A pour-over will is something you may have heard about, but you may not be sure what it does. Pour-over wills, like other types of wills, must meet specific legal requirements to be effective estate planning tools. Pour-over wills are designed to work hand-in-hand with another estate planning tool, the revocable living trust.
To better explain what a pour-over will is, how it works with a living trust, and how you might benefit from including one in your estate plan, let’s take a look at some essential issues.
Wills
A last will and testament, commonly referred to simply as a will, is the estate planning tool with which most people are familiar. With a basic last will and testament, at your death you can make gifts to whomever you like. If your last will and testament complies with state law, the gifts you have listed will become effective after you die and your will is probated. Until you die or become incompetent, you can modify your choices, update your will, or completely revoke its terms.
Living Trusts
A living trust is another vital estate planning tool that allows you to make inheritance choices. A living trust is like a corporation in that it exists independently of the person who creates it. When you use a living trust as part of your estate plan, you transfer your property into the trust’s name and use the trust as the vehicle through which you name your beneficiaries. When you die, the living trust remains the owner of your property and begins distributing your property as inheritances. The great benefit of using a living trust instead of a last will and testament is that the trust does not have to go through probate. A last will and testament must be probated before inheritances can be distributed.
Pour-Over Wills and Living Trusts
When people create a pour-over will, they create a last will and testament designed to accompany a living trust so that the trust inherits any personally owned property. As the name implies, a “pour-over” will is designed to take any property you did not transfer into the living trust, and transfer it for you after you die. It “catches” any property you left out and “pours” it into the living trust, so the living trust can distribute inheritances.
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