While many individuals begin their estate planning journey with a Last Will and Testament, it’s not uncommon to augment that Will as their family or estate expands. In fact, numerous individuals eventually opt for a trust agreement as the primary means of distributing their estate after their passing, drawn to the various advantages that a trust provides. If you decide to utilize a trust for estate distribution, the attorneys at Wilcox Attorneys, PA explain why you still need a Pour Over Will in your Arkansas estate plan.
What Is a Last Will and Testament?
A Last Will and Testament, commonly known as a Will, is a legal document empowering the Testator (the individual creating the Will) to allocate specific and/or general gifts of estate assets to various beneficiaries. When the Testator passes away, the law requires that these gifts be honored. Although a Will can be used to distribute a decedent’s entire estate, many people eventually choose to use a trust to distribute some or all their estate.
What Is a Trust?
A trust constitutes a relationship wherein assets originally owned by one party are held by a Trustee for the benefit of third-party or parties. Established by a Settlor (also known as a Maker or Grantor), a trust involves the transfer of property to the Trustee. Trusts are categorized as either testamentary or living trusts. A testamentary trust comes into existence upon the Settlor’s death, activated through a provision in the Settlor’s Will. In contrast, a living trust takes effect once all legalities are in place and is administered during the life of the Settlor, though a living trust may continue to function after the Settlor’s death as well. Like a Will, a trust can also be used to distribute the entire estate. Along with being used to distribute estate assets, additional benefits potentially gained from utilizing a trust include:
- Probate avoidance. Unlike assets distributed via a Will, assets held in a trust are not required to go through the probate process before they can be distributed to the beneficiaries.
- Protecting the inheritance of a minor child. A minor child cannot legally inherit directly from your estate, making a Will a poor choice to use when assets are designated for minor children. A trust, however, allows you to decide who will manage your child’s inheritance until he/she reaches the age of majority.
- Incapacity planning. A Will is only applicable upon the death of the Testator, A trust, however, can be used to protect assets and loved ones in the event of incapacity as well.
- Privacy. The terms of a Will become public record when it is submitted for probate. Conversely, the terms of a trust agreement remain private because it does not go through probate.
Why Do I Need a Pour Over Will If I Have a Trust?
The belief that a Will becomes obsolete once a trust is created is a common, and persistent, estate planning misconception. To ensure the overall success of your estate plan, it is crucial to understand that you may still need a Will in place even if you plan to rely entirely on a trust to distribute your estate assets after you are gone. A “Pour Over” Will is a Will specifically intended to fulfill this role in your estate plan.
While significant assets may be successfully transferred into the trust you create prior to your death, there is always a possibility that you overlooked assets. Personal items, vehicles, less valuable holdings, day-to-day banking accounts, and recently acquired valuable assets are assets that people may unintentionally leave out of a trust. These assets that you have failed to account for could lead to an intestate estate, resulting in the need to open a formal probate which is precisely what you likely wanted to avoid by using a trust. To mitigate this risk, a Pour Over Will is necessary to direct all assets not previously included in the trust to be “poured over” posthumously. Essentially, your Pour Over Will serves as the perfect complement to your revocable living trust when used to distribute your estate assets.
Do You Have Additional Questions about a Pour Over Will in Your Arkansas Estate Plan?
For additional information, please download our FREE estate planning worksheet. If you have additional questions about the need for a Pour Over Will in your Arkansas estate plan, contact the experienced Washington County, Fayetteville, Springdale, Rogers, Bentonville, and Northwest Arkansas estate planning attorneys at Wilcox Attorneys, PA by calling 479-443-0062 to schedule your appointment today.
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