Pour-over wills are an essential part of creating an estate plan for those that choose to use a living trust. A pour-over will can act as a backup to the living trust, ensuring that any assets not in the trust are moved there after you pass. An estate plan is meant to determine what happens to your assets once you’re no longer living. With a living trust, the trustee will distribute the assets to your beneficiaries and avoid the probate process. This form of estate planning offers privacy because without probate, the passing of assets will not be on public record. Having a pour-over will is essential if there are any mistakes or oversights with the assets in the trust. The pour-over will ensures you have a backup plan for assets that weren’t outlined in the trust.
What Is a Living Trust?
Let’s begin by identifying what a living trust is and its connection to the pour-over will. Living trusts, also known as revocable trusts, can be canceled or changed by the trust’s creator (trustor) at any time. The trustor maintains control over assets regardless of taxation and can change beneficiaries when they want to. They can also undo the entire trust in the case that they change their mind. Many people debate revocable trusts vs. irrevocable trusts, which are permanent once signed, and choose revocable trusts because of their flexibility. Living trusts essentially place all of your assets into a trust and allows you to continue using, spending, and controlling them.
Once you pass, the trustee will distribute the assets to the beneficiaries you have named in the trust. Living trusts avoid the probate process because assets go directly to the beneficiaries without any court proceedings or formal processes needed. Pour-over wills are so crucial to living trusts because they make sure any assets that were overlooked or left out of your trust go directly into it once you’ve passed. They act as a safety net so that none of your assets go through probate, but instead directly to your trust and beneficiaries.
Benefits of Living Trusts
As mentioned above, there are revocable trusts (living trusts) and irrevocable trusts. Many people choose revocable trusts because of their flexibility and ease. Trustors can change beneficiaries and other important assets whenever they please. In addition, the trustee is appointed to take care of the trust when the trustor can no longer manage their own assets or when the trustor passes away. Having someone you trust as your trustee can make the whole process less stressful because you know everything will be taken care of as you wish. Living trusts are great for those looking to maintain control over their trust, assets, and estate. Here are a few more benefits to choosing a living trust:
- Flexibility to make changes whenever you need.
- Maintain privacy surrounding your estate and property transfers.
- Unlikely to be challenged in court.
- Maintain control over assets after mental incapacitation or death.
- Assets won’t go through probate court.
- No personal financial details will be exposed to the public.
What Is a Pour-Over Will?
Now that you have a good idea of what a living trust is, let’s discuss pour-over wills. They are an essential part of creating an estate plan when you choose to use a living trust to take care of your assets after death. Pour-over wills are legal documents that state that any assets that have not been funded into your living trust should go there after you die. This essentially means that your trust is the beneficiary of any property it doesn’t already hold. These properties or assets that have not been placed in your living trust will be funneled through it after your death so that they don’t pass directly to a living beneficiary through other means.
It can be difficult to make sure all of your assets are placed in your living trust before you die. You may forget to move something or run out of time before everything is there. The pour-over will acts as a backup to your living trust so that any property or assets not already in your living trust will be moved there after you pass. Pour-over wills differ from regular wills because they exist only in conjunction with your living trust. Typical wills handle your entire estate, which may be fine for some situations. But, if you’d rather keep control of your assets, then a revocable trust is a good choice for you.
Pour-Over Will Protocol
Since pour-over wills are their own kind of will and operate in conjunction with a living trust, their protocols differ from a typical will. Revocable trusts help avoid probate, which can be time-consuming and expensive, not to mention available on public record. A pour-over will ensures that all property is transferred to the trust and then distributed to the trust beneficiaries. The goal of having a living trust and subsequent pour-over will is to have all assets distributed under the trust document’s terms. This type of estate planning is simple because there is only one document needed, the trust. It takes care of anything that might have been forgotten or overlooked in an uncomplicated way. Here is the basic protocol of a revocable trust and pour-over will:
- The executor handles the transferring of any assets to the living trust.
- Any assets that pass under the terms of the will must be moved, usually only minor things of value that have been left out.
- In some cases, the estate may qualify for special “small estate” probate procedures, which are quicker and easier than normal probate procedures.
- Once assets are in the trust, the trustee takes over from the executor.
- The trustee has control over trust assets and must distribute them by following the terms of the trust document.
- The trust may have instructions to distribute everything to the beneficiaries as soon as possible.
- If assets are left to young adults or children, the trust might have more detailed instructions on how to proceed. Sometimes the money may be left in the trust until a beneficiary reaches a certain age.
- The work of a trustee is not always done right away, but the responsibilities could continue for years after, depending on the circumstances.
Pour-Over Will Benefits
The pour-over will protocol exists hand-in-hand with the living trust. Having a pour-over will is beneficial because it ensures that all of the deceased person’s assets are taken care of in a straightforward way after their death. Beneficiaries receive what has been left to them through the living trust, with the help of the trustee, who is usually a close friend or trusted person. The pour-over will acts as a backup plan so that every asset is taken care of after the person passes, offering peace of mind for their family and loved ones. When in doubt, consulting with an estate planning attorney can take any stress away from writing your will or setting up a trust.