You may decide to leverage the benefits of trusts to pass on your wealth to your loved ones. However, trusts require careful planning to ensure you do not inadvertently exclude valuable assets from your estate plan. Pour-over will provide a powerful tool to help maximize the effectiveness of your other estate planning strategies, such as revocable living trusts. As a result, when you create an estate plan, knowing what a pour-over will do can help you determine whether you need one for your plan.
What Is a Pour-Over Will?
A pour-over will specifically direct any assets left outside your living trust before your death – which remain part of your probate estate – to “pour over” into your trust upon your death during probate. Pour-over will effectively act as a safety net for your estate plan, rather than the primary testamentary vehicle of your plan. Individuals who intend to place all their assets in a living trust and have that trust distribute them after the individual’s death might use a pour-over will to ensure that any assets they did not place into the living trust ultimately end up in the trust after their death.
How Pour-Over Wills Work with Revocable Living Trusts
A revocable living trust is a type of trust that a person creates during their lifetime. The revocable nature of the trust means that the trust’s creator, often called a grantor, can change the trust’s terms or cancel (revoke) the trust during their lifetime. Revocable trusts can manage assets for a grantor, especially when another person or organization serves as trustee, and ensure those assets avoid probate after the grantor’s death.
However, people who use revocable living trusts may forget to include certain assets in the trust or may not transfer assets to it validly. People may also acquire new assets during their lives that they do not include in their trusts. However, for people who intend for their living trusts to serve as the primary vehicle for distributing their wealth after death, a pour-over can catch any assets remaining in a person’s estate at their death and transfer those assets to the trust (through probate) for eventual distribution according to the trust’s terms.
Why Texas Residents Might Need a Pour-Over Will?
Texas families who leverage living trusts as their primary estate planning tool might need a pour-over will to ensure that all the assets they have owned pass according to their instructions under one document – the trust document – rather than a series of estate planning documents that could potentially conflict with one another. Furthermore, using a trust to pass assets to family members and beneficiaries helps families keep their wealth and financial affairs private. Although a pour-over will publicly transfer estate assets to a trust through probate, the terms of the trust document remain private.
Common Misconceptions
Some of the biggest misconceptions that people have about pour-over wills and living trusts include:
- The trust covers everything: A trust can only manage and distribute assets that the grantor lawfully transfers to the trust.
- A regular will does the same thing: Although both wills and trusts can pass assets to beneficiaries, wills do so publicly through the probate process, whereas trust administration remains a private affair.
- My family won’t need probate: A pour-over will still requires a probate proceeding to transfer estate assets to a decedent’s trust.
Contact Our Estate Planning Law Firm Today
When you plan to distribute your wealth through your living trust, a pour-over will ensure that all your assets eventually pass through your trust according to the terms you have set for it. Contact Carroll Law Group, PLLC today for an initial consultation with a pour-over wills attorney to learn what pour-over wills do and whether you should incorporate one into your estate plan in Texas.