A pour-over will is a fairly simple—yet essential—document needed when a living trust anchors an estate plan. Basically, as the name implies, a pour-over will “pours” any assets that have remained in your name into the trust, though you may not have actually signed them over to the trust before death. In this way, a pour-over will allows your overall estate plan to stay on track, guaranteeing that the instructions made for the trust serve as your final word.
Best Practice: Trust Plus Pour-Over Will
Living trusts are often considered the cornerstone of a comprehensive estate plan, because of their comparative advantages to traditional wills: assets in trusts remain private, bypass the public process of probate, and can be received by beneficiaries quickly upon the death of the trust’s grantor. Crucially, a well-drafted living trust also encompasses arrangements for potential incapacity, allowing a named successor trustee to immediately manage finances if the grantor becomes unable to do so. Despite the utility of a living trust, most families still need a form of will, known as a “pour-over will”, to ensure that affairs are as neatly ordered as possible. As Kyle Krull of Harvest Law explains, a pour-over will serves as a “safety net,” ensuring that all assets are ultimately distributed based on the specifications laid out in the trust document:
A pour-over will …designates your trust as the beneficiary of your probate estate.
When assets are forgotten or are left out due to a lack of time to transfer them before you die, the trustee will be able to gather those assets into the trust. Pour-over wills allow for the trust to singularly control the who, when, and how of inheritances … .If you have a revocable living trust-based estate plan, you should also have a pour-over will. This tool is beneficial when you expect new inheritances or accounts to be left to you, or when you hold property in multiple locations. It is also helpful when you have arranged for a trustee to implement spendthrift protections, manage funds for minors, and stage distributions. You also need a pour-over will to nominate guardians (i.e., back-up parents) for any minor children should they ever be orphaned.
Though useful, pour-over wills are not magic wands, so it’s still wise to carefully review both the provisions of a living trust and those of the pour-over periodically to ensure they attend to life changes that may require a re-think of assets and plans. Estate planning specialists share these additional cautionary notes to ensure living trusts and pour-over wills are well coordinated:
- Pour-over wills must correctly identify the living trusts by name and date.
- Storing, reviewing, and updating trusts and pour-over wills together will ensure they can serve their purposes when the time comes….
- Although a pour-over will is a safety net, you should still prioritize retitling essential assets to your trust while you are alive.
- Any payable-on-death or transfer-on-death designations should align with your comprehensive estate planning.
- Selecting executors and trustees capable of the roles will promote a more efficient and effective estate settlement. Your executor should be able to take prompt action for your estate, as is likely also your trustee. Your trustee should understand the terms of the trust you created. Because your first choices for these roles may not be available when the time comes to administer your estate, you should select alternates as well.
Carrying Out The Estate Plan: Executors and Trustees
The designation of the individuals who must ultimately carry out the plans made through wills and trusts is an important aspect of estate planning. It’s well worth the effort to be thoughtful in making this decision, taking the time to ensure designees understand your intentions, and have the information, time and ability to carry them out. At Trust & Will, attorney Craig Parker offers these tips related to the selection of an executor and trustee for a pour-over will and trust:
- The Executor of a Pour Over Will is the person who will carry out the duties specified in the document. In many cases, this means arranging for the cremation or burial, organizing the funeral or memorial ceremony, filing final tax paperwork, and transferring assets into the Living Trust. The Executor will also handle any other necessary administrative affairs.
- The Trustee, who is named when the Living Trust is created, will manage the distribution of assets within the Trust as specified. In some cases, the Executor and the Trustee will be the same person but not always. For example, parents may place one child in charge of each role or some other arrangement. It is recommended that the Trustee and Executor are aware of each other’s responsibilities, and that they understand they will be working together in the future.
It is common for executors and trustees to also be beneficiaries of the estate, so attorneys remind us that the appointed individuals “owe a fiduciary duty to the estate and its beneficiaries that compels them to act in the best interests of both.” Given the significant obligations of executors and trustees, fiduciary bonds can be required. Essentially, executor and trustee bonds guarantee that the individuals will adhere to the law, and the official estate plans, when carrying out their duties. More Information about executor bonds and trustee bonds, as well as a user friendly online service to obtain them quickly is available at Colonial Surety Company:
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