A revocable trust is a substitute for a Will and distributes your property in the same manner. However, a revocable trust has the added advantage of avoiding probate, a process which is public, costly, and time-consuming. This is particularly beneficial if you own real estate in more than one state. If your trust owns all of your assets, you eliminate probate in each state where you own real estate.
A revocable trust also provides for incapacity planning by avoiding the conservatorship process, which is established through the court. The conservatorship process is essentially probate for a living person and it comes with the same drawbacks, including being costly, open to the public, and time-consuming. However, a properly funded revocable trust will eliminate the need for a conservatorship because the trustee of the revocable trust can use the trust's assets to provide for the trust's maker and his family should he become incapacitated.
However, a revocable trust requires more time and effort during your lifetime. With a trust, you must transfer legal ownership of substantially all assets to your trust while you are living. Some assets cannot be transferred to the trust, but instead should be “payable upon death” to the trust through a beneficiary designation. As you acquire additional assets, you must be careful to title assets in your trust's name.
Another alternative that also avoids probate is to own property in joint tenancy with rights of survivorship. Property held in joint tenancy automatically passes to the surviving owner upon the death of the first owner. Downfalls to titling property in joint tenancy include the possibility of an immediate and taxable gift, a potential future income tax liability to the recipient because the property will not receive a step-up in income tax basis, and the ability of the recipient's creditors, such as a divorcing spouse, to reach the asset and potentially force the sale of the property. Also, if an intended recipient dies before you, then probate will still be necessary, and you may inadvertently disinherit children of the predeceased recipient.