The most common question we get from our estate planning clients is: should I do a will or a trust? Which one is better for me?
The answer varies depending on your individual circumstances, your family’s situation, and your estate planning goals.
But, what if we told you that you can actually have the best of both worlds? That you can have your cake and eat it too? Can you have a will and also a trust?
The answer is YES, you can.
Having a trust does not mean a will is not necessary. On the contrary, a will is still a highly effective estate planning tool that goes alongside a trust. This type of will is called a Pour-Over Will.
What are pour-over wills?
A pour-over will is like a safety net that captures any assets not transferred into your trust before your death to make sure they end up in the trust. It’s that simple. In addition, it maximizes probate-avoidance goals by making sure every single asset you own at your time of death ends up in your trust.
Whether you forget to transfer assets into your trust, the transfer is done incorrectly, or you don’t have time to finalize the transfer before your time here is up, a pour-over will prevents intestacy laws (laws that apply when you die without a will) from directing the future and distribution of your estate or a portion of it. A trust requires constant maintenance. If you fail to update your trust and any assets end up not transferred timely, a pour-over will take care of that for you, hassle-free.
By doing so, a pour-over will make your trust an even safer tool in protecting your assets, avoiding probate, and minimizing tax implications.
How do pour-over wills work?
This type of will works like all other types of wills. You must designate an executor to your estate who will then carry out the instructions in the will during the probate process. Even though the language is pretty similar, you should be careful when listing your assets in your will to avoid listing any assets already transferred to your trust.
You must also name a residual beneficiary who will receive your residual estate. If you choose your trust to be your residual beneficiary, you are making sure that the totality of your assets will be administered and distributed in accordance with the provisions of your trust and as directed by the trustee or chosen successor trustee.
In some instances, it is better to use broad language when drafting your pour-over will to make sure it includes any asset not previously transferred into your trust.
Do pour-over wills have to be probated?
Yes, they dot. If there is a will, this will must be probated for distribution to occur. However, intestacy laws do not apply. Meaning, your assets will not be distributed according to the law. A pour-over will directs any assets not duly transferred into your trust to be transferred into your trust at the end of the probate process.
Will a pour-over will interfere with my trust?
Not at all. A well drafted pour-over will, when prepared as part of a comprehensive estate plan package including a revocable trust, will not interfere with any of the instructions of your trust.
On the contrary, it will ensure that the instructions of your trust are respected and apply to all your assets with no exceptions, protecting your estate and your beneficiaries.
If your estate plan includes a trust and a pour-over will, your trust is the primary estate planning tool. It combines all your wishes and instructions as to how to distribute your assets to your chosen beneficiaries..
Is a pour-over will and trust combo right for me?
As we said earlier, whether this estate planning tool is the right one for you, it depends on your unique situation and what your goals are.
If you would like to know more about wills and trust and other estate planning tools, give us a call at (385)334-4030 or schedule a consultation with one of our experienced attorneys at: https://www.skvlegal.com/bookings-checkout/1-hour-initial-consultation?referral=service_list_widget.
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And, for more articles from our attorneys about wills and trusts, check these out: