How Does A Pour-Over Will Work?
An important aspect of anyone’s financial journey is a Last Will and Testament. This document outlines the individual’s last wishes and designates who will receive their assets. However, in the past few years, a pour-over Will has become another option for many estate plans. If you would like more information about estate planning tools, including pour-over Wills and how they differ from traditional types of Wills, consider scheduling an appointment with Loughlin Law, P.A. by calling (561) 677-8384.
What Is a Traditional Will?
According to the American Bar Association, a traditional Will specifies an individual’s posthumous wishes regarding:
- Asset distribution
- Guardianship of minor children
- Appointment of an executor
- Funeral arrangements
This document is a guide for the executor. That person is responsible for executing the instructions outlined in the Will, settling outstanding debts, and distributing assets to designated beneficiaries.
While traditional Wills have long been the standard in estate planning, alternative strategies such as living trusts and pour-over Wills have gained popularity. These alternatives offer flexibility and may help bypass certain aspects of the legal process.
What Is a Pour-Over Will?
At its core, a pour-over is a testamentary document that complements a revocable living trust. Unlike a stand-alone Will, a pour-over Will works together with a trust. The document can dictate the transfer of any assets not already within the trust into it after the testator passes away. With this distinctive approach, the Will has earned the name of “pour-over,” meaning there is a pouring over of assets into the trust for distribution.
How Do You Use a Pour-Over Will?
Pour-over Wills can help streamline asset distribution and minimize probate involvement. The following steps are involved in setting up a pour-over Will in an estate plan.
Establish a Revocable Living Trust
If you want to use a pour-over Will, you need to establish a revocable living trust. According to the American Bar Association, individuals can manage their assets throughout their lifetime with this type of trust. Additionally, this trust helps transfer assets after their death.
Identify Trust Assets
Another important step is the process of earmarking any assets to be added to the trusts. Revocable trusts can contain:
- Bank accounts
- Real estate holdings
- Valuable possessions
Once the trust assets have been identified, the next step is to draft the pour-over Will. This document is considered a fail-safe mechanism. If any assets are left out, this document will transfer any remaining into the trust upon death. The pour-over captures assets that may not have been included in the trust during the individual’s lifetime.
The primary purpose of using a pour-over Will with an estate plan is to bypass the probate process for assets not already held in the trust. Probate is a court-supervised procedure. During this time, the courts will validate a Will and oversee asset distribution. By “pouring over” assets into the trust, individuals can save time and reduce costs associated with this process.
If you would like to learn more about pour-over Wills and how they compare with the various other types of Wills, consider reaching out to Loughlin Law, P.A.
What Are the Differences Between a Traditional Will and a Pour-Over Will?
While these documents might seem the same, they have a few distinct differences. These pertain to probate, management of assets during an individual’s lifetime, and privacy.
The biggest difference between a traditional and pour-over Will is whether they head into probate. A traditional Will outlines the process for the distribution of assets. However, it must go through probate. On the other hand, a pour-over Will addresses any assets not held in the living trust. In turn, that keeps them out of the probate process altogether.
Asset Management During Lifetime
Another notable difference is the impact on asset management during the grantor’s lifetime. A living trust, along with a pour-over Will, allows for a hassle-free management of assets. As a result, the individual can retain control and make changes as necessary. With a traditional Will, assets are not managed until the testator’s death.
Because probate is a public process, traditional Wills and their terms are not private. The nature of the probate process means that the estate and its distributions can be a matter of public record. Pour-over Wills provide privacy, as these assets are part of a living trust.
What Is the Drawback of a Pour-Over Will?
While pour-over Wills have many advantages, some drawbacks are associated with their use. Many times, they can add some complexity to the estate planning process. While the living trust allows for the avoidance of probate and promotes continuous management of assets, it requires careful oversight. Many times, this can include:
- Updating the trust to incorporate newly acquired assets.
- Removing assets that are sold or transferred.
- Adjusting beneficiary designations.
Failing to keep the trust updated can undermine its effectiveness, which can lead to unintended consequences in the distribution of assets.
Also, establishing and maintaining a revocable living trust involves legal and administrative costs that may exceed those associated with a traditional Will. You will need a legal professional to craft and update the trust. Because this requires additional work, their fees can contribute to a higher overall cost than the simple process of a stand-alone Will.
Reach Out to a Florida Estate Planning Attorney Today
Estate planning can be complex. There are several options when deciding which type of Will to use for your estate. Before drafting any document, you should examine the benefits and potential drawbacks. Consulting with qualified legal professionals is essential, as these individuals can help guide you through the process so you can make informed decisions. As the world of estate planning continues to evolve, the pour-over Will is a valuable option for those looking to secure the seamless transfer of assets while maintaining a level of privacy. However, choosing between a traditional Will and a pour-over Will depends on individual preferences. If you are looking for more guidance on these issues, consider scheduling an appointment with Loughlin Law, P.A. Our Florida estate planning and probate attorneys can help you find the right option for your needs. Call (561) 677-8384 to set up a consultation.