What is a Trust?
A trust is a legal mechanism that specifies the distribution of your assets after your die. Trusts help minimize estate taxes and gift taxes. Trusts typically only deal with specific assets of value, such as businesses, real estate, investment portfolios and cash. A trust can provide for beneficiaries as well. Some common uses are for underage beneficiaries as well as disabled beneficiaries or even just beneficiaries that may overspend.
Even if you have what’s known as a revocable living trust into which you can put the bulk of your assets, you still need what’s known as a pour-over will. In addition to letting you name a guardian for your children, a pour-over will ensures that all the assets you intended to put into the trust are put there, even if you fail to retitle some of them before your death.
Any assets that are not retitled in the name of the trust are considered subject to probate. As a result, if you haven’t specified in a will who should get those assets, a court may decide to distribute them to heirs whom you may not have chosen.
If a will leaves less to a spouse than state law requires, that part of the document may be overridden, and the spouse awarded the mandated amount.