The Living Trust
Trusts are generally classified as either being "revocable" or "irrevocable" and created either during lifetime (an "intervivos trust") or at death (a "testamentary trust"). Generally a living trust will be a revocable trust created during lifetime.
A revocable living trust can be revoked by the grantor of the trust (i.e., the trust creator) at any time in whole or in part. A revocable living trust allows a person to avoid probate and the costs of estate administration and extra attorneys fees involved. In addition, the revocable trust can avoid probate procedures in multiple states, which would otherwise be required when the grantor owned property in more than one state. A revocable living trust further allows management of the trust assets during the grantor's lifetime if the grantor becomes incapacitated. That would help avoid the expense and headaches of establishing a guardianship.
Not everyone needs a living trust, especially if the estate is small (because then the court costs would be lower, too). Living trusts are also not necessary if the individual's estate consists mostly of non-probate assets such as jointly held property, life insurance, Individual Retirement Accounts (IRAs), Deferred Annuities, etc.
Note: Revocable living trusts generally do not reduce income, estate or gift taxes. Nor will they protect assets for the purpose of qualifying for Medicaid and other such programs with limits on the resources and income of the recipient.
An irrevocable trust created ruing lifetime cannot be revoked by the grantor, and the grantor generally cannot be the trustee. This type of trust (if properly written by a lawyer experienced in Elder Law) can provide the additional benefit of protecting assets while qualifying for Medicaid coverage for nursing homes and home care, adult day care services etc. An irrevocable living is also used for establishing a trust for a child, grandchild or other persons, which effectively removes the trust assets from the decedent's estate to tax and probate purposes.