Both wills and trusts allow people to dictate who will receive their assets after their passing. Trusts have the benefit of being confidential and do not have to go through the probate process. However, wills can be easier to understand and navigate, especially for smaller estates.
For these reasons, it may seem like estate planning is a this-or-that decision: trust or will. In reality, however, it is often a good idea to have both. Here’s why:
Which assets do trusts cover?
A revocable living trust controls only those assets that you transfer into it. For example, your home, bank accounts, and investment accounts only become trust assets if you transfer them from your name (John Smith) into the name of your trust (John Smith, Trustee of the John Smith Living Trust). Then, after your passing, your successor trustee can manage, sell, and distribute those trust assets without the involvement of the probate court.
At this point, you may think, sounds great. Who wouldn’t want to avoid probate court? I’ll get a trust rather than a will. But what happens if an asset gets left behind?
Why you may still need a will
A will can act as a safety net for the trust. How? Assets that you do not retitle in the name of the trust—either intentionally or accidentally—cannot be distributed by your trustee because they are not part of your trust; they remain part of your probate estate and can only be distributed according to the terms of a will or, if you die without a will, according to Minnesota’s intestacy laws. This means that even if you have a trust but no will, the State may distribute some of your property in ways that you never intended.
For this reason, many people with revocable living trusts also have what’s known as a pour-over will that instead of distributing your assets to individual people, distributes your assets to your trust.
Bear in mind that even if you properly execute a pour-over will, good trust funding still matters. If most of your assets never enter the trust, your estate may still require a full probate process, taking time and money.
In conclusion: Are wills necessary if you already have a trust?
Wills and trusts complement each other, and an effective trust-based estate plan is one that’s properly funded with trust assets and includes the safety net of a pour-over will, especially for people who also need to appoint a guardian for their minor children (something you cannot do within a trust document).