If you are starting an estate plan, you have probably heard two pieces of advice that seem to conflict. One person says everyone needs a living trust. Another says a simple will is plenty. The honest answer is that it depends on your family, your property, and what you want to happen if you become ill or pass away.
This article walks through the basics so you can have a more informed conversation with an attorney.
What a will does
A will is a written document that says who receives your property after you die, who will manage your estate, and, if you have minor children, who you would like to care for them. In Tennessee, a will generally must be signed and witnessed according to specific rules, and many people add a notarized affidavit so the will is easier to prove later.
A will does not take effect until death, and it usually has to go through probate. Probate is the court-supervised process of confirming the will, paying debts, and transferring property. Probate is a public process, so a will and the inventory filed in the case can become part of the public record.
A will can be a good fit when your estate is modest, your wishes are simple, and your family is likely to get along. It is also usually less expensive to put in place at the start.
What a revocable living trust does
A revocable living trust is a legal arrangement you create while you are alive. You transfer ownership of assets into the trust and name a trustee to manage them. Most people serve as their own trustee at first and name a successor to step in if they become incapacitated or die. "Revocable" means you can change or cancel it while you have capacity.
Because the trust owns the assets, those assets can often be handled by your successor trustee without going through probate. The trust terms also stay private. A trust can also include instructions for how and when beneficiaries receive property, which can help if a beneficiary is young, has special needs, or may struggle with money.
Key differences at a glance
- Timing: a will works only after death. A trust can help during your life if you become unable to manage your affairs.
- Probate: assets in a will usually go through probate. Assets properly titled in a trust often do not.
- Privacy: probate is public. A trust is generally private.
- Cost and effort: a trust usually takes more time and money to set up and maintain.
The step people often miss: funding the trust
A trust that is signed but never funded may accomplish very little. Funding means retitling assets into the trust's name or naming the trust as a beneficiary where appropriate. That can involve a new deed for real estate, paperwork with banks and investment firms, and changes to business ownership records.
Most people who use a trust also sign a "pour-over" will. It acts as a safety net, directing any assets left outside the trust to be transferred into it. Those assets may still have to go through probate first.
Questions that can point you in a direction
- Do you own real estate, especially in more than one state? Out-of-state property can mean a separate court process in each state unless it is handled carefully.
- Do you want to avoid a public probate case for privacy reasons?
- Do you have a blended family, a beneficiary with special needs, or a young beneficiary who should not receive money all at once?
- Do you own a business that someone needs to run or sell if something happens to you?
- Are you concerned about who would manage your finances if you became incapacitated?
If most of your answers are "no," a well-drafted will along with other documents may meet your needs. If several are "yes," a trust deserves a closer look.
Digital assets and crypto
Digital property raises its own issues. Online accounts, photos, cloud storage, and cryptocurrency can be hard or impossible to access without the right credentials. Tennessee has a law addressing fiduciary access to digital assets, but the rules depend on the platform's terms and on what authority your documents give your representative.
With crypto, ownership often turns on who controls the private keys or recovery phrase. Avoid writing keys or seed phrases directly into a will, since a will may become public in probate. Instead, a plan might name who has authority, describe where the assets are held, and set up a secure way to share access when needed. A trust can sometimes make the transition smoother, but only if the assets are properly arranged.
A trust is not the whole plan
Whether you choose a will or a trust, a complete plan usually includes more:
- A durable power of attorney, so someone you trust can handle financial matters if you cannot.
- A health care directive naming a person to make medical decisions for you.
- Beneficiary designations on retirement accounts and life insurance, which generally control over what a will says.
- Business succession documents, such as an operating agreement or buy-sell agreement, that fit with your overall plan.
Taxes and changing rules
Tennessee does not currently have a state inheritance or estate tax, but federal estate tax rules exist and tax laws can change. This is one reason to revisit your plan periodically.
Next steps
The right choice depends on your circumstances, not on a one-size-fits-all rule. If you would like to talk through your options, MT Legal can help you understand what fits your family and your goals. Reach out to our office to schedule a conversation.
Learn more about Estate & Family Planning
This article is general information about Tennessee and federal law, not legal advice for your situation. Reading it does not create an attorney-client relationship.