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If you have considered drafting a revocable living trust to bypass the court-supervised probate process, you may have heard of a "pour-over will." This type of will is often utilized in tandem with an established trust.
As an experienced legal attorney with almost ten years specializing in this area, I strongly recommend utilizing pour-over wills to protect your assets.
Today, I’ll share everything you need to know about pour-over will and the ways it can shield your assets.
Quick Summary
- By creating a pour-over will, the grantor's assets will be channeled into the trust and handed out as per their wishes in the trust document.
- A pour-over will typically only dispense assets of minor value.
- Crafting an estate plan usually necessitates constructing a pour-over will and a living trust.
What Is a Pour-Over Will?
A pour-over will is an invaluable type of will that perfectly connects with a living trust.
Its purpose is to ensure any property you haven't placed into your trust during life can still be directed to it when you pass away, so the court knows what should occur after death [1].
To guarantee there is no misunderstanding, you should not include any valuable property that has already been transferred to your trust in your will to have all your trust assets covered.
How Does a Pour-Over Will Work?
A pour-over will work together with a living trust. Trusts are an invaluable tool for estate planning, providing a fast and cost-effective way to distribute asset ownership after the grantor's death.
When settling their estate, these assets will be divided among the trust's beneficiaries according to the original owner's intentions. Setting up trust ahead of time ensures that your wishes are followed without going through lengthy probate processes.
The pour-over will ensure transferring assets to the successor trustee in cases of invalidity or if funding becomes legally tricky at the time of the grantor's passing. This is particularly helpful for unfunded trusts, giving extra protection against legal issues.
Advantages and Disadvantages of a Pour-Over Will
A pour-over will is a valuable tool for those planning their small estate. Still, as with any legal document, there are pros and cons to consider before choosing this option.
Advantages
Choosing a pour-over will have several advantages. First and foremost, it ensures that all assets are correctly accounted for. The asset will then automatically transfer to its intended beneficiaries according to your wishes.
Additionally, pour-over will provide additional protection against creditors since any assets not transferred into a trust before death will be moved into the trust upon death.
Finally, pour-over wills can protect against taxes since assets held in a trust are not subject to estate tax.
Disadvantages
If you so choose, a pour-over will remember that it must go through probate before the property passes through.
This could lead to significant delays; if the living trust has valuable assets that need to be distributed, they may remain stuck in probate until months after your death.
However, when left directly via a living trust, distribution among trust beneficiaries typically occurs within weeks of passing away. Another disadvantage is that pour-over will also pass only minor value assets.
What Should Be Included in a Pour-Over Will?
A pour-over will include the trust's name, the last will, and the beneficiaries. Check with a certified public accountant to ensure there are no negative tax consequences before doing this.
It's important to remember that the pour-over will only apply to personal assets, not trust assets. When providing these specific possessions in a pour-over will, make sure it is specified which are personal and which belong within the trust, as this can cause some uncertainty.
In the most straightforward situations, the pour-over will name either the trust or its beneficiaries as remainder beneficiaries with percentages listed in your original trust document.
Pour-Over Wills and Living Trusts
Creating an estate plan typically involves designing a pour-over will and living trust, which requires the transfer of assets to them prior to death. Usually, for smaller estates, revocable trusts are employed since it allows grantors complete control over their possessions until they pass away.
"Living trusts can help you avoid probate, but can be tricky to fund, that's why a pour-over will is a good safety device to protect intended beneficiaries."
- Jeffrey M. Salas, Attorney
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FAQs
Why Do I Need a Will If I Have a Living Trust?
If you have a living trust, you need a will because no one transfers every single asset to a living trust. Even if you try your best, you may still unknowingly acquire property close to the time of death that isn't included in the trust.
What is The Difference Between a Will and a Pour-Over Will?
The difference between a will and a pour-over will is that a will is just one document that typically takes charge of all your assets, while a pour-over will only shift belongings into either an irrevocable or revocable trust. These two types will work together for ultimate benefit and security.
Can a Pour-Over Will Avoid Probate?
No, a pour-over cannot avoid probate unless there's a probate shortcut. Creating a living trust is the best solution if you would like not to go through probate. Revocable living trusts can easily pass on your assets and belongings to your designated heirs.
Do You Want To Create Your Pour-Over Will?
If you believe you want to create your last will for your estate, you must speak with an estate planning attorney who specializes in estate law and is familiar with the state law that governs wills and trusts in your state. Contact Schmidt & Clark, LLP to speak to an expert in a free consultation session today.
Schmidt & Clark are experts in estate planning and pour-over wills. We can help you understand your legal rights, how to structure your will, and advise you on the best way to protect your assets for the benefit of yourself and future generations.
Reference:
- https://www.law.cornell.edu/wex/pour-over_will