Creating And Protecting Your Legacy

What is a pour-over will?

On Behalf of | Oct 27, 2020 | Estate Planning |

As the Florida Bar explains, living trusts can be an effective tool to avoid probate, manage your estate and distribute assets after you die. These trusts offer significant estate planning benefits including the flexibility to withdraw funds and modify the trust during your lifetime. And they offer the benefit of privacy as trust assets remain closed to the public.

But to avoid probate and reap the full benefits of a living trust, grantors need to plan effectively. One tool many testators use to cover mistakes is the pour-over will.

Funding a trust

Grantors must fully “fund” their trusts during their lifetime to enjoy the benefits that living trusts offer; failing to do so will require their nontrust assets to undergo probate and get caught in the lengthy red tape.

Funding a trust means formally moving all assets into it before death. This may include real property, financial accounts or other assets. Sometimes moving all assets into the trust can be a long and complex process, especially for high-asset testators.

Pour-over wills

Pour-over wills are a common device that grantors use to fund their wills after death. In short, these wills dictate that any assets the grantor failed to transfer to the trust move to the trust after death.

This can be a great way to catch any mistakes or leftover items outside of the trust. However, these wills are only appropriate for a backup plan. Items subject to pour-over wills still must undergo the probate process before they end up in the trust for distribution.

Grantors will need to have a plan in place to distribute their trust assets to beneficiaries, and they will need to designate a trustee to manage the process.