I am often put in the position to counsel clients on whether it is better to have a Last Will and Testament or a Living Trust to dispose of their assets at death. Time and time again, I recommend the Living Trust.
A Last Will and Testament requires the client’s family to not only prove the client’s Will in court, it also requires the court to oversee the distribution of the client’s assets and before that ever happens, the client's debt may have to be paid, thereby decreasing the amount that is paid out to the client's family. In addition to the payment of debts, personal representatives must hire an attorney to represent them in court, which can cost at little as $1,500 for a small estate and up to 3% of the total value of the estate for larger estates. On top of all that, it may take up to 1 year or longer for the court to distribute the assets to the beneficiaries.
The use of a Living/Revocable Trust allows the trustee that is named in your trust to distribute the client's assets without court supervision and without having to hire an attorney to handle the probate. Although your debts must still be paid from the trust assets, the use of a Living Trust will usually cost less and distribute assets to beneficiaries faster than a probate court.
If you want to avoid paying creditors after death, you may consider an Irrevocable Trust. However, since this type of trust is not changeable and is often more expensive to set-up, those with little to no debt prefer to allow for changes and opt for a Living Trust.
Before you make your final decision on which choice is right for you, speak with your local estate planning attorney. A good estate planning attorney will review your assets and liabilities to determine how you can protect your assets to ensure they are distributed to your loved ones.