Question: What happens if I don't have an estate plan?
Answer: First of all, some assets like retirement plans and life insurance have named beneficiaries so those accounts pass directly to those beneficiaries. Other assets/accounts might be in joint name with someone else (i.e. spouse or child). Those assets simply pass directly to the surviving account holder. For anything in your name alone or for which there is no beneficiary, that will pass to your estate. In that event, either your will (if you have one) or State law will determine how the asset(s) is distributed.
Question: What's the difference between a will and a trust?
Answer: The honest answer is not much. Both are just documents. On the top of one we write the word "will" and on the other we write the word "trust". Beyond that, a will has an executor whereas a trust has a trustee but both name beneficiaries. The main difference between the two documents is what we do with each of them once they are signed. With a will, once it is signed we simply place in a drawer and let it sit there for (hopefully) a very long time. The title to all assets such as real estate and financial accounts stays the same. With a trust, we actually do something with it once it is signed. We can start to title assets in the name of the trust. In the case of real estate, we record a deed with the county which transfers title to the trust. With financial accounts (i.e. investments and bank accounts), we contact the institution holding the account and let them know we want to retitle the account in the name of the trust. The trust can even be the beneficiary of life insurance and retirement accounts but please speak to an attorney to see if this makes sense in your situation.
Question: How do I avoid probate?
Answer: The way to avoid probate is to go through each one of your assets (i.e. real estate, bank accounts, investments, etc.) and make sure that each and every one of them has a beneficiary named for it. With some assets such as retirement plans and life insurance, this is easy. We simply ask the custodian or insurance company for a change of beneficiary form. For all other accounts, we have two options. One is to simply ask the company holding the account for transfer on death (TOD) or payable on death (POD) form. This option will avoid probate but it does nothing for periods of incapacitation and it doesn't protect young or vulnerable beneficiaries from wasting their inheritance. The other option is to retitle the account/asset in the name of a living trust.