A trust – or a living trust – is a legal means of assuring that a decedent’s property and assets are transferred to his or her heirs according to the decedent’s wishes. Trusts ensure more privacy because it does not have to go through the court (probate) system – and the distribution is also quicker, as probate can take months. There might also be some tax advantages for those who own lots of assets. Further, the terms of a living trust are not disclosed to the public, as the terms of a will are.
It’s important to keep in mind that although there are some advantages to a living trust over a will, there are also disadvantages (for instance, living trust generally cost more to set up than a will) – one should consult with a competent attorney to decide what is right for him or her.
The legal name for a living trust is a revocable inter vivos trust. Inter vivos means that it was created while the decedent was alive and revocable means that it can be revoked or changed by the decedent at any time before he or she dies. For purposes of a living trust, the decedent is called the settlor.
With a living trust, the settlor can manage his or her property before and after death, as well as provide how those assets, and the income earned by the trust, are distributed after death. If the settlor becomes incapacitated or disabled, the trust is in place to manage the financial affairs, usually by a successor settlor – thus, a trust does provide for comprehensive disability planning.
A pour-over will is necessary to distribute any property that is acquired in the name of the settlor after the living trust was established or any property that was not transferred into the trust in the first place. Thus, a pour over will is a necessary requirement of a living trust.
However, even with a living trust, you still need a will as a backup for anything that does not pass through your trust, such as recently acquired property.