Many people use a Last Will and Testament to distribute their entire estate when they initially create an estate plan. As both their estate and their family grow, many choose to incorporate more comprehensive estate planning tools and strategies into their plan. For instance, they might decide to use a Trust to distribute their estate instead of a Will. If so, does that mean they no longer need a Will? The short answer is a special Will is needed even if you are counting on a Trust to distribute your estate.
Last Will and Testament Basics
A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make both general and specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. Your Will also allow you to make two additional important decisions. First, you will appoint someone to be the Personal Representative, also known as the Executor, of your estate in your Will. The Personal Representative of your estate is responsible for overseeing the probate of your estate following your death. Second, you have the ability to nominate a Guardian for your minor children in your Will. Your Will, in fact, is the only opportunity you have to tell a judge who you would want to take over the care of your children if a Guardian is needed. A Will works fine to distribute a very simple and modest estate; however, if you have minor children, assets worth more then $75,000, or distinctive estate planning goals, you should consider incorporating a Trust into your estate plan as the primary vehicle by which your assets will be distributed after your death.
A Trust is a legal relationship wherein property is held by one party for the benefit of another party. The person who creates a Trust is referred to as the "Trustor", "Settlor" or "Grantor." The Trustor transfers property to a Trustee, appointed by the Trustor. Almost always, the Trustor is the initial Trustee, and thus has complete control of the assets of the Trust. The Trustee holds that property for the Trust's beneficiaries as well as invests Trust assets and administers the Trust terms according to the terms created by the Trustor.
There are several reasons why people frequently decide to use a Trust as their primary estate distribution vehicle. Under a Trust, your beneficiaries will not receive assets upon your death until they are of an appropriate age and are ready to control the assets. Only through a Trust, and not a Will, will your beneficiaries have protection from creditors, ex-spouses, irresponsibility, and other factors that could deplete what you leave them. Another huge benefit to using a Trust to distribute an estate is that assets held in a Trust are not required to go through probate, which takes months, is very expensive, and allows the public access to all matters involved. Using a Trust to distribute your estate, however, does not mean that you no longer need a Will.
Pour-Over Will Basics
A properly drafted Trust can take the place of a Last Will and Testament regarding the distribution of estate assets; however, your estate may have some loose ends after your death for which a Will is required. Specifically, you need to include a “Pour-Over Will” in your estate plan if you decide to use a Trust as your primary distribution tool. Despite your best efforts, you might leave behind some assets that fail to make it into the Trust. Personal items, vehicles, less valuable assets, bank accounts used for day to day banking, and even valuable assets purchased just prior to your death are all examples of assets that might be inadvertently left out of your Trust at the time of your death. If they remain unaccounted for, they will create an intestate estate that requires probate. A Pour-Over Will simplifies the process and provides protection by directing all assets not already transferred into the Trust to be “poured over” into the Trust after your death. A Pour-Over Will serves as a “catch-all” tool that backs up your Trust.
Contact Morris Hall, PLLC
For more information, or if you have additional questions or concerns regarding the need for a Pour-Over Will to go along with your Trust, contact Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.