An alternative to the will-based estate plan is the Revocable (or Living) Trust-based estate plan. There is a lot of overlap between the two as to the end result (getting assets to your beneficiaries after your death), but they have very different mechanisms for getting there.
A trust, at its core, is a contract between three individuals (natural or otherwise) - the settlor (the person giving the assets); the trustee (the person holding the assets); and the beneficiary (the person who will ultimately receive the assets from the trustee). In many aspects, a trust is treated like a separate entity, but, legally, a trust is just a contract.
A revocable trust can be funded or defunded at any time before the death of the settlor - hence, revocable. Assets must be legally titled in the name of the trust in order for the trust to really work the way it is designed to, but the transfer to the trust does not have to be permanent. Revocable trusts are meant to allow for the exchanging of assets that normally occurs during our lifetimes. If you title your house in the name of the trust, you can still sell the house later on and buy a different house - no problem. Transfering your house into the trust when it still has a mortgage and deed of trust against it is also not an issue - although some banks may be hesitant to refinance the loan, but that is a bank-by-bank policy issue and not a legal issue.
Revocable trusts are used most often to avoid probate. Probate is the process in which the Court supervises the disposition of a person's estate according to their will (if they died with a will). It can be lengthy and cumbersome, so some people choose to avoid probate altogether with trust-based planning.
Revocable trusts avoid probate by eliminating or greatly reducing the probate assets of the settlor. By transfering all of your assets into the trust, you remove all of your assets from your probate estate. Since you no longer have a probate estate, the Court will have no jurisdiction over the distribution of your non-probate assets. But, this only works if your trust is fully funded. If you forget to transfer your property into the trust, anything that was left out will be subject to probate. Often attorneys use Pour Over Wills to make sure all of the assets that may have been left out of the trust make their way into the trust after the settlor/testator's death - somewhat of a catch-all, just in case.
Revocable trusts are not for everyone, but can be very useful if you want to keep your family out of Court and seemlessly transfer your assets to your family after you're gone.