Estate Planning is the process of preparing legal documents, such as wills and trusts, which enable a person to direct how his or her assets will be distributed upon death or managed in the event of that person's incapacity.
A properly crafted estate plan should result in the efficient transfer or management of assets, in an effort to reduce costs to beneficiaries, as well as to avoid taxes incurred due to a person's death.
A Living Trust is used in estate planning, in place of the will, as the main document for stating a person's direction for distribution of assets to beneficiaries.
It differs from a will in a very significant way, in that a beneficiary will receive his or her inheritance via the Living Trust without probate (a court proceeding), thereby saving family, friends and other beneficiaries time and money.
A Trust is created with a document, either a trust agreement or declaration, and the preparation process is similar in many respects to that for a will.
However, a Trust must be "funded" with assets during the trust maker's lifetime in order to avoid probate.
A Trust is funded by changing assets' title documents or beneficiary designations on financial accounts.
It is also used for management of assets, either for the trust maker, due to his or her incapacity, for minor children or for young adult beneficiaries who are legally unable or inexperienced to receive an inheritance "in-pocket" at the time of the trust maker's death.
In order to avoid probate you must fund your Living Trust by transferring title to your assets to the trust in order to avoid probate.