Why You Need A Pour-Over Will
Are you avoiding estate planning? Estate planning can be hard, and creating a comprehensive estate plan can often seem daunting. However, with the help of an experienced estate planning attorney, the process can be quite painless. For many people the hardest part of estate planning is making sure to account for all of your assets and property. For this reason, one important aspect of an estate plan is a pour-over will.
What is a Pour-Over Will?
A pour-over will is an estate planning tool that works in conjunction with a living trust. It’s essentially an insurance policy for your estate, that ensures that any assets that have not already been moved into the living trust at the time of your death, will automatically be transferred into the trust so that they do not have to go through probate.
Why to Avoid Probate
You may be wondering why it is important to try and avoid probate and what probate even is. Probate is the process of settling and distributing a decedent’s estate. This process involves filing court documents, publishing citations in the newspaper, preparing accountings, and closing an estate in compliance with statutory and court regulations. Prior to distributing assets to those named in a Will, certain expenses, such as the decedent’s debts and taxes have to be paid from estate assets. The remaining assets will then be distributed in accordance with the Will; however, the amount left over for distribution may not be known until the closing of the probate matter, which generally occurs at the one year anniversary of the date of death. The probate process can be long, as well as cost inefficient, when filing fees, publication fees, and attorney’s fees are taken into consideration. The cost to administer an estate and the time inefficiencies equate to less received by the beneficiaries of your estate at a later period in time.
How a Pour-Over Will Helps You Avoid Probate
A Pour-Over Will is a Last Will and Testament; however, it is different from a stand-alone Will in that the residuary beneficiary is a living trust. So, instead of leaving equal shares to your living children, you are leaving 100% of your assets to your living trust. The living trust will then have the detailed distribution instructions that would typically be included in the stand-along will.
When you transfer assets into a living trust, which can be done during your lifetime or at your death, the assets become property of the trust. When an asset is either “sat” in the trust (that is, owned by the trust at your passing) or transferred to the trust at your death because the trust is named as the death beneficiary, then the assets are no longer owned in the individual name of the decedent or trust maker and thus not probate assets. If they are not probate assets, they are not probated. They are assets of the trust, which is not probated. This means that there is no need to file a probate, but it also means that these assets are not distributed in accordance with the provisions of a Will. Instead, if the decedent’s property is owned by the trust , they will be distributed according to the decedent’s wishes as expressed in the trust instrument (again, not the Will). Distributions from a trust can be done quickly and easily, and does not involve the waiting process and legal complexities of probate.
If a decedent does not succeed in transferring all of his or her assets into the trust, either accidentally or intentionally, the assets that were left out will have to go through the probate process l and the terms of the pour-over will will dictate the distribution, which would be to the trust, as residuary beneficiary. While the distribution of assets may be the same under a Last Will and Testament or a living trust, the trust is more efficient, in that it can addressing issues that do not require the supervision or intervention of the probate court and also provides the decedent the opportunity to control the distribution of assets after death by imposing conditions on the beneficiaries not allowed to be included in a Will for public policy reasons, for example, execution of a prenuptial agreement or a consistent history of employment. A trust is a more flexible and robust document.
Contact Fisher Law, LLC to Schedule a Consultation
If you are ready to create or update an estate plan that meets all of your needs, contact the Norwood estate planning lawyers at Fisher Law, LLC to schedule a consultation today.