Often a living trust is used in conjunction with a will. Both a will and trust can be used to distribute assets, but a trust also avoids probate, provides disability planning, and is an efficient platform for beneficiary trust shares. Typically, trusts are more comprehensive than wills, and they are effective while you are still alive.
Why You Still Need a Will, Even if You Have a Trust
- You must use a will to appoint guardians for minor children.
- You must use a will to appoint executors.
- You should use a pour-over-will to distribute assets to your trust.
What’s a Pour-Over-Will?
A pour-over-will is a will with only one beneficiary, a trust.
While most assets should be funded (i.e. titled) in the name of your trust, sometimes assets are inadvertently or intentionally left out of the trust. At your death, your pour-over-will will be used to pour any assets not in your trust, into your trust, through the probate process.
Proper Asset Ownership: A Key to Success
Whether your estate plan is based on a will or a trust, it will only work if you own your assets properly. Improper asset ownership is one of the main reasons estate plans fail.
- A will only controls assets in your individual name, without a beneficiary designation.
- A trust only controls assets in the name of your trust.
If you own your assets in any other way, it doesn’t matter whether you have a will or a trust, your estate plan will fail.