December 1, 2025

When our clients are planning for the future, one common question arises: should you set up an estate plan or a trust?

There’s a lot of confusion between the two, and how they can help you plan for the future. We’ll walk through what each one is, how they can protect your assets, and when you should consider including them in your estate planning. More than 50% of Americans don’t have any estate planning documents, with procrastination and unknown information being some of the most common reasons why.

What is an Estate?

An estate is the collection of assets and property owned by an individual after their death. It can include everything from bank accounts and investments to real estate and other valuable possessions.

The purpose of an estate is to handle your affairs in an orderly manner and pass these assets on to your beneficiaries. When you pass away, all of your assets become what’s known as estate property. At this point, your estate goes through estate administration, which is also known as probate. During this process:

• Your will (if you have one) will be validated by the court
• A personal representative (often referred to as an executor) will be appointed
• All your bills, taxes, and other outstanding debts will be paid
• Remaining assets will be distributed as outlined in your will or in accordance with the law if you do not have a will.

While not always a negative thing, probate can be a complicated process, and can take months or even years to complete. Having a comprehensive estate plan in place can ease this process, protect your legacy, and pass property onto your beneficiaries with as much of your assets intact as possible.

What is a Trust?

At its most basic definition, a trust is a legal document that outlines how someone wants their assets to be managed and passed down. More specifically, it creates a relationship between three entities:

• Grantor: the person who creates the trust
• Trustee: the person that manages assets assigned to the trust
• Beneficiary: the person(s) that receives assets from the trust

Keep in mind that each of these people can in fact be more than one person, an organization, or other entity. For example, parents often create trusts for their children in case something happens to them before their children are able to provide for themselves. In this case there could be two grantors, and multiple beneficiaries. They may also choose several people, such as siblings or close friends, to be the trustees.

Common Types of Trusts

There are several types of trusts, including:

• Revocable Living trust: created by a grantor within their lifetime to hold and manage assets. In this case, the grantor may also be the trustee, but often a successor trustee is named in the case the grantor dies or becomes incapacitated. A grantor can also modify the terms of the trust at any time during their lives.
• Testamentary trust: a trust that is established through a will, and only takes effect upon the grantor’s death.
• Irrevocable trust: a trust that cannot be altered, amended, or dissolved once created except under very limited circumstances. An irrevocable trust can be used to remove assets from the grantor’s taxable estate. These types of trusts can also be used for individuals doing pre-planning for Medicaid asset protection as part of their long term care plan in addition to other uses.

• Supplemental needs trust: a trust that is designed to provide for a beneficiary with disabilities. Often designed to pass on assets without jeopardizing the beneficiary’s eligibility for government benefits.

• Charitable trust: established to benefit a charitable organization or philanthropic purpose. These trusts often provide tax advantages for the grantor’s estate.

• Qualified terminable interest property trust: allows the grantor to provide financial support to a surviving spouse while still maintaining specific assets or property for other beneficiaries. Often used in blended families to ensure assets are passed to specific beneficiaries.

• Generation-skipping trust: a trust that allows a grantor to pass assets to their grandchildren or subsequent descendants. This kind of trust can provide specific tax advantages to beneficiaries.

Estate vs Trust – Key Differences

Understanding the differences between an estate and a trust is an important part of your overall estate planning. Each serves unique roles in asset management and distribution, and the right choice often depends on individual goals, circumstances, and priorities. Here’s a breakdown of the main distinctions you should be aware of:

Timing and Creation

• Estate: An estate is opened only after a person’s death. Upon passing, all assets held solely by the deceased become part of their estate.
• Trust: A trust, on the other hand, can be created at any time during a person’s life or established upon their death.

Management and Administration

• Estate: An estate is managed by a personal representative. The personal representative works through the probate process, ensuring that debts and taxes are paid and assets are distributed according to the deceased’s wishes or state law if no will exists. The personal representative’s role ends when the estate assets are fully settled and distributed and the formal estate is closed.
• Trust: A trust is managed by a trustee, who has an ongoing role in managing trust assets and following the trust’s instructions for distributing them. Unlike estates, trusts can continue for years, giving trustees flexibility in managing assets long-term or for specific needs, like a beneficiary’s education or healthcare.

Privacy

• Estate: The probate process is public, meaning that details about the deceased’s assets, debts, and beneficiaries are accessible through public records. This can be a disadvantage for families who want more privacy about their financial matters.
• Trust: Trusts are generally private, as they avoid the probate process. This privacy means that trust details, asset distributions, and beneficiary information remain confidential, providing greater discretion for everyone involved.

Probate Process

• Estate: Since an estate must go through probate, the process can be costly and time-consuming. Probate involves court oversight, which can lead to delays, administrative costs, and legal fees.
• Trust: Some types of trusts, such as living or revocable trusts, can avoid the probate process. By doing so, these trusts help families reduce delays and administrative burdens, providing a streamlined and often quicker process. However, it is important to remember that trusts also have the trust administration process to deal with as well which can also take time depending on the terms of the trust.

