Do I Need a Trust or a Will? Smart Estate Planning Ahead of Year-End Deadlines

As we approach the halfway point of 2025, many families, business owners, and individuals may be starting to contemplate an important question: Should I have a trust, a will, or possibly both? There are some potential changes to federal estate tax laws that can take place at the end of the year. It remains to be seen whether current exemptions will remain.  This is a smart time to review your estate plan and take the necessary steps that offer clarity and peace of mind.

While the estate tax exemption is still high for now (over $13 million per individual in 2024), those levels are set to be cut almost in half starting January 1, 2026, unless Congress acts to extend or revise the provisions from the 2017 Tax Cuts and Jobs Act. A new tax bill is being considered this July, and while many expect the higher exemption to be extended, there is no way to be sure.

This makes 2025 a great opportunity to take advantage of current rules and plan without urgency. 

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

A will is a legal document that outlines your wishes for how you want your assets to be distributed after you pass. Your estate goes through probate court, where a judge validates the will, oversees the payment of debts, and authorizes the transfer of your assets.

A trust, on the other hand, is a legal entity that holds and manages your assets for your beneficiaries. A living trust can take effect during your lifetime, helping to manage your estate both before and after death, very often without any court involvement at all.

You do not have to choose one or the other. In many cases, you can benefit from having both.

Why Consider a Trust?

Even for those without “ultra-high-net-worth” estates, a trust offers many practical advantages that can simplify your estate, avoid headaches, and provide peace of mind for your loved ones.

1. Avoid Probate

Probate can be slow, expensive, and public. A trust allows your assets to transfer directly and privately to your beneficiaries.

2. Maintain Privacy

Wills become part of the public record during probate. Trusts stay private, keeping your financials confidential.

3. Plan for Incapacity

If you become temporarily or permanently incapacitated, a trust helps ensure that someone you trust can manage your affairs without court intervention.

4. Protect Assets

Certain trust structures can help protect your assets and your heirs' inheritances from creditors, lawsuits, or divorces.

5. Control Distribution

Perhaps you would like to keep your child from receiving everything at once. A trust lets you stagger distributions, fund education, or protect inheritances until your heirs reach certain milestones such as finishing college, getting married, or at different ages when they might make better decisions.

What Happens at the End of 2025?

Unless Congress passes new legislation, the federal estate and gift tax exemption will go back to pre-2018 levels which is about $6–7 million per person, adjusted for inflation. This change would expose many more estates to a federal estate tax of up to 40%.

There is a bill aimed at extending the current exemptions and is being debated in Congress as of this writing; however, its passage and final provisions are still uncertain. Relying on legislation that hasn’t passed can be risky, especially when proactive estate planning today can offer more options and protections.

For families or individuals with real estate, business interests, retirement assets, or investment portfolios, even moderate growth in those assets could push their estate over the lower threshold in just a few years.

Common Misconceptions About Trusts

• “I’m not wealthy enough to need a trust.”

  
  

  If you own a home, have children, life insurance for your family or care about how your assets are managed, a trust can be a smart and very practical tool.

• “I already have a will and that’s enough.”

  
  

  A will is important, but it won’t help you avoid probate or plan for incapacity. A trust complements a will and fills important gaps that a will does not.

• “Trusts are too complicated or expensive.”

  
  

  While every case is different, creating a trust with a qualified attorney is often very easy and can save your loved ones time, money, and headaches in the future.

A Calm, Confident Approach to Planning

There’s no need to panic but there is reason to act thoughtfully. By starting your planning now ahead of the potential tax changes in 2026, you can take advantage of today’s generous exemption limits and ensure that your wishes are clearly spelled out and protected.

Whether you need a will, a trust, or both, the key is to start the conversation now. Waiting too long may limit your options or result in rushed decisions that don’t fully meet your priorities.

Final Thoughts: Take the First Step

Estate planning is not just about taxes. It’s about taking care of your loved ones, preserving your legacy, and ensuring your wishes are carried out. A trust is one of the most powerful tools available to help do that.

With changes potentially around the corner and a July bill in the works, now is a good time to sit down with an estate planning professional. Discuss what is best for your situation without stress, but with clarity and confidence.

Disclaimer: This post is for informational purposes only and does not constitute legal or financial advice. Please consult with a licensed attorney or tax advisor for personalized guidance.