After creating and funding your revocable trust, your estate planning task is not quite over. It is still necessary to consider whether you will need a pour-over will. You may be wondering what a pour-over will is and why you would need it. If there is a possibility that you may own additional property in the future, more than what you have included in your trust, you may.
The importance of funding a trust
Once your revocable trust has been created, the next step in the process is funding that trust. The true benefits of a trust are not reaped until it is properly funded, which simply means transferring your property and assets into the name of the trust. This can be accomplished in several ways: changing the title or ownership of the property to the trust, assigning the ownership rights in certain property to the name of the trust, or changing the name of the beneficiary to the trust. The method to be used in your case will depend on the different types of property you need to transfer.
Why would I need a pour-over will?
Any assets that are in your name at the time of your death, but have not been included in your living trust, cannot be later included. The excluded property will not be governed by the terms of the trust agreement, but instead will likely be distributed through the laws of intestate succession. On the other hand, if you have a pour-over will, those assets can be included with the assets already part of the trust, so they can be distributed according to the terms of your trust.
Is there a catch?
Assets that are transferred to the trust through a pour over will, must proceed through probate before they can be included in the trust. One of the primary purposes of a trust is to avoid the time and expense of the probate process. For this reason, it is a good idea to routinely review your assets, along with the terms of the trust, to be sure it is updated to include all of your property.
Property that you own in another state should be transferred to your living trust. If not, your estate must go through, what is known as, ancillary probate proceedings in each state where real property is located. However, if the property is owned by a living trust, that property will not be required to go through the probate process in any state.
If you have questions regarding trusts, pour-over wills, or any other estate planning needs, please contact Sexton, Bailey Attorneys, PA online or by calling us at (479) 443-0062.