If you want to protect the wealth that you’ve accumulated and support your loved ones long after you’re gone, you’re going to have to engage in thorough estate planning. Far too many people think that they can skip the process since they just want everything to pass down to their spouse and their children, but taking this approach can be dangerous.
It might threaten to leave your assets with someone you never intended to inherit, leave your family susceptible to infighting over certain assets and leave your estate subject to otherwise avoidable taxation and probate costs.
Yet, a lot of people are simply daunted by the intricacies of the process. That’s why this week on the blog we want to briefly look at the benefits of using a living trust in conjunction with a pour-over will, which may make your estate planning a little easier.
How does a living trust work?
A living trust is simply a trust that you create during your lifetime. You can add assets to the trust over time and name appropriate beneficiaries to inherit those assets when the time comes.
One of the benefits of this kind of trust is that even though you no longer own the assets, since they are technically owned by the trust, you still get to use them as if you own them. This trust type also skips the probate process, which can save your estate and your loved ones a significant amount of money.
What is a pour-over will?
If you use a living trust, you have to remember to add assets to it as you continue to acquire them and if you want them to receive trust protection. But that can be hard to do when you’re dealing with the realities of your daily life.
This is where a pour-over will can prove helpful. This legal document serves as a catch-all, informing the probate court and your loved ones that any assets not in your living trust were intended to be transferred to the trust. Therefore, at the time of your death, the pour-over will effectively moves those assets that you may have forgotten about or overlooked to the trust.
Does a pour-over will have to go through probate?
Yes, unfortunately. That’s why it’s best to stay on top of your living trust as much as possible. But having a pour-over will is better than having no will at all. If you only proceed with a living trust but don’t create a will to catch your other assets, those assets that are outside of the trust will be distributed in accordance with the state’s intestate succession laws, which may be contrary to your wishes.
Do you have to use a living trust and a pour-over will?
No. The estate planning process has a lot of options that you can use to protect your interests and your loved ones. You simply have to educate yourself about those options so that you can make the fully informed decisions that are right for you, your estate and your family.
Do you need additional guidance?
With so many choices to make during the creation of your estate plan, it’s easy to get confused and frustrated. But you don’t have to try to navigate the intricacies of the process on your own. Instead, you can have an experienced legal professional help guide you toward the estate planning avenues that are right for you, thereby making the process easier to understand and easier to navigate.