The Difference Between a Will and a Trust in Colorado

Estate planning can seem overwhelming, and every family’s needs are different. The most basic planning documents are a last will and testament and some form of trust, and many plans use both.

Knowing how each one works, and where the common generalizations break down, helps you decide what your plan needs.

Understanding a Last Will and Testament

A will describes how you want your property distributed after your death. It can also name a guardian for minor children, appoint a personal representative to administer the estate, and set when and how beneficiaries receive their inheritances.

A will governs only property that passes through your estate. Accounts with a named beneficiary, jointly owned property with survivorship, and assets held in a trust pass outside the will, so the will and those designations need to agree. How to pass on the family home shows how that plays out for real estate.

Understanding Trusts

A trust is an arrangement in which a trustee holds property for the benefit of beneficiaries under the terms the creator, called the settlor, sets. Trusts can be revocable or irrevocable, and there are many specialized types, such as special needs trusts for a child with a disability.

Most people comparing a will and a trust are thinking of a revocable living trust. You usually serve as your own trustee during life, keep full control, and can change or revoke it, and a successor trustee takes over at incapacity or death.

Differences Between a Will and a Trust

Effective Date

A will takes effect only at death. A living trust can operate as soon as it is signed and funded, which lets it manage your assets if you become incapacitated.

Not every trust starts immediately, though. A testamentary trust is created by a will and comes into existence only after death, through the probate of that will.

Probate

A will is administered through probate, the court process that validates it, pays debts, and distributes property; that is also where a will can be contested. Assets properly titled in a living trust pass under the trust’s terms without probate.

The key word is properly. A trust avoids probate only for assets actually transferred into it, and anything left outside may still require probate. A pour-over will often moves those assets into the trust at death, and a testamentary trust goes through probate by definition.

Privacy

A will filed in probate becomes part of the court record. A trust is generally not filed with a court, which gives more privacy about who receives what.

That privacy has limits. Once a trust becomes irrevocable, including at the settlor’s death, the trustee must notify the qualified beneficiaries of the trust’s existence within 60 days.¹ On request, each one receives the parts of the trust that affect their interest, and a trust can become public if it is litigated.

Creditors and Taxes

A revocable trust does not shield assets from your creditors. During your life, property in a revocable trust is subject to your creditors’ claims, and after death it remains subject to claims as the statute provides.²

A revocable trust also does not, by itself, reduce estate tax, because you still own the assets for tax purposes. Certain irrevocable trusts can affect taxes, but they require giving up control and careful planning.

Whether a will, a trust, or both fits depends on what you own, how it is titled, and who you need to provide for. Johnson Law Group offers a no-pressure consultation to review that with you, so schedule a consultation and bring a list of your accounts.

What Is Better, a Will or a Trust?

Neither is better in every case. A will is simpler and less expensive to create, and it is the most common place for minor children.

A living trust costs more to set up and requires retitling assets, but it can avoid probate for those assets, manage property during incapacity, and set detailed terms for beneficiaries. Families with real estate in more than one state, a blended family, or a beneficiary who should not receive assets outright often benefit from one.

Can You Have Both?

Yes, and most trust-based plans include both. The trust holds and distributes the main assets, while a pour-over will catches anything left outside and names a guardian for minor children.

Families with children from a prior marriage often need that combination most. Second marriages and estate planning explains why.

Contact an Estate Planning Attorney

A will and a trust each do something the other cannot, and the right plan coordinates them with your beneficiary designations and titles. Johnson Law Group is here to help.

The attorneys at Johnson Law Group help clients build plans with wills, trusts, and directives and will give you a clear read on what yours needs. Schedule a free consultation through our Colorado offices, and we will serve as your North Star from here.

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