Although your estate plan may include additional goals, the distribution of your estate assets after your death is one of your most important ones. Most people initially use a Last Will and Testament for their estate planning, but as their estate and family grows, the Will may be replaced by a Family Wealth Trust as the means to distribute their assets. If you have a Family Wealth Trust, you still need a Pour-Over Will to ensure your entire estate is distributed according to your wishes after you are gone.
What Does a Basic Last Will and Testament Accomplish?
A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make gifts of estate assets to designated beneficiaries that must be honored after your death. Your Will allows you to appoint someone you trust to be the Executor (or Personal Representative) of your estate. The Executor is responsible for overseeing the probate of your Will after your death. It also allows you to nominate a Guardian for your minor children. Your Will is the only opportunity you will have to tell a judge who you want to care for your children if a Guardian is needed. A Will is fine for a relatively simple and modest estate; however, if you have minor children, complex assets, and/or very specific estate planning goals, you should consider adding a trust to your estate plan as the primary vehicle by which your assets will be managed and distributed after your death.
What Is a Family Wealth Trust?
A Family Wealth Trust, or FWT, is used to protect your assets for future generations. Despite the name, you need not be “wealthy” to benefit from an FWT. One significant benefit of an FWT is that it can protect assets from creditors both now and after your death. Assets held in an FWT may also be safe from claims made by a beneficiary’s spouse in a divorce. If you have minor children, they cannot inherit directly from your estate. An FWT can protect your children’s inheritance until they reach the age of majority or such later time at which you want them to inherit directly. Finally, because the assets held in a trust are not required to go through probate, they can be distributed much more quickly and readily than in a probate, offering one of the most important advantages of using a trust. These benefits make a Family Wealth Trust a popular option for distributing estate assets, but it does not entirely do away with your need for a Will.
What Is a Pour-Over Will?
A well thought out and properly drafted Family Wealth Trust can take the place of a Last Will and Testament, but only if there aren’t any loose ends after your death. If something was left out of the FWT, or purchased after the Trust was set up and titled solely in your name, the Trust has no authority over it and it can only be taken care of through a Will. For this reason, a “Pour-Over Will” should always be included in an estate plan when an FWT is used as the primary distribution tool. You may succeed in transferring all your valuable assets into your FWT prior to your death, but many times we find some assets that simply failed to make it into the trust. Personal items, vehicles, less valuable assets, bank accounts used for day to day banking, and even valuable assets purchased just prior to your death are often inadvertently left out of your FWT. If they remain unaccounted for, they will require an intestate administration or probate. A Pour-Over Will prevents most of these problems by directing that all assets not already transferred into the trust be “poured over” into the trust after your death. In essence, a Pour-Over Will serves as a “catch-all” tool that backs up your primary Family Wealth Trust. Together they ensure your estate is distributed according to your wishes.
Contact Oklahoma Estate Planning Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns regarding a Family Wealth Trust or the need for a Pour-Over Will, contact the experienced Oklahoma estate planning attorneys at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.
- Does Your Estate Plan Include a Letter of Last Instruction? - June 6, 2023
- What Is the 2023 Gift Tax Exemption? - June 1, 2023
- Incentives Can Be Part of Your Estate Plan - May 30, 2023
