What’s the Difference Between a Will and a Trust?

One of the most common conversations we have with clients at Moneybox Wills & Trusts starts with a simple question:

“Do I need a Trust?”

The confusion is completely understandable. Wills and Trusts are often talked about together, sometimes interchangeably, and much of the information online oversimplifies the differences. As a result, many people either assume a Will is enough when it may not be, or believe trusts are only for the very wealthy.

In reality, Wills and Trusts do very different jobs. Understanding the difference between a Will and a Trust, how each works and how they can work together will help you to decide what is best for you and your family.

In this article, we explain:

• What is a Will
• What is a Trust
• How Wills and Trusts differ
• How Trusts can be included within Wills
• When a Will and a lifetime Trust may work alongside each other

What Is a Will?

A Will is simply a legal document that sets out what should happen to your estate when you die. It allows you to decide who inherits your assets, who will deal with your estate (your executors), and who should care for minor children if applicable.

A Will takes effect on death. Until then, it offers no protection over your assets during your lifetime. While a Will is the cornerstone of estate planning, it does have many limitations.

For example, a basic Will cannot control what beneficiaries do with their inheritance once they receive it. It also does not protect assets from risks such as remarriage, divorce, bankruptcy, or care fees for a surviving spouse after your death.

Lets say a legacy is left to a person who may not manage the funds responsibly. With a basic Will, the testator (person making a Will) cannot influence how the funds are managed. Or if an estate is left to a spouse, that spouse may remarry, passing the estate outside of the original family, or they need long term care in the future, eroding the estate and reducing what is left for children.

This does not mean a Will is ineffective. Everyone should have one, regardless of their net worth. However, it is important to understand that a simple Will only answers the question “Who gets what?” not always “How, when, or under what conditions?”

What Is a Trust?

A Trust is not a document in the same way a Will is. Instead, it is a legal structure that holds assets and control how they are used.

Trusts are a very broad subject, with many different variations. However, most family and estate planning trusts fall into two main structural categories:

• Discretionary Trust
• Interest in Possession Trust (often called life interest trusts)

Other types of trust often sit within or alongside these two broad structures.

When a Trust is created, assets are placed under the control of trustees. The trustees must manage those assets according to a set of rules, for the benefit of one or more beneficiaries.

Unlike a Will, a Trust can operate during your lifetime, after your death, or both. Its main purpose is to provide control, protection, and flexibility over assets. Whereas a Will just passes something to somebody.

In simple terms, if a Will is an instruction that takes effect when you die, a Trust is a framework that governs how assets are looked after or passed on over time.

In a lot of circumstances, a Will is absolutely fine in this way. If there are no reasons to control or manage an asset, a Trust can be an unnecessary complication.

For others, the control and flexibility of a Trust is essential.

How Do a Will and a Trust Differ?

Although Wills and Trusts are often mentioned together, they are not alternatives to one another. They perform different roles within estate planning.

Many clients who come to us will say “I have been told I need a Trust”

While It is unlikely they need a Trust, our roll is to explore with them how using Trusts may benefit them over just a simple Will.

A Will is primarily about distribution. It comes into force only on death and directs where assets should go. A trust, on the other hand, is about management and control. It can restrict access to assets, protect them from certain risks, and allow decisions to be made over time rather than all at once.

Another key difference is timing. A Will does nothing until you die. A trust may already be operating while you are alive, which can be crucial in certain family or financial situations.

Understanding this distinction helps explain why families use both.

Wills That Include Trusts

One important point that often gets overlooked is that many professionally drafted Wills already include Trusts.

In these cases, the Trust is created by the Will itself and comes into effect after death. The Will sets out the rules of the Trust and appoints trustees to manage it.

Common examples include Trusts for children who are under a certain age, Trusts that allow a surviving spouse to live in the family home while protecting the inheritance for children (life interest trusts), or Trusts designed to add flexibility and protection for vulnerable family members (Discretionary trusts).

This is why estate planning is rarely about choosing a Will or a Trust. Very often, it is about deciding which Trusts, if any, your Will should include.

Wills Alongside Lifetime Trusts

There is another scenario that causes confusion, and that is where a Will operates alongside a separate lifetime Trust.

A lifetime Trust is set up during your lifetime and exists independently of your Will. Assets placed into a lifetime Trust do not pass under the terms of your Will, because they are no longer owned by you personally.

In these situations, the Will and the lifetime Trust must work together. The Will deals with assets that remain in your estate, while the Trust governs assets that have already been placed into the Trust structure.

For example, a person may transfer their property into a family Trust during their lifetime and their Will would sit along side that to distribute the rest of their estate.

Lifetime Trusts are most beneficial for families who wish to remove assets from their estate while retaining some control, sometimes for a specific purpose or do not want to gift assets directly to their children at that time.

When Might Having Both Be Beneficial?

Not everyone needs a lifetime Trust. However, there are situations where a simple Will alone may not be enough.

For example, clients in second marriages often want to ensure a surviving spouse can live in the property, while also protecting children’s inheritance. Others are concerned about safeguarding assets for vulnerable beneficiaries, or about protecting family wealth over the long term.

In higher-value estates, lifetime Trusts may also form part of inheritance tax planning, provided they are set up carefully and with professional advice. Families must be aware of HMRC rules when gifting assets to trust that they may wish to benefit from personally.

In these circumstances, a Will and a lifetime Trust working together can offer a level of control and reassurance that a Will on its own cannot.

Another example may be families who have surplus funds and need to reduce their estate for Inheritance Tax purposes. They may choose a lifetime Trust so that they can gift away assets but want those funds to be used for property purchases, setting up a business or simply held until the appropriate time.

Final Thoughts

A Will is essential for everyone, regardless of the size of their estate. Trusts are not essential for everyone, but they can be extremely valuable in the right circumstances.

The key is understanding that Wills and Trusts are not competing options. Each have their own merits and should be looked at as tools that can be used individually or together, depending on your family, your assets, and your long-term goals.

Think of it this way, if you want somebody to have something and don’t mind what happens to that legacy after your death, a simple Will is fine. However, If you want to control or influence what happens with that legacy then a Trust structure may be better for you.

If you are unsure whether a simple Will is enough, or whether a Trust could benefit your situation, professional advice can make all the difference.

At Moneybox Wills & Trusts, we help families across Macclesfield and Cheshire put clear, practical plans in place. If you would like to understand your options, arrange a free initial consultation to help you decide the right approach for you and your family.