If the goal of estate planning is to avoid probate, it seems counterintuitive that one would sign a will, but the pour-over will is an essential part of some estate plans, reports the Times Herald-Record’s article “Pour-over will a safety net for a living trust.” So, what is a pour-over will?
If you pass away with assets in your name alone, those assets will have to go through probate. The pour-over will names a trust as the beneficiary of probate assets, so the trust controls who receives the inheritance. The pour-over will works as a backup plan to the trust, and it also revokes past wills and codicils.
Living trusts became very common, and widely used after a 1991 AARP study concluded that families should be using trusts rather than wills, and that wills were obsolete. Trusts were suddenly not just for the wealthy. Middle class people started using trusts rather than wills, to save time and money and avoid estate battles among family members. Trusts also serve to keep your financial and personal affairs private. Wills that are probated are public documents that anyone can review.
Even a simple probate lasts about a year, before beneficiaries receive inheritances. A trust can be settled in months. Regarding the cost of probate, it is estimated that between 2—4% of the cost of settling an estate can be saved by using a trust instead of a will.
When a will is probated, family members receive a notice, which allows them to contest the will. When assets are in a trust, there is no notification. This avoids delay, costs and the aggravation of a will contest.
Wills are not a bad thing, and they do serve a purpose. However, this specific legal document comes with certain legal requirements.
The will was actually invented more than 500 years ago, by King Henry VIII of England. Many people still think that wills are the best estate planning document, but they may be unaware of the government oversight and potential complications when a will is probated.
Speak with an experienced estate planning attorney to discuss how probate may impact your heirs and see if you agree that the use of a trust and a pour-over will would make the most sense for your family.
Reference: Times Herald-Record (Sep. 13, 2019) “Pour-over will a safety net for a living trust.”