Many people wonder what happens to assets they hold that are not included in their trusts. They also ask if there is any way to transfer those assets to their trust after their death.
If you have established a revocable living trust to keep your estate out of probate, you should have a pour-over will.
In this article, we cover basic information to help you understand pour-over wills and determine whether you should create one.
Definition: What is a Pour-Over Will?
A pour over will is used in conjunction with a living trust. It serves to pass property through your pour over will into your trust.
A pour-over will is a will designed especially for a person who has created a trust.
During your life, you will transfer certain assets into your trust. However, you may not get around to transferring everything.
A pour-over will transfers all of your remaining property into your trust after you die. Once the assets are transferred to the trust, they can be distributed to the beneficiaries who are named in the trust.
Advantages of Pour-Over Wills
A pour-over will offers several notable advantages for estate planners:
- Having a pour-over will simplify the estate administration process by funneling all of your property into the same trust.
- It ensures that none of your assets will be forgotten or left out.
- Furthermore, It is a safety net that will protect any assets that are outside of the trust at your time of death.
Probate: Disadvantages of Pour-Over Wills
In addition to the advantages of pour-over wills, there is a key disadvantage that should be noted. Because they are wills, the property that passes through them and into the trust must generally go through probate. This can increase the amount of time it takes to distribute all of your property to your heirs.
If you want to completely avoid probate, then all property should be transferred directly to your trust. This way your heirs will receive their inheritances much faster.
An Executor for Your Pour-Over Will
All wills need to identify a person to serve as executor. The executor is responsible for seeing that all of the details of your estate are settled after your death.
In a standard will, these responsibilities include:
- Gathering assets
- Satisfying debts
- Filing and paying taxes
However, if you have a trust and a pour-over will in place, the duties of the executor should be much simpler. The duty of the executor of a pour-over will is to take all of the assets identified in the will and transfer them to the trust. This usually occurs after the pour-over will has gone through probate.
Duties of the Trustee
Once the property is transferred from the pour-over will to the trust, it becomes the responsibility of the trustee to manage or distribute the assets.
The trustee’s role is to ensure that the terms that you set out in your trust are carried out.
The most common choice for a trustee is an adult relative or trusted friend.
There are advantages to both selecting a trustee from your friends or relatives AND from selecting a professional trustee.
Friend or Relative
A friend or relative is less likely to charge a fee for serving as a trustee. And they are more likely to provide more attentive and personalized involvement.
Financial Institution or Professional Trustee
Hiring a professional trustee has advantages. Of course, there will be greater costs involved. Professional trustees possess knowledge and expertise in managing funds and other assets that should give you peace of mind that your affairs will be handled according to your wishes.
Using a Pour-Over Will
If you choose to execute a pour-over will in combination with a living trust, you can minimize the chances of complications after your death by transferring all of your most valuable assets into your trust while you are still alive.
By minimizing the amount of property that passes through the will, you minimize the size of your probated estate.
Not only will this facilitate faster administration of your estate, but it may also keep your estate small enough to remain out of probate altogether.
Arizona Assets that Could Avoid Probate
In the state of Arizona, if the value of the personal property left outside the trust is less than $75,000, probate may not be necessary.
Pour-Over Wills Conclusion
As you can see, a pour-over will is a tool that should be considered as part of your estate plan if you are contemplating, or already have an established trust.
Whenever possible, assets should be transferred into your trust prior to your death. However, a pour-over will serves as a way to move any assets into your trust after your passing.
Having a trusted estate attorney help you set up your trust and pour-over will can ensure that your desires will be carried out more efficiently.
For more information about forming a trust or executing a pour-over will, please contact our estate planning attorneys at Fowler St. Clair today to schedule a consultation.
© 2019 Fowler St. Clair PLLC, All Rights Reserved. The information presented is not legal advice, is not to be acted on as such, and may not be current and is subject to change without notice.