What is a Trust and How is it Different from a Will?

A trust is a legal arrangement that allows you to set aside assets like property, bank accounts, or investments for specific people or purposes. Unlike a will, which only takes effect after you pass away, some trusts (like revocable living trusts) can be used during your lifetime to manage your estate. In a trust, you name a trustee to manage the assets and follow the instructions you've set for when and how those assets are used. Trusts can offer privacy, avoid probate, and in some cases, provide protection for your assets from certain taxes or long-term care costs.

There are many types of trusts used in estate planning. A revocable living trust is a flexible option that allows you to maintain control over your assets while you're alive and streamline the transfer of property after death. A family trust can help keep assets within the family and reduce conflict among beneficiaries. Medicaid asset protection trusts are more specialized and can help protect your home or savings if you need long-term care, but they require careful planning well in advance. A testamentary trust, on the other hand, is created through your will and only goes into effect after your death. A testamentary trust is often used to manage inheritances for minor children or dependents with special needs.

While trusts can be powerful estate planning tools, they aren’t right for everyone and have some significant limitations. They can be more complex and expensive to set up than a will, and not all assets belong in a trust. Some types of trusts don’t protect your property from creditors or Medicaid unless specific rules are followed. It’s also a common misconception that creating a trust means you don’t need a will. You usually still need will to cover any assets that weren’t transferred into the trust. At Dale & Van Horn Law in Helena, Montana, we help clients understand their options and build estate plans that reflect their goals and values. Whether you’re considering a trust, a will, or both, we can guide you through your choices and help you make a clear, effective plan.

Make an appointment to talk to one of our attorneys today and learn more about your options.