What’s The Difference Between An Estate and a Trust?
A person’s estate is all of their property owned at death.
If you have a Will, that document states who inherits your estate. If you die without a Will, state law determine who will inherit your estate. In both cases, if you have enough assets, a Probate court has to supervise the settling of the estate.
A trust is a legal agreement in which a person (called a Grantor) states that one or more people (called Trustees) hold the Grantor’s assets for certain people (called the beneficiaries) subject to certain duties and the terms of the agreement.
The most common type of trust is called a revocable living trust, but there are others. You might set up a living trust to hold certain of your assets (like your house) during your lifetime, and then give those assets to others at your death. Assets held in the living trust do not go through probate, which is why most people set them up.
But, you almost certainly own other assets in your own name (like your everyday checking account, your car, and your tangible personal property). These things are part of your estate, not your trust. Normally you want to have a special kind of Will (called a pour-over Will) that says that all of these things should be added to your trust upon your death.
When you do this, there’s just one set of instructions about who gets what. And life is a lot easier for your heirs.