Which is better: A Will or a Trust?

By now, many of you know the importance of having a will drawn up. But recently, there have been more than one occasion where a question arises about whether a “trust” should be drafted instead.

There is a great a article by Jodee Redmod on Lovetoknow.com, where she writes:

"By way of a reminder, a will is a legal document that sets out how a person's estate will be dealt with upon his or her death. The estate includes the deceased's real and personal property

If a person dies intestate, without having made a will, his or her estate will be distributed according to the law set out in the state of residence. The way to ensure that your money and property go to the person(s), organization, or charity that you want is to have your instructions clearly noted in a will.

After a person dies, his or her estate needs to be settled. This process is known as probate. Before assets can be distributed to the beneficiaries under the provisions of the will, the deceased's debts must be paid out of the estate. Factors that can make this process both lengthy and expensive include:
-The deceased died without a valid will
-No will was drawn up at all
-Multiple wills are discovered
-The will is contested by one or more persons making a claim against the estate

Even in the case of a relatively-simple estate, probate fees will need to be paid. The probate fees are calculated based on the gross value of the estate, not on the net value after any debts are paid.
Once a person's will goes into probate, the contents of the will are a matter of public record. Anyone can appeal the courthouse and request a copy of the document.

A living trust, or you may see the term inter vivos trust, serves a different function than a will. A living trust is a created during a person's, know as the grantor, lifetime. The grantor transfers ownership of his or her assets into the living trust. These assets can take the form of real property, such as real estate, stocks, personal property, or cash in the bank. The main advantage to placing assets into a living trust is a financial one. Assets held in the trust do not have to be probated after the grantor's death. They pass directly to those people named as beneficiaries immediately without having to wait for an extended period for the probate process to be completed. Since a typical probate process can last as long as one year, a living trust is a benefit to heirs to the estate.

Another advantage to a living trust is that the terms of the trust are kept private; unlike a will, they are not made public after the grantor's death. Putting assets in a living trust may also help to lessen the burden of estate taxes. People may also avoid probate by purchasing a life insurance policy, or by putting money into a joint savings account with another person A person interested in estate planning doesn't necessarily need to choose a will versus a living trust. Both of these items have a place in estate planning."