A will is used to instruct probate court how to distribute your property. A trust is a probate avoidance tool to never start the probate process at all.
The most common form of trust is called a Living Trust.
Another type of trust, called an AB Trust, is used to avoid paying federal taxes referred to as the Estate Tax. An AB Trust is more complicated because property passes to a beneficiary to hold on behalf of another person who doesn't technically own the property for tax purposes.
Living Trust
You create the trust and are called the grantor or trustor.
The trustee has compete power over property in the trust. The original trustee is yourself.
The property in the trust is called the principal.
The successor trustee transfers ownership of the principal (property) after your death.
Trust beneficiaries receive the principal (property) from the successor trustee.
The reason that property in the trust avoids probate is because the trustee owns the property. Upon your death, a new trustee simply takes over that duty.
Example:
Real estate is owned by John and Mary. They transfer the property to the John and Mary Trust. The trust now owns the property through an actual transaction that requires a new deed being filed. They name their daughter Sue as successor trustee. John and Mary are the trustees and can make all decisions about the real estate, including when to sell. When John dies, Mary becomes the sole trustee. When Mary dies, Sue takes over as trustee. The real estate is still owned by the trust, even though John and Mary are both deceased. All that changed was who controls the property. First John and Mary. Then Mary. Then Sue. Without a trust, John and Mary write a will for their daughter Sue to inherit the property. When John dies, Mary becomes sole owner. When Mary dies, the real estate passes through probate court. This process could take years and cost thousands of dollars before a judge approves the will and processes all paperwork for Sue to inherit the property.
A potential complication is additional paperwork needed to complete a trust. This additional paperwork, if done incorrectly, could cause the trust to fail with the result being probate court.
Since all property is owned by the trust (not you), it is important to verify how ownership takes place. Personal property, like furniture, can be owned by anybody, including a trust. However, real estate requires a deed filed with the county recorder of deeds. Vehicles also have a title registered by the Secretary of State. These types of property require an additional step to change ownership from you as an individual to the trust, such as filing a new deed with the Recorder or registering a new vehicle title.
Requirements:
The only requirement is that the document be notarized and that all property is properly added to the trust, such as a real estate deed.