Trusts are often used as the primary manner to transfer wealth either while a trustor is alive or after death. A living trust becomes effective as soon as it is created and may begin distributing trust funds at any point thereafter. If you are depending on one or more living trusts to transfer your wealth, don’t make the mistake of assuming that you do not need to execute a Last Will and Testament as well.
Because a living trust has the ability to legally own and distribute all of a person’s assets, some people make the mistake of thinking that a Will is not needed. In a perfect world this may be the case; however, it is always best to have a backup plan. A pour over Will is just that — an estate planning back up plan for someone who thinks all of his or her assets have been transferred into a living trust.
A pour over Will does just that — “pours over” assets from a decedent’s estate into a trust. At the time of death, newly acquired asset, a forgotten asset, or an asset that did not get transferred because of a technical error in the transfer process will automatically be transferred per the terms of the pour over Will. In the absence of a pour over Will, those assets would become part of an intestate estate, meaning they will have to go through the probate process and state intestate succession laws will determine what happens to them. By creating a pour over Will, that possibility is avoided.
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- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020