Jerry Taylor breaks down when a revocable trust beats a will. Probate costs 3-8% of your estate, so a $500,000 estate could lose $25,000 in fees. Even simple estates take 6-9 months to settle, and wills become public records while trusts stay private.
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Under what circumstances would a last will and testament work just fine instead of a revocable trust? Here's my take on it. There are basically 3 situations in which someone might want to choose a trust over a will. Thing 1, a will will ultimately cost more to go through the probate process than it will to administer a trust. To be legally enforceable, every will has to go through the probate process. AARP did a study that showed that the cost of going through probate on average was 3 to 8% of the value of the assets being probated. I tell people 5% just because that's a mid-range number. $500,000 estate, that's $25,000, way more than you'll pay for a trust. The million-dollar estate, $50,000. Thing 2, the time factor. It's going to be very difficult to get out of probate most anywhere in less than 6 to 9 months. If it's a complicated estate or any problems pop up, it could take much longer than that. Year and a half to 2 years is not uncommon. And thing 3, privacy. Wills must be submitted to court to go through the probate process. Anyone?
