When planning your estate, you may want to adopt the common technique of placing assets in trust using your will. You may have heard this called a “pour-over will” or heard the term “revocable living trust”. But you may not understand how these estate planning structures could help you.
What Is a Pour-Over Will?
Setting up a “pour-over will” includes signing two different documents. Your lawyer will create both a will and a trust. The will’s language should explain that all or some of your assets go to the trust when you pass away. As such, your assets “pour over” into the trust automatically.
The assets that go into the trust fund trust distributions to beneficiaries later on. If all of your estate goes to the trust, then nothing should go through probate court. It makes your estate much easier to wrap up, and much less costly.
What Is a Revocable Living Trust?
Often, the trust that you create along with a pour-over will is called a revocable living trust. You can make some changes to the trust, including contributing or removing property, at any time. While you maintain control over the trust during your lifetime, it automatically becomes an irrevocable trust upon your death. The trust document language may specifically state that this will happen.
During your life, you can place any assets you wish into the trust. But as long as your will gives all your assets to the trust on your death, you do not have to place any in it during your lifetime. In other words, the pour-over will and revocable trust combination does all the work for you.
What Are the Benefits of Placing Assets in Trust Using Your Will?
One advantage of placing all of your assets in trust using a pour-over will is avoiding probate court. When an irrevocable trust is the only recipient of assets named in a will, probate is not usually necessary. This can save the estate thousands in court costs and fees. The saved money will instead help the trust beneficiaries.
Further, creditors will have more trouble accessing the assets to satisfy debts after you pass away. If your estate goes through probate, creditors have the opportunity to make claims and get paid from the estate’s assets. Irrevocable trusts’ assets, however, are much more difficult to access. This structure could benefit you if you have significant debts.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.