Final answer:
A personal testament to distribute one's assets posthumously is known as a will, while a trust serves a similar purpose but operates privately outside of probate court. People may also have a living will or advance directive for medical decisions if incapacitated.
Step-by-step explanation:
A person’s declaration of how they wish to allocate their property after death is called a will. A will is a legal document that can range from a simple handwritten note to complex instructions involving multiple assets and beneficiaries. However, because a will is a public record once it goes through probate, its contents and the assets of the deceased become known to the public. This can sometimes lead to the validity of wills being challenged in court.
If an individual passes away without a will or trust, they are considered to have died intestate. In such cases, the distribution of their estate is governed by the state’s intestacy laws, which establish a hierarchy of beneficiaries including the spouse, children, parents, siblings, and so on.
Alternatively, a trust is another estate planning tool aimed at private and ascribed management of one’s assets. A trust can bypass the public and often lengthy probate process, with a trustee managing the asset distribution according to the deceased's instructions, which typically become irrevocable upon death.
In addition to wills and trusts, individuals may also prepare a living will or advance directive. These documents specify medical interventions and end-of-life care preferences to ensure one’s wishes are fulfilled in case they are incapacitated.