget the will completely. Now, for everyone watching this, it isn't a choice between one or the other. If you own a home and you want to keep your family out of probate, a revocable living trust is the foundation of your plan, and it does the main work that we just went over. But you still need a will, a different kind of a will, because it does two specific jobs that a trust cannot. The first thing is that's where you name a guardian for your kids. That's the only person who could legally raise your kids if something happened to you both, you and your spouse. Your trust can pass all your money and property to your kids, but it can't decide who raises them. And if your will doesn't name a guardian, a judge will end up making that choice instead of you. That's not a decision you want to leave to a judge because your kid's gonna end up being raised by a relative that you never would've picked. Or stuck in the middle of your family fighting over who should raise them. And the second job a will does is it catches anything you forget to put into your trust. And there's a specific kind of will built just for that called a pour-over will. So even after you set up a trust, it's easy to pick up something new later and forget to put it in that trust, like a new investment account or a second home. So your pour-over will acts as a backstop. Now, somebody still has to take it to probate to put those things in your trust, but they find— they end up in your trust trust. Once that's finally over, they don't end up getting distributed according to what a court says. Now, there's one last thing I have to warn you about because it is the single biggest mistake I ever see, and it can make your entire trust absolutely worthless. That's setting up a trust document. The document itself doesn't do anything on its own because the trust won't legally own a thing until you move your assets into it. The way you bring that trust to life is called funding the trust, and that just means changing the name on your house, your accounts, and anything else you own from from your name into the trust name. And if you don't do this, your trust technically owns nothing. So when you pass away, everything you thought was protected has to go through probate, the exact thing you set up the trust to avoid. Now, if you want to make sure your own plan is built the right way, just click the first link in the description to sign up for my free workshop. I will walk you through the whole thing step by step so you'll know exactly how to set up your trust, exactly how to fund it the right way, and put together a complete plan that keeps your family out of probate for good. You can do all that in 30 to 60 days, even if you've never done anything before. So again, you can save your spot by clicking the first link below this video. And if you want to learn more about why you should probably avoid probate, then check out this video right over here where I explain the entire process from start to finish.