Trusts 101: What They Are and When You Need One
A trust isn't just for the wealthy — here's what it actually does, and how it's different from a will.
What Is a Trust?
A trust is a legal arrangement where you (the "grantor") place assets under the control of a trustee, who manages them according to your instructions — either for your own benefit during your lifetime, or for beneficiaries after you pass away. Unlike a will, which only takes effect after death, a trust can be active while you're still alive.
How Is a Trust Different From a Will?
This is the question most families ask first. A few key differences:
Timing: A will only takes effect after death. A trust can take effect immediately and manage assets during your lifetime, especially useful if you become incapacitated.
Probate: Assets in a properly funded trust typically avoid probate entirely, passing directly to beneficiaries. Assets distributed through a will generally go through probate first.
Privacy: Wills become part of the public probate record. Trusts generally remain private.
Control: A trust can specify conditions on how and when assets are distributed (e.g., a beneficiary receives funds at certain ages or milestones), offering more control than a will typically allows.
Common Types of Trusts
Revocable Living Trust: The most common type for individuals and families. You retain control and can change or dissolve it during your lifetime.
Irrevocable Trust: Cannot be easily changed once established, often used for specific tax or asset-protection purposes.
Special Needs Trust: Designed to provide for a beneficiary with a disability without affecting their eligibility for government benefits.
Who Actually Needs a Trust?
Contrary to popular belief, trusts aren't only for the wealthy. You might consider one if:
You want to avoid probate for your heirs
You own property in multiple states (probate would otherwise be required in each state)
You want more control over how and when beneficiaries receive assets
You have a family member with special needs who receives government benefits
You value privacy around your estate's distribution
What a Trust Doesn't Do
A trust only controls assets that have actually been transferred into it — a common and costly mistake is creating a trust but never "funding" it (retitling accounts and property into the trust's name). An unfunded trust provides none of its intended benefits.
Trust or Will — Or Both?
Most comprehensive estate plans use both. A trust handles specific assets efficiently, while a "pour-over will" catches anything not explicitly placed in the trust and directs it there upon death. An estate planning attorney can help determine the right combination for your specific situation.
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