If you are like most people here in Pennsylvania, you are going to be concerned about providing for your loved ones after you are gone. This is why estate planning is so crucial. You are going to want to make sure your estate has been set up in such a way that all of your assets will be able to transfer to the people you care about without any issues. This is why many experienced estate planning attorneys advise their clients to set up a living trust with a pour-over will to make sure that all of the assets are captured and distributed properly to their heirs and beneficiaries.
What are a Pour-Over Will and Living Trust?
A living trust is a legal document under which an individual, called a grantor, transfers the ownership of his or her assets to a trustee during their lifetime. The intent is to have these assets transferred to people they designate, called beneficiaries, upon their death. This allows the person to still control his or her assets while they are alive, with the assets being more quickly and easily distributed to the beneficiaries, since the transfer will avoid probate.
Sometimes, in setting up the living trust, a grantor may either neglect or for some other reason be unable to transfer all of his or her assets into the trust. This could be because the asset has provisions that make it impossible to transfer, or the assets may have been acquired just before the grantor died. For whatever reason, it is vital that these assets be transferred to the beneficiaries designated by the grantor. This is where a pour-over will comes in.
As its name implies, the pour-over will acts as a safety net, catching all the assets held by the grantor outside of the living trust at the time of death. These assets are then “poured over” into the living trust and distributed according to the terms of that document. This is a comprehensive strategy, since it allows the living trust to effectively capture and distribute all of the assets to the beneficiaries in a timely manner.
What are the Benefits of using a Pour-Over Will with a Living Trust?
There are a number of excellent benefits to using this strategy in your estate planning. First, it provides comprehensive asset management. While a living trust alone is helpful, it is often unworkable to continually transfer newly acquired assets into the trust. This is burdensome and costly in terms of time and money. The pour-over will provides a safety net that ensures that your beneficiaries will get all of your assets upon your passing.
You can also avoid the hassle of probate court with this strategy. Not only are there fees associated with having an estate pass through probate, but it also delays the distribution of assets to heirs and beneficiaries. This strategy will help you reduce or avoid probate court altogether.
There is also an element of privacy associated with this strategy. Many individuals, especially those with a high net worth, would prefer that the general public not know about their assets. With a standard will, the assets and distribution become a matter of public record. This is not the case with trusts, which are not made public.
You also gain a measure of flexibility with this strategy. When you acquire new assets, you won’t have to worry about filling out paperwork to transfer them into the trust. The pour-over will covers this, making sure that any and all of your assets will end up getting distributed according to the terms and conditions of the living trust.
Finally, this strategy is able to include the same benefits of using living trusts. These documents tend to have more detailed instructions for how assets are distributed when compared to simple wills. They also help reduce family conflict, since all of the assets will be governed by the terms of the living trust. Finally, this strategy gives you the ability to set up tax planning, helping to reduce the effect of estate and gift taxes. This is why this strategy is often employed by individuals with large real estate holdings or high net worth.
Contact an Estate Planning Attorney Today
Estate planning is something every individual should consider. If you are like most people, you are going to want to control how your assets are distributed to your friends and relatives upon your passing. The experienced estate planning attorneys at Jones, Gregg, Creehan & Gerace can help you design an estate plan that works best for you, such as a living trust with pour-over will. Contact our firm today so you can set up a consultation.