Wills and Trusts:
A living trust is a trust you create while you're alive, rather than one that is created at your death under the terms of your will. Different kinds of living trusts can help you avoid probate, reduce estate taxes or set up long-term property management. A big advantage to making a living trust is that property left through the trust doesn't have to detour through probate court before it reaches the people you want to inherit it, although not everyone has to worry about probate, and some people don't need a living trust at all.
Making a living trust does require some crucial paperwork. For example, if you want to leave your house through the trust, you must sign a new deed, showing that you now own the house as trustee of your living trust. This paperwork can be tedious, but the hassles are fewer these days because living trusts have become so common.
Just because you having a living will, it does not excuse you from making a regular will. A will is an essential back-up device for property that you don't transfer to yourself as trustee. If you don't have a will, any property that isn't transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives in an order determined by state law. These laws may not distribute property in the way you would have chosen.
A testamentary trust is a trust which arises upon the death of the testator, usually under his or her will. Testamentary trusts are different from living trusts, which are created during the individual's lifetime.
For a testamentary trust, since the individual is deceased, he or she will generally not have any influence over the trustee's exercise of discretion. However, in some jurisdictions it is common for the testator to leave a letter of wishes for the trustees.
Testamentary trusts tend to lean more toward the needs of the beneficiaries (especially infant beneficiaries) than the by tax considerations which tend to dominate considerations in living trusts.