By establishing an estate plan, you are proactively ensuring that your assets will be transferred in accordance with your preferences after your passing.
A trust is one estate planning instrument that you have at your disposal. Trusts come in a variety of forms. You can choose to create a revocable, or "living" trust along with a pour-over will if you want to keep control over the assets you place in a trust during your lifetime.
To begin, what exactly is a living trust?
A living trust is an estate planning technique. When you establish a living trust, you designate certain assets for it. This could apply to assets like a second home, a bank account, or a gallery.
You have the freedom to alter or terminate a living trust at any time during your life.
How Do Living Trusts Work?
You still have access to the assets after putting them under this kind of trust. If you pass away or are ever rendered incapable of managing your affairs, you can name a trustee who will act as the manager of your living trust.
For instance, if you become ill, develop dementia, or experience an injury or accident that prevents you from speaking, you may lose the ability to manage your property, finances, and other elements of your life. In the event of your demise or incapacity, the trustee you have appointed will oversee the living trust on your behalf, adhering to whatever instructions you have provided in the trust agreement.
Your living trust's assets are dispersed to your beneficiaries in accordance with your instructions, often without going through the probate process. This is frequently regarded as one of a living trust's key benefits.
For starters, the length of the probate process might range from several months to a year or more, depending on your state and the size of your estate.
By avoiding probate, you can keep confidential the details of how your assets were distributed to your loved ones. This can be useful if you have people in your life from whom you'd wish to keep your estate's specifics a secret, including children from a prior marriage or estranged or belligerent family members.
Though it's possible that you added new assets after creating your living trust, including investment property, a bank account, a car, expensive furnishings, or jewelry. It's possible that you haven't moved them yet. This is where creating a pour-over will can be a crucial component of your estate plan.
What Is a Pour Over Will?
A pour over will is a sort of estate planning document. It functions in conjunction with a living trust and takes effect in the event of your incapacity or demise. This instrument makes sure that, in such a case, any assets you hadn't transferred to your current living trust are directed (or "poured over") to it.
With a pour over will, you may be sure that your assets will be distributed to your beneficiaries according to your wishes. Once transferred to your living trust, information on the distribution of any of your remaining assets will also be kept private as part of the trust.
It is crucial to note that rules might vary by state, so before creating any estate planning documents in your area, you should speak with a knowledgeable estate planner in your area.
Do Pour Over Wills Mean You Avoid Probate?
Not always; while the property held by a pour over will eventually pass to your living trust after your death, this does not imply your family will avoid probate. Your assets might need to go through the probate procedure first before they are owned by the trust. In some places, for instance, if your probate property is valued below a particular level, it's likely that it will move through probate more quickly. The rules can also differ by state.
You must ensure that all of the assets you desire to leave to your beneficiaries are included in your living trust if you want to avoid the probate procedure. A pour over will essentially serve as a backup.