Living Trust vs Will: What Each One Does, What Each One Skips, and When People Use Both

A will and a revocable living trust do different jobs. A will (opens in a new tab) states who should receive property that goes through probate, names an executor, and can nominate guardians for minor children. A revocable living trust holds property during your life and directs how that property is managed and distributed, often without probate for property that was actually transferred into the trust. A trust does not control retirement accounts, life insurance, joint property, or payable-on-death accounts just because it exists. Many plans use both a funded trust and a pour-over will, and the controlling rules vary by state.

What does a will do?

A will is a written document that says how your probate property should be distributed after you die. It can name an executor (called a personal representative in some states), nominate guardians for minor children where state law allows, and direct who receives the property the will covers. TexasLawHelp explains in Spanish why a will matters (opens in a new tab), including the guardian nomination.

A will does not generally control several kinds of property. Under IRS guidance (opens in a new tab), assets with a beneficiary designation generally pass to the named beneficiary instead of under the will. That list usually includes:

• Retirement accounts with a named beneficiary.
• Life insurance proceeds payable to a named beneficiary.
• Payable-on-death and transfer-on-death accounts.
• Jointly owned property that passes to the surviving owner.
• Property already owned by a trust.

The exact effect depends on your state's law and on how each asset is titled or which beneficiary form is on file.

What does a revocable living trust do?

A revocable living trust is created during the settlor's life and can generally be changed or revoked under its terms and state law. The settlor creates the trust and puts property into it. The trustee holds and manages that property. The beneficiaries receive distributions or other benefits under the trust's terms. Texas Health and Human Services lists funding, trustees, trustors, beneficiaries and revocability (opens in a new tab) as the central trust elements, and the Texas Property Code defines these terms in Chapter 111 (opens in a new tab).

One person can fill more than one role. A settlor may serve as trustee while alive, and a successor trustee can manage the trust property if the settlor becomes incapacitated or dies. That lifetime management is one reason people compare a trust with a will, which does nothing until death. The trust controls only property that has been transferred to it or is otherwise held by it.

Which assets go through probate?

Probate generally covers property that passes under a will or under intestacy law and that falls within the court's authority. Property titled in a properly funded living trust is generally administered by the trustee instead of passing under the will. Beneficiary-designated, jointly owned and payable-on-death property can also pass outside probate, as the ABA's overview of probate (opens in a new tab) explains.

Funding is the step that decides how much a trust accomplishes. Signing a trust document does not by itself move ownership of a house, a bank account or a brokerage account into the trust. The transfer method varies by asset and by state, and it can involve a new deed, retitled accounts, assignments or updated beneficiary forms. For a closer look at the court process itself, see our guides on how long probate takes and the Texas probate process.

Why do people use both?

Some assets never get transferred into the trust, whether by oversight or because they were acquired later. A pour-over will directs probate assets still in the decedent's name into an existing living trust after death. The State Bar of Texas (opens in a new tab) describes the pour-over will as covering directly held assets that pass to the trust after death.

The pour-over will does not make those assets skip probate. They may pass through probate first and then move into the trust under the pour-over provision. A will can also carry the guardian nomination for minor children, where state law permits. That is why a funded trust and a pour-over will are often paired. Without a will, state intestacy law decides who inherits; see our guide to dying without a will in Texas.

What are the Texas formalities?

Texas sets separate requirements for wills and for trusts.

For a will, Texas Estates Code §251.051 (opens in a new tab) requires a written will signed by the testator, or by another person in the testator's presence and at the testator's direction, with at least two witnesses who are at least 14 years old. A will can also be made self-proved through the affidavit procedures in Estates Code §§251.101 through 251.107 (opens in a new tab), including the simultaneous execution procedure in §251.1045 (opens in a new tab). A Texas will can be valid without being self-proved, but self-proving affects how the will is proved at probate.

For a trust, Texas Property Code §112.001 (opens in a new tab) lists the methods of creating a trust, and §112.002 (opens in a new tab) requires the settlor to manifest an intention to create one. Under §112.004 (opens in a new tab), a trust involving real or personal property generally needs written evidence of its terms signed by the settlor or an authorized agent. Section 112.005 (opens in a new tab) requires trust property, and §112.006 (opens in a new tab) allows additions to an existing trust unless the trust terms restrict them or the trustee finds them unacceptable. Funding a Texas trust is a separate step from signing the trust instrument.

How do California and New York differ?

Each state writes its own rules, so a will that follows one state's formalities is not automatically judged by another's. Two examples show how the signing rules differ.

In California, Probate Code §6110 (opens in a new tab) generally requires a written will signed by the testator or an authorized person, and §6113 (opens in a new tab) recognizes certain executions that comply with the law of another place or the testator's domicile. In New York, EPTL §3-2.1 (opens in a new tab) requires a written will, the testator's signature, and a declaration that the instrument is the will. Trust creation, revocation, funding, homestead treatment and probate effects also differ by state, so these examples are not national rules.

