Many clients ask us, “what happens if I have an asset outside the name of my trust at the time of my death? Is there any way to transfer it to my trust at that point?” The answer is YES. Typically, a pour over will is used in conjunction with a living trust, which allows selected property or assets to “pour” into a trust. Once that happens, the property can be distributed to the beneficiaries named in the trust.
Advantages of Pour Over Wills
Many estate planning attorneys believe that handling all of your assets with one document, a trust agreement, is the best plan. We are generally in agreement with this position in most circumstances, however, there is still the question of how we create a safety net in the case that assets are outside of the trust at the time of death. The major benefit is that a pour over will takes care of any assets or property that you was not transferred to the trust before your death. Using a pour over will in conjunction with a trust helps maintain the privacy many clients prefer.
Disadvantages of Pour Over Wills
The major disadvantage of pour over wills is that the property must still go through probate. The distribution of the trust property could be delayed in probate before it will ultimately be distributed to the trust. However, to avoid that step, the property can be transferred directly to a living trust, as opposed to a pour over will, and your heirs may be able to receive their inheritances much sooner.
Selecting which property to include in your pour over will
In most cases, clients do not set up their estate plan so that any of their assets are included in the pour over will. Instead, many clients transfer the majority of their valuable assets to a living trust, as part of their estate plan. The only property that is included in a pour over will would be the minor assets that remain, along with anything that was unintentionally omitted from the living trust. In this way, the probate process will be much simpler and less expensive, depending on the size of the estate.
The duties of an executor of a pour over will
As with other types of wills, a pour over will needs to identify an executor to wrap up the estate after your death. The duties of the executor will typically include collecting the assets, satisfying debts and paying taxes, and ultimately distributing the assets to the named beneficiaries. These duties are made simpler with a pour over will. Basically, the sole duty of the executor of a pour over will is to take all of the assets identified in the will and transfer them to the trust.
Selecting a trustee for your pour over will
The trustee is a major component of every trust. So, selecting your trustee is an important decision. A trustee is the person who will ensure that the terms of your trust are followed. The most common choices for trustee are an adult relative or a trusted friend. Certainly, in most cases, selecting someone you know personally will have its benefits. For example, you are more likely to receive personal attention from someone you know. Also, a friend or relative will be less inclined to charge a fee for serving as trustee. A financial institution, on the other hand, is responsible for managing several trusts, which means you could receive less personal service.
The benefits of professional trustees
Another option to consider is a professional trustee. It goes without saying that a financial institution or trust company would be qualified and highly capable of serving as trustee. In fact, these professionals possess the knowledge and expertise in managing funds that can give you the peace of mind you are looking for. However, financial institutions and trust companies can be more expensive than private trustees.
Choosing a successor trustee
Once the assets have been transferred by the pour over will to the trust, they become the responsibility of the successor trustee. The successor trustee is the person you identified in your living trust to take over at your death or upon your incapacity. The duties of a successor trustee are similar to that of an executor, except that the trustee only has control over the trust property. However, the successor trustee has no authority over property that is included in your probate estate.
If you have questions regarding pour over wills, or any other estate planning matters, contact Gaughan & Connealy for a consultation either online or by calling us at (816) 974-3030. Join us for a free workshop!