Taxes and Expenses

• Estate: Estates incur the costs associated with probate, including attorney and court fees and possibly personal representative compensation.
• Trust: Trusts may offer tax advantages, depending on their type, and generally avoid probate-related expenses. Certain irrevocable trusts, for instance, can reduce tax liabilities for large estates, providing an additional layer of financial benefit. Although some attorney fees may still be incurred for assisting with trust administration.

Deciding Which Option is Right for You: Probate Estate or Trust?

Choosing between a probate estate or a trust depends on your individual circumstances, financial goals, and your family’s needs.

Personal Circumstances

Consider your age, the complexity of the assets you own, family dynamics, and privacy preferences. Younger people with simple estates may not need a trust, whereas those with substantial assets or complex family situations might benefit from a more comprehensive approach.

Estate Planning Goals

Define your estate planning goals: How important is it to avoid probate, provide privacy, or maintain control over assets after your death? Understanding these and other priorities will help determine whether a trust, a probate estate, or a mix of both are best suited to meet your needs.

When to Use Both

In some cases, a combination of a probate estate with a testamentary trust makes the most sense. For example, a younger parent might use a testamentary trust to make sure their minor children have trustee oversight of their assets without having to deal with the extra steps of having to re-deed property during their lifetime. Consulting with an estate planning professional can help determine an ideal combination based on specific needs and circumstances.

How an Estate Planning Attorney Can Help

For over 70 years, BB&C has been a reliable estate planning partner for clients and their families in Indiana. Our experienced attorneys are experts in estate and trust planning and provide dedicated, high-quality legal assistance.

Creating an estate plan can be a daunting task, especially with the financial and legal obligations involved. If you need help understanding your options and coming up with a plan, contact BB&C today for a free consultation. Our team is here to guide you every step of the way.

Disclaimer: The information in this blog is intended for general purposes only. It does not constitute legal advice. Please consult an attorney for specific advice based on your unique circumstances.

Frequently Asked Questions about Estates and Trusts

What is an Estate?

An estate is the collection of assets and property owned by an individual after their death. It can include everything from bank accounts and investments to real estate and other valuable possessions. An estate helps handle your affairs in an orderly manner and pass assets on to your beneficiaries.

What Happens in the Probate Estate Process?

When you pass away, all of your assets go through estate administration, which is also known as probate. During this process, your will is validated by the court, an executor is appointed, outstanding debts are paid, and remaining assets are distributed as outlined in your will (or in accordance with the law if you don’t have a will).

How Does an Estate Plan Help?

While not always a negative thing, probate can be a complicated process and can take months or even years to complete. Having a comprehensive estate plan in place can ease this process, protect your legacy, and pass property onto your beneficiaries with as much of your assets intact as possible.

What is a Trust?

A trust is a legal document that outlines how someone wants their assets to be managed and passed down. It creates a relationship between the person who created the trust (grantor), the person who manages the assets assigned to the trust (trustee), and the person(s) who receive assets from the trust (beneficiary).

Do I Need a Trust in Indiana?

Estates must go through probate, which can be costly and time-consuming. Some types of trusts can avoid the probate process. Trusts can also offer tax advantages and generally avoid probate-related expenses. Additionally, unlike estates, trusts can continue for years, giving trustees flexibility in managing assets long-term or for specific needs, like a beneficiary’s education or healthcare.

What are Common Types of Trusts?

At its most basic definition, a trust is a legal document that outlines how someone wants their assets to be managed and passed down. There are several types of trusts, including:

• Revocable Living Trust
• Testamentary Trust
• Irrevocable Trust
• Supplemental Needs Trust
• Charitable Trust
• Qualified Terminable Interest Property Trust
• Generation-Skipping Trust

What is the Difference Between an Estate and a Trust?

Estates must go through probate, which can be costly and time-consuming. Some types of trusts can avoid the probate process. Trusts can also offer tax advantages and generally avoid probate-related expenses. Additionally, unlike estates, trusts can continue for years, giving trustees flexibility in managing assets long-term or for specific needs, like a beneficiary’s education or healthcare.

Should I Choose a Probate Estate or a Trust?

Choosing between a probate estate or a trust depends on your individual circumstances, financial goals, and your family’s needs. Consider your age, asset complexity, and estate planning goals. Consulting with an estate planning professional can help determine an ideal plan based on specific needs and circumstances.

Can I Create My Own Estate Plan?

Creating an estate plan can be a daunting task, especially with the financial and legal obligations involved. There are many decisions involved, and they can feel overwhelming. Consulting with an estate planning professional can help determine an ideal plan based on specific needs and circumstances.

What do Estate Planning Attorneys Do?

Consulting with an estate planning professional can help determine an ideal estate plan based on your specific needs and circumstances. Creating an estate plan can be a daunting task, especially with the financial and legal obligations involved. There are many decisions involved and they can feel overwhelming. Estate planning attorneys will walk with you through the process.