1) To a common person I am to assume that the will and living trust one in the same.
No, they are two different documents. This is in simplified terms.
A living trust controls assets that are titled in the name of the trust. A trust is a private document and is administered without supervision by a court unless an interested party presents an issue to the court.
A will controls assets that are owned solely by the deceased. Generally, a will is administered through the probate process which involves submitting the will to the court and the appointment of a personal representative to administer the probate estate. The court supervises the administration.
Note that assets that are owned jointly with right of survivorship or that have named beneficiaries (such as 401k's, IRA's, pay on death accounts, etc.) are controlled by neither a living trust nor a will.
2) Is the trustee supposed to inform the beneficiaries of the estate distribution within a specified time frame?
The trustee has certain duties to keep the beneficiaries informed. For California, you can read the statutes here:
http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=prob&codebody=&hits=20
Look for Section 16000. If you are asking if there is a time limit for the trustee to make distributions, I don't believe that you will find anything in the statutes. It depends upon what the trust document says and how complex the trust is.
4) I was understanding that so far there is no estate tax for this year 2010, but it will start in again next year, 2011, just as it did in 2009. If this is the current law on the books, why is the attorney recommending to delay the distribution, because Congress has made up there minds yet. It sounds like they already did and just chose not to have an estate tax this year. OR is the fact that they just haven't got around to it yet.
Some observers believe that Congress will not get around to doing anything regarding 2010 and the law will stand as it is. Others believe that Congress may still address 2010 and make any changes retroactive to 1/1/2010. Place your chips and spin the wheel...
5) Couldn't the estate make distribution with the understanding that the beneficiaries would have to pay any new estate taxes if the law changed?
It could, but let's put it this way. If you had the responsibility to see that any estate tax liability was paid, would you go handing out assets to beneficiaries with only an "understanding" that the beneficiaries would return enough of the assets to pay the liability?