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Bottom Line Up Front

  • A will takes effect after someone’s passing, and a trust takes effect as soon as it’s funded.
  • Wills go through a probate process, but a trust doesn’t.
  • Depending on your life circumstances, goals and finances, you may need a will, a trust or both.

Time to Read

6 minutes

April 9, 2024

If you’re thinking about the future and how you can protect your property and those you love, it can be really comforting to know you have everything in place for them. But, where should you start?

First, you’ll need to decide what you want to do with what you’ll leave behind, and who should inherit it. Then, to ensure the smooth transfer of your money and property, you’ll need an estate plan. Two key documents most commonly used in estate planning are wills and trusts. But, what’s the difference, and do you need both? The answers depend on your circumstances and how large or complicated your estate is. 

What’s the Difference Between Wills and Trusts?

Although everyone should have a will, not everyone needs a trust. While they share some similarities, wills and trusts play distinct roles in ensuring your wishes are met.

A will is a legal document that says who you want to inherit your money and other possessions. It takes effect after your passing. In addition to naming who will receive your property, you can appoint an executor/personal representative to oversee the probate process, where the court supervises the identification of your assets, debt and inheritors. You can even name guardians for minor children. Some states use the term “executor,” and some use “personal representative,” but they perform the same function.

Your executor will be responsible for filing your will with the probate court, and the court will oversee the process to ensure your wishes are followed. If you don’t have a will, a probate court will make those decisions and divide your estate according to state law—which may or may not be in your family’s best interest.

And, one more thing to know: Property that’s owned jointly will automatically pass to the co-owner(s) and doesn’t need to be included in your will.

A trust is a more complex legal arrangement where you transfer ownership of assets to a trust account and can continue to add to it throughout your lifetime. It takes effect as soon as it’s funded. A trust can offer more flexibility than wills, allowing you to set conditions for distribution, protect assets for minor children until they become adults or even stagger when heirs receive money. It can also be set up to manage your assets for you if you become unable.

With a trust, your heirs can bypass the probate process altogether. You’ll appoint a trustee, who has a legal obligation to manage the trust in their best interests. But, it won’t be overseen by the probate court. Most trusts are created during the lifetime of their donors, often called a “grantor”. But, some people opt to include a direction in their will for a trust to be set up after they’ve passed.

Now, trusts can be expensive, with additional costs like fees for managing the trust and tax preparation. Typically, a trustee can charge between 1% and 2% of the assets in the trust. But, if you have minor or special needs children or your heirs don’t have strong financial skills, a trust may be worth the additional cost.

Here are a few side-by-side comparisons to help make things clearer.

Takes EffectUpon passingAfter Funding
FunctionDistributes assets after passingManages and distributes assets during life or after passing
ProbateAssets generally go through probate court, unless jointly owned or the estate is very smallAssets in the trust avoid probate
Privacy ConcernsContents are public (probate)Contents are generally private
Ongoing Management of AssetsNo. Assets are distributed according to the will by the executor/personal representativeYes (by the named trustee)
Names heirs, guardians for childrenYesYes
Names who receives your propertyYesYes
Protects assets until children become adultsNoYes
Can stagger when heirs receive moneyNoYes
Can manage your assets if you become unable to communicate or make your own financial decisionsNoYes

Can I Have Both a Will and a Trust?

Absolutely. It’s not a question of either/or. You should have a will. Whether you need a trust depends on your goals—do you want assets distributed as soon as possible, need them to be held until later or have conditions on when and how they can be received? Answering these questions may help you decide.

  1.  Are you looking to bypass the probate process?
  2.  Is your estate large enough or complex enough to justify management fees?
  3.  Do you want someone to manage your finances if you become unable? (This can be accomplished through a trust or with a power of attorney.)

How Can I Get Started?

You can consult an estate planning attorney or, if you’d prefer a more do-it-yourself approach, there are online templates you can choose, like those offered by our partner, Trust & Will. They’ll guide you through the process to customize your document(s). Plus, they offer prepaid legal services, if you want the best of both worlds.

Common Will and Trust Terms

Here are a few key terms you may see related to estates:

  1.  Assets: Something valuable like real estate, stocks and bonds, cash, automobiles and jewelry
  2.  Beneficiary: The person or entity inheriting assets
  3.  Estate: All the money and other property owned by the deceased person
  4.  Executor/Personal Representative: The person named in a will to distribute assets
  5.  Grantor/Settlor/Donor: Someone who creates the trust and transfers assets into it. Grantor may also be used to refer to anyone who contributes to a trust.
  6.  Guardian: A person or entity appointed to act on behalf of a child or for an adult who is unable to make their own decisions
  7.  Heir: Someone who can receive the property of a deceased person
  8.  Intestate: When someone passes without a will. In this case, state law will determine how assets are distributed.
  9.  Irrevocable Trust: A trust that can’t be changed or ended after it’s created
  10.  Principal: The assets transferred to a trust. This can be any combination of money, stock, real estate or other property.
  11.  Probate: The court process for settling a deceased person's estate
  12.  Revocable Trust: A trust that the grantor can change or cancel during their lifetime
  13.  Testator: The person signing the will. In the past, the term for women who signed a will was Testatrix.
  14.  Trustee: The person responsible for managing the assets in a trust according to its terms

How Can Navy Federal Investment Services Help?

Navy Federal can help you with estate planning and the creation of wills, trusts and their management. Need a trust or will updated? We can help with that, too. Visit to see how we may help you.

Next Steps Next Steps

  1. Do a simple analysis of your estate. Write down all your assets such as:
    • bank, retirement and investment accounts
    • life insurance policies
    • real estate, like your primary home and/or vacation property
    • personal property, like cars, collectibles and jewelry
    Make sure you also have a good picture of how much money you owe. Consider the financial skills of your spouse, life partner or heirs. Consider the needs of your children or other dependents you may have, like elderly parents. Use this as a starting point for determining whether you need just a will or both a will and a trust.
  2. Talk with a Navy Federal financial advisor. They can help you determine the types of estate planning services you may need. You can make an appointment by visiting our advisor locator page or by calling 1-877-221-8108, Mon. to Fri., 8 am to 8 pm ET.


Nondeposit investment and insurance products are offered through Navy Federal Financial Group, LLC, (NFFG) and through its subsidiary, Navy Federal Investment Services, LLC (NFIS), a member of FINRA/SIPC and an SEC registered investment advisory firm. Brokerage and advisory products are offered through NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of the credit union, are not offered, recommended, sanctioned, or encouraged by the federal government, and may involve investment risk, including possible loss of principal.  Trust and Will documents and services are made available to Navy Federal members through Trust & Will.  Navy Federal is in no way responsible for any products or services provided by or through Trust & Will or their affiliates, subsidiaries, and company partners. Navy Federal Financial Group enables this  program to be offered and is entitled to compensation from Trust & Will. Trust Services available through MEMBERS Trust Company. 1-855-358-7878.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.