A living trust is a trust established during a person’s lifetime in which a person’s assets and property are placed within the trust, usually for the purpose of estate planning. The trust then owns and manages the property held by the trust through a trustee for the benefit of named beneficiary, usually the creator of the trust (settlor). The settlor, trustee and beneficiary may all be the same person. In this way, a person may set up a trust with his or her own assets and maintain complete control and management of the assets by acting as his or her own trustee. Upon the death of the person who created the trust, the property of the trust does not go through probate proceedings, but rather passes according to provisions of the trust as set up by the creator of the trust.
Perhaps the biggest advantage of a living trust is that it does not have to go through probate, as does a will. However, there are other estate planning devices which avoid probate, such as a joint tenancy, a life insurance policy, and others.
A last will and testament with a trust in it will take the assets of the testator (deceased person) and place them in a trust for the benefit of whomever is the beneficiary.
A Last Will and Testament Form with All Property to Trust (Pour Over Will) assumes that a living trust has already been established. This will is one made in conjunction with a trust in which all property is designated to be distributed or managed upon the death of the person whose possessions are in trust, leaving all property to the trust. A pour over will is a safety measure designed to protect any assets which somehow were not included in the trust and make them assets of the trust upon the party’s death. A pour over will often provides that if the trust is invalid in whole or in part, the distribution under the will must be made under the same terms as stated in the invalid trust.
To prevent the creation of an intestate estate, a pour-over will is created to save any property which had been left out of the trust at the time of trustor’s death. By the terms of the pour-over will, the property that it catches is distributed to the existing trust. A pour over will is a necessary addition to a trust, in order to protect the property which was not held by the Trust, not held in joint tenancy, or subject to other contractual arrangements at the time of the rustor’s death.
A pourover trust is a revocable trust that is structured to receive and dispose of assets at the settlor’s death. The revocable living trust can be a “shell” during the grantor’s lifetime. That is, the trust can be inactive during life. If the trust did not terminate at the grantor’s death, the trust may receive assets passing under the will (after probate) and from life insurance policies. Assets may be directed to the trust by the settlor’s will, which is called a pourover will, or by beneficiary designation for non-probate assets.
This type of trust is similar to a testamentary trust in that it is designed to dispose of the assets at the settlor’s death. However; a pourover trust is a separate document. A pourover trust can be advantageous since it is administered by a trustee without court supervision. In addition, it is a private instrument, unlike a testamentary trust, which is part of public record.
A living trust, by definition, is not part of a last will and testament. Any trust created in a will is called a testamentatry trust as it does not begin until the death of the trustor.
