Many people might not know the term “pour over will.” But if you want to create a revocable living trust, you definitely need one.
A pour over will works in tandem with a revocable trust. (A revocable trust is created while you are alive and can be changed or amended or even terminated during your lifetime. With some exceptions, it becomes irrevocable on your death.) The main benefit of this trust is that it allows your estate to avoid probate and the associated high court costs and attorney fees, making it especially attractive for small estates. Probate can also take an inordinate amount of time, so there is also a faster distribution of assets. Additionally, the administration of a trust is a private matter between the trustee and beneficiaries, so there are few public documents announcing which beneficiary received what assets.
The grantor, or person who sets up the trust, funds the trust with various assets. (Not all assets are a good fit for a revocable trust, however. Check with your estate planning attorney as to how to deal with automobiles, some real estate, and subchapter S stock, for example.)
A revocable living trust is not a substitute for a will, which brings us to the reason you need a pour over will. With such a will, any recently acquired or forgotten assets can then “pour over” into the trust at your death. If you don’t have a pour over will, assets not included in the trust might be handled through intestate succession, as if you died without a will, and the state decides who gets them. Assets that are poured over likely will have to go through probate, however.
Ask your estate planning attorney to explain to you all the benefits and tax consequences of a revocable living trust and a pour over will.
- How to Recognize Nursing Home Abuse - August 4, 2022
- Do You Have the Right Type and Amount of Life Insurance? - August 2, 2022
- The Problem with Relying on the Unlimited Marital Deduction - July 28, 2022