Many people view trust funds as tools to protect the wealth of the very rich or to provide their heirs. However, trust funds vary in complexity and purpose—preserving assets designated for charities, retirement funds, public works, and more.

Trust funds may be used by individuals, even some of modest means, who wish to set aside assets for specific purposes. 

For example:

  • Affluent, but not necessarily ultra-rich parents and grandparents create college trust funds to pay for children’s postsecondary education. 
  • To avoid potential family conflicts, widowed and divorced couples entering second marriages may use trust funds to hold property for children of their first marriages.

What is a Trust?

A Trust is a legal arrangement intended to ensure a person’s assets eventually go to specific beneficiaries. The main purpose of a trust is to transfer assets from one person to another. Trusts can hold different kinds of assets. Investment accounts, houses and cars are a few examples.

Why use a Trust? 

An advantage of a trust is that it usually avoids having your assets (and your heirs) go through probate when you die. Probate is a part of the court system tasked with deciding whether your will is valid (if you have a will) and then distributing your assets. That can take several months, and much of it is public record. Avoiding probate can save significant time and preserve estate privacy.

Setting up a Trust.

The person creating the trust, the Grantor, puts assets in the name of the trust and authorizes a third party, the Trustee, to administer those assets for the trust creator and the beneficiaries. A well-designed trust can help save time, paperwork and other headaches when settling an estate. In some cases, a trust can help reduce estate taxes beneficiaries have to pay when they inherit assets.

Will vs. Trust

While most people know of will’s and how they work, fewer know the differences between a will and a trust. These differences can be significant, from a ownership, taxation and execution standpoint.

A Will is a legal document that designates how to manage your assets upon your death. Distribution of an estate can include guardianship of minor children or pets, dole, property and assets out to beneficiaries, implement funeral arrangements and more.

See the table below for more differences between a will and a trust. If you have any questions, feel free to reach out to us at , we’d be happy to help.

Will Trust
Effective date After one’s death. Once signed and funded.
Protection during incapacity No. Yes.
Avoids probate? No. Yes.
Preserves privacy? No. Yes.
Provides guardianship for minor children? Yes. No.
Process and costs Straightforward process. Average cost ranges from $0 to $1,000, depending on the complexity and size of the estate and how it is created (DIY, online, via an attorney). More complex process, with more paperwork. Average cost for a simple trust is up to $1,500. Complex trusts have an average cost of around $3,000.
Contestability More likely to be successfully challenged. Less likely to be successfully challenged due to its ongoing nature.
Precedence Usually secondary to trusts. Generally take precedence over wills.
Tax benefits No.
  • Revocable trusts: No.
  • Irrevocable trusts: Yes.
Protection from creditors No.
  • Revocable trusts: No.
  • Irrevocable trusts: Yes.



This material is for informational purposes only and is not investment, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Triad Advisors, LLC does not provide tax or legal advice. For tax advice, consult your tax professional.