What happens to a home and to retirement accounts?

A home can be held in a trust, but homestead, recording, tax, probate and Medicaid rules may apply separately. Texas HHS has specific Medicaid treatment for homes in revocable trusts (opens in a new tab).

Retirement accounts work differently. The account itself generally stays governed by the plan or IRA agreement and its beneficiary designation. The IRS (opens in a new tab) states that the owner designates the beneficiary under plan procedures. A trust can be named as a beneficiary in some circumstances, but that is different from retitling the account into the trust. Vehicles vary by state; TexasLawHelp describes beneficiary-designation procedures (opens in a new tab) for certain Texas vehicles, which may replace trust retitling.

Does a living trust protect a house from Medicaid or nursing-home costs?

Federal law generally says no. Under 42 U.S.C. §1396p(d)(3)(A) (opens in a new tab), for a revocable trust established with an individual's assets, the trust corpus is treated as resources available to the individual, payments to or for the individual are income, and other payments may be treated as asset transfers. Section 1396p(c)(1)(B) sets a 60-month look-back period for trust payments and other asset disposals the statute covers, and §1396p(c)(2) lists exceptions involving certain spouses, children, disabled individuals, returned assets, fair market value, and transfers made for purposes other than Medicaid qualification.

Texas HHS policy, revised December 1, 2009, says a home placed in a revocable or living trust loses the homestead exclusion (opens in a new tab) and becomes a countable resource under the cited policy. Texas HHS also says that making a revocable trust irrevocable while making payments unavailable to the person is a transfer of assets subject to a 60-month look-back (opens in a new tab). For Supplemental Security Income, SSA's POMS (opens in a new tab) treats the entire corpus of a revocable trust created with the person's assets as a resource, though SSI and Medicaid are separate programs.

None of this means a nursing home automatically takes a house. It means that trust ownership does not by itself remove Medicaid countability or the transfer rules. The state Medicaid agency is the place to confirm how its rules apply.

What does a trust cost?

Costs fall into several groups, and they come at different times. The ABA (opens in a new tab) states that estate-planning professionals generally charge by the hour and that the total depends on the work involved. The FTC (opens in a new tab) explains that lawyers may use hourly or flat-fee arrangements and advises getting the fee agreement in writing.

The ABA's living-trust brochure (opens in a new tab) lists possible downsides: setup expense, the work of retitling assets, ongoing trustee administration, possible trustee pay, transfer taxes or recording fees depending on the jurisdiction, and tax filings that probate avoidance does not remove. It adds that assets left outside the trust may still require probate and that a trust may not produce net savings over probate. Asking a lawyer for a written fee agreement that separates drafting, funding, recording, updates and administration charges makes those items easier to compare.

A checklist for comparing the two

Because both documents depend on state law and on how each asset is held, a short list helps:

• Identify the state whose law applies.
• List real estate, bank and brokerage accounts, businesses, vehicles, retirement accounts, insurance and digital assets.
• Record how each asset is titled and each beneficiary designation.
• Identify the proposed executor, trustee, successor trustee and guardians.
• Sign the will and the trust under the applicable state requirements.
• Retitle the assets meant to belong to the trust, then review deeds, account registrations and beneficiary forms.
• Keep a pour-over will for assets left outside the trust.
• Recheck the plan after marriage, divorce, a birth, a death, a move, major asset changes or incapacity.
• For Medicaid questions, use federal law and the state Medicaid agency.

Spanish-speaking readers will find the terms in TexasLawHelp's wills, estate planning and probate page (opens in a new tab): testamento for will, fideicomiso en vida for living trust, albacea for executor, tutela for guardianship, and legalización del testamento for probate.

Frequently asked questions

These questions come up often once the basics are clear.

Do I still need a will if I have a living trust?

Many plans pair the trust with a pour-over will. The will addresses property that was not transferred into the trust and can nominate guardians where state law permits.

Does a will control a retirement account?

Usually not when the account has a valid beneficiary designation. The plan's designation and federal distribution rules generally decide who is paid.

What happens to a bank account that stays outside the trust?

It remains in the owner's name unless a beneficiary designation or joint ownership says otherwise. If it passes under a pour-over will, it may go through probate before reaching the trust.

Does a trust only make sense for wealthy families?

Not necessarily. The State Bar of Texas describes revocable trusts as potentially useful beyond complex tax planning, but usefulness and cost depend on the estate and the state's procedures.

Next step

If a trust, a will or both fit your situation, a lawyer in your state can review how your assets are titled and which formalities apply. You can find estate planning and probate lawyers in the Counselado directory, starting with Texas.