Wills vs. Trusts – What’s the Difference?
At the surface, wills and trusts may seem similar – and maybe even interchangeable. If you dig deeper, though, you’ll find that the two have a few important differences that could make one a better fit for you.
Contents and Instructions
The first key difference between wills and trusts is that wills only take effect after a person’s death, whereas trusts can be implemented both during a person’s life and after their death. The contents of a trust can also protect a person during incapacity. Therefore, a trust can cover everything from instructions for distributing property (after death), to how end-of-life care should be handled, to who the designated guardians are for children or pets. Wills, on the other hand, mainly cover the manner in which assets should be distributed by an Executor.
Degree of Flexibility in Terms
By design, most wills are inflexible: While the contents of a will can be modified, the process can be strict and complicated. For trusts, the degree of flexibility depends on the type of trust – revocable trusts, for example, can be more easily modified after they are created, but irrevocable trusts can only be altered under certain conditions.
Complexity of Implementation
A major disadvantage to wills, for many people, is that they must be filed with a probate court – the court that oversees the distributi on of an individual’s assets. The probate process can be long and makes all information within the will publicly accessible. In contrast, trusts are effective immediately upon signing and funding – once a trust’s assets are transferred to a trustee, the trustee is required to manage it according to the terms. In addition, a trust keeps the information within it private from the general public.
Tax Benefits
Whenever you’re passing assets above a certain amount onto your heirs ($13.99 million for an individual in 2025), you run the risk of incurring estate tax. Unlike a will, a trust can help you mitigate these estate taxes. For example, putting assets into an irrevocable trust can remove them from your taxable estate, therefore lowering your estate tax bill.
Protection From Creditors
During the probate process, the decedent’s debts and liabilities typically must be settled first – so a judge can order that creditors be paid from the estate before any distributions are made to beneficiaries. Irrevocable trusts, on the other hand, can help protect assets from creditors.
When considering wills and trusts, remember that the two are not mutually exclusive. While wills can be effective for those with children or dependents, trusts are helpful for those who want to distribute assets while they’re still alive or keep their information private after death. An individual who fits into multiple categories might benefit from both documents.
To discuss which (or both) of these options could be the most effective for you and your family, reach out to your attorney and work together with your Baird Financial Advisor team.
| Will | Irrevocable Trust | Revocable Trust | |
| Contents | Provisions for distributing assets, funeral arrangements, end-of-life care, guardianship | Provisions for how assets should be distributed to a beneficiary over time | Provisions for how assets should be distributed to a beneficiary over time |
| Implementation Process | Must go through probate court; only takes affect after decedent’s death | No probate; takes affect after signing and funding | No probate; takes affect after signing and funding |
| Flexibility | Fixed and inflexible; strict and complicated process to modify | Very limited ability to modify after signing and funding | Can be modified |
| Tax Benefits | Does not avoid estate taxes | Can reduce taxable estate | Does not avoid estate taxes |
| Protection from Creditors | Does not protect from creditors | Protects assets from creditors | Does not protect from creditors |
Baird Trust Company (“Baird Trust”), a Kentucky state chartered trust company, is owned by Baird Financial Corporation (“BFC”). It is affiliated with Robert W. Baird & Co. Incorporated (“Baird”), (an SEC-registered broker-dealer and investment advisor), and other operating businesses owned by BFC. Neither Baird nor Baird Trust provide individualized tax, accounting or legal advice. Please consult your accountant or attorney for personal tax, accounting or legal advice.
Contact the Baird Trust team or find a location near you.
