Like most people, you will probably use a Last Will and Testament to distribute your entire estate when you initially create an estate plan. As both your estate and your family grow, you may choose to incorporate more complex and sophisticated estate planning tools and strategies into your plan. You may, for instance, decide to use a trust to distribute your estate instead of a Will. If so, does that mean you no longer need a Will? The Phoenix trust lawyers at Morris Hall PLLC explain why you still need a Will 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/or specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. Your Will also allows you to make two additional important decisions, appointing the Executor of your estate and nominating a guardian for your minor children. Your Will, in fact, is your only opportunity 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 relatively simple and modest estate; however, if you have minor children, complex assets, and/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 where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. 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 Settlor.
There are several reasons why people frequently decide to use a trust as their primary estate distribution vehicle. If you have minor children, for example, those children cannot inherit directly from your estate, but a trust can protect your children’s inheritance until they reach the age of majority and are able to inherit directly. 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. 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 will probably 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 – one of the primary goals of using a trust in the first place. A Pour Over Will prevents that eventuality by directing all assets not already transferred into the trust to be “poured over” into the trust after your death. In essence, a Pour-Over Will serves as a “catch-all” tool that backs up your trust.
Contact Our Phoenix Trust Lawyers
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding the need for a Pour Over Will to go along with your trust, contact the experienced Phoenix trust lawyers at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.
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