A pour-over will works in conjunction with a trust. A trust, whether revocable or irrevocable, is a legal document that holds your assets, like investments, bank accounts, real estate, vehicles, and valuable personal property, for your benefit during your lifetime and afterward for the benefit of another person, called a “beneficiary.”
A big benefit of a trust is that you can control when and how your beneficiaries receive assets after your death and also that beneficiaries can decide whether they are ready to receive an asset. You might not want your young child to receive their full inheritance until they turn 25, for example. Conversely, your 25-year-old might be applying for graduate school scholarships that could be compromised if they received an inheritance. In that case, they may want to delay receiving the assets. A trust offers both control and protection, which is why funding your trust, (i.e., making sure assets are retitled in the name of the trust during your life) is so important.
But sometimes even the best laid plans can go astray. A pour-over will declares that when you die, any assets that didn’t make it into the trust and aren’t mentioned in any other document will “pour-over” to the trust to be distributed according to the directions of the trust. This acts as a safety net should you forget or simply not get around to funding an asset into your trust during your life.
For example, let’s say you open a new account but unexpectedly pass away before putting it in your trust. If you don’t have a pour-over will and the account is only titled in your name, the account may be distributed according to the laws of intestacy or otherwise in ways that disregard the rules of your trust. The pour-over makes sure all assets get transferred to your trust so there are no unintended distributions.
There are a lot of estate planning tools and strategies that help you save money and make sure your wishes are carried out. We can help you create an estate plan that’s tailored to your needs. Contact me at email@example.com or 617.299.6976 today to set up your free initial consