A living trust is an essential estate planning tool for many people, and it has many benefits. Chief among these are avoiding probate and helping assets get more quickly into the hands of loved ones after a death. Creating a trust doesn’t automatically accomplish these goals, of course; once you have a trust, you need to place assets in the trust for them to pass through the trust. This is done by funding your trust. What happens though if you miss getting every single thing you into your trust? That’s where a “pour-over” will comes into play.
What is a pour-over will? As the name suggests, it is a will that, at your death, “pours” all of your assets, large and small, into the trust’s ownership. Though funding your trust during your life is advisable for a variety of reasons, if you have failed to do so but have a pour-over will, the pour over will effectively funds your trust with those assets you missed after your death.
As suggested above, the primary advantage of a pour-over will is the ability to ensure that everything you own at your death can pass according to the terms of your trust. While a will distributes assets outright to your named beneficiaries, a trust can allow a delayed or measured distribution, which you may prefer. A pour-over will also offers clarity; because all assets are distributed via the trust, the trust document controls everything. The executor of the pour-over will need only turn all assets over to the successor trustee of your trust.
However, keep in mind that you do not want to rely on the pour-over will to transfer your assets into your trust. That is because assets distributed via a pour-over will still need to go through probate and, therefore, are subject to probate costs and the other disadvantages associated with probate.
Another benefit of having a pour-over will that you may not have considered is privacy for your estate plan.
Another benefit of having a pour-over will that you may not have considered is privacy for your estate plan. In Michigan, wills must go through probate and are filed with the probate court, making them public record. If your assets and their intended recipients are detailed in your will, anyone will be able to access that information. Trusts are not public record. If you have a pour-over will that simply directs that any assets in your sole name are to be distributed to the trust, the amount, nature, and disposition of your assets remain private.
If, as an increasing number of people do, you decide to relocate overseas, having a pour-over will may also simplify the disposition of assets you acquire while living in a foreign country. A pour-over will that funnels those assets into an American trust may minimize or eliminate the need for probate in a foreign country.
If you have a trust, or want to create one to take effect at your death, a pour-over will should be a part of your estate plan. Get in touch with an experienced estate planning attorney to discuss updating your estate plan to include this essential document, as well as to update your trust as needed. We invite you to contact our law office for assistance; we look forward to working with you.