The most common question I get asked in our Mutual Interview is, “What’s the difference between wills and trusts?” The answer is based on the way each gets treated while you’re living and after you die. Whether you choose one or the other depends on your goals for your plan.

Present and Future

Perhaps the most fundamental difference between a will and a trust is the date their terms go into effect.

When you sign a Last Will and Testament, you are writing down your final wishes for your property. Wills use terms like “residue” and “remainder” in part because we often don’t know what property you will own at your death, so it’s easier to say “everything else that I own.”

As a final statement of your intentions, a will only takes effect upon your death. Before you pass away, none of the terms of your will have any force. A trust is different from a will because a trust is an agreement between two people: the grantor and the trustee.

When you create a trust, you (the grantor) are asking the trustee to take control of specific property and manage it for a third party called the beneficiary. With a Revocable Living Trust (the most common type), you play all three roles: grantor, trustee and beneficiary; but the terms in the trust document are effective immediately.

The functional difference between the two documents means you can use a Revocable Living Trust to lay out instructions for managing your property in the event you are incapacitated. A will doesn’t provide these same protections.


Another big difference between a will and a trust is the person who is in charge of implementing them. When you create a will, you designate an Executor who must ensure that your wishes are followed. In most cases, the executor must file the will with the probate court, notifies your heirs and beneficiaries, and collects your property and pays your last debts. The Executor is someone you designate before your death and is often not aware of their role until after you pass away.

As I mentioned above, a trust is managed by a trustee. At your death, the trustee’s tasks are similar to an executor’s in some ways, but they also play a very different role. A trustee is usually given the option to seek court supervision over specific actions, but typically is not required to do so. They are also already in control of any property you placed in the trust before you died, so they don’t have to collect anything.

Your trustee will work with your executor to make sure your debts are paid and necessary tax returns are filed, but will only pay out assets of your trust if your probate estate doesn’t have enough money to cover everything. If you don’t have an executor, your trustee will handle those tasks alone.

Both executors and trustees are known as fiduciaries which means they must be responsible with your property once it comes into their control. They must account for every receipt and disbursement. They must treat each beneficiary equally; they cannot allow one beneficiary to benefit more than another.

Wills and Trusts: Judging an Asset by Its Title

This difference is fundamental to the nature of wills and trusts. I’ve already referred to your “probate estate.” The probate estate is created by your will and includes everything you own in your personal name at your death. It does not include assets titled in the name of your trust.

A trust, on the other hand, must have assets transferred into it in order to be effective. The trust will only hold those assets you transfer into it. That transfer can be done before death by changing title or it can occur after you pass away through beneficiary designations or even by designating your trust as a beneficiary under your will. The process of transferring assets to your trust is called “funding.”

One of the biggest problems people encounter when they create a trust is the proper funding of that trust. Many attorneys do not help with the funding of the trusts they draft, making the trust completely useless. If you are concerned about whether your trust is funded, check with your attorney to see if they completed any funding tasks.

Speaking of Judges…

As indicated above, the executor of your estate is designated in your will and must file the will with the probate court. Without submitting the will to court supervision after your death, the Executor will be unable to access your assets and take action on your behalf. The probate process in Iowa takes a long time, typically lasting for a minimum of six months; it is not uncommon for an estate to be open for 18 months or more.

One alternative to probate is the use of a Revocable Living Trust. The terms of such a trust are binding on the trustee from the moment they take over management of the trust assets; no court orders are required. However, if a trustee believes it will be in the best interest of the beneficiaries or if they can’t decide on the best course of action, they can ask a judge to rule on that specific question without submitting the whole trust to court reporting. Because there is no requirement of a probate proceeding,

Wills and Trusts: Prying Eyes

Because probate is a judicial proceeding, the documents filed in an Iowa probate action are public record. They show up in abstracts of title, and they can be accessed by anyone with a computer, an internet connection, and a last name. Bank balances, life insurance proceeds, retirement savings, and the list of beneficiaries – even minors – are all available for anyone to see.

With a trust, only those items that need court intervention are identified and listed for the public to see. Your financial assets are kept private. Without a court filing, the only public proof that a trust exists is the deeds showing title to your real estate.

The privacy you get from a revocable trust is further enhanced by using a Certificate of Trust which is an affidavit listing the name and date of the trust, the tax identification number of the trust, and any essential information for the person you are giving the certificate to. The document is not recorded and can be provided to your bank, life insurance company, or other third party in lieu of providing a full copy of the trust.

Bonus: Cost Analysis

Now you know five of the many differences between wills and trusts. Creating a revocable living trust costs more up front while a will can be created for a relatively small investment, essentially passing the cost on to your children. However, you can see that managing a probate estate under a will requires reporting everything to a court for approval which can take a long time and results in court costs. On the flip-side, administering a trust, while still a lot of work, is a much more relaxed process. Court supervision is optional which reduces or eliminates court costs. Court supervision increases the amount of work needed by the attorney for the executor or trustee, which increases the attorney fees as well.