You have worked hard your whole life to build your savings and after all is said and done, want to pass your estate down to your heirs. If you're not careful, this process can go painfully wrong. Fees, taxes and legal costs set you back and it's possible that your heirs don't receive what you had intended. Fortunately, this can be avoided and the steps to take are simple.

Here is the easiest way to remember a will versus a living trust. A will directs the disposition of your assets after death, while a living trust becomes valid while you're alive. For many years, a will has been the popular choice. When someone leaves their estate to the next generation in a book or a movie, it's always done via a will. In reality, a will isn't likely to be the best option for most people. (For more, see: Pick the Perfect Trust.)

A will involves the probate process, which comes with unnecessary costs. When you use a living trust the upfront costs are higher, but no probate is required, which makes it a more affordable option overall. There is one exception. Some states offer expedited and simplified probate if the estate is under a specific dollar threshold. That dollar threshold depends on the state. Aside from that exception, you should strongly consider a living trust opposed to a will.

A living trust becomes valid immediately after you execute documents and your property is transferred into that trust. Then it's up to you to manage those assets. If you're an investor, then you can look at it as a form of active management versus passive management, only in this case, active management is more affordable. In addition to affordability, which stems from avoiding the probate process, a living trust will allow you to control what happens to your assets during and after death. Also, unlike a will a living trust is not public record. Furthermore, you can use a living trust regardless of the size of your estate. (For more, see: Passive vs. Active Management.)

Other pluses of a living trust include federal and state tax advantages, a better chance of withstanding the estate being contested, and the ability to determine when a small child, grandchild or special needs dependent will be able to have access to the trust. A living trust is a much faster and easier process than a will, and it is more specific than power of attorney on a will. As long as the trust is funded, the freezing of assets will not be allowed. Be sure to have all assets titled in your trust name. That includes certificates of deposit (CDs), stocks, bonds, mutual funds, real estate, businesses, etc. This will help you avoid probate.

A lot of estate planning lawyers have paid for their luxurious lifestyles by leading clients down the wrong path, which is probate. If you challenge one of these estate planning lawyers on this topic, he or she might state that a living trust is more expensive, but that's only the case upfront. A living trust is almost always a cheaper option when looking at these two options (will versus living trust) in their entireties. (For more, see: 6 Estate Planning Must-Haves.)

Do you have a child from a previous marriage that you would like to treat as a beneficiary? If so, it would be wise to consider a living trust. If you use a beneficiary design or joint ownership, your spouse could end up with control of your assets, which could then lead to those assets going elsewhere, including their children from a previous marriage, or even a new spouse.

Your children can be in charge of their own shares. As a trustee, your children can invest however they see fit. They will also have the option of taking out money from the estate for living expenses. And they can use it to help pay for their child's education. Your child's inheritance will be protected not only from creditors, but bankruptcy as well. If you were to choose a will, the above options wouldn't be available. (For more, see: An Estate Planning Must: Update Your Beneficiaries.)

Be sure to hire an experienced attorney. Not only should that help you avoid the above scenario, but it should help you determine who receives your individual retirement account (IRA), 401(k), or life insurance. The recipient of your retirement accounts and life insurance policy is based on the beneficiary on the account of the policy - not the name on your will or trust. A specially designed trust can help you avoid this scenario.

Baby Boomers are hopping on the living trust bandwagon and for good reason. Avoiding probate is the biggest advantage, but as you already know based on the information above, it's not the only one. There are other things you should know about a living trust prior to making any important decisions: (For more, see: Establishing a Revocable Living Trust.)

• A living trust is revocable while you're alive, but irrevocable when you're dead.
• There are three parts to a living trust: creator, trustee (manages assets), beneficiary. Strongly consider naming yourself a trustee for control over assets.
• A living trust can be used as a substitute for power of attorney.
• You can determine when assets are passed on to a beneficiary; it doesn't need to be immediately upon your death.
• A disgruntled heir has the ability to challenge a trust (a disgruntled heir can also challenge a will).
• You can fund a living trust at your desired pace.
• Always hire an attorney to prepare a living trust (avoid a horror story).
• Avoid online living trust kits.
• The average living trust will cost a few thousand dollars to set up.

For most people, a living trust will present a faster and more affordable option than a will. There are numerous advantages to a living trust, with the most important being avoiding probate. However, this doesn't undervalue the other advantages above, which include avoiding assets moving in an unintended direction. (For more, see: Estate Planning: 16 Things to Do Before You Die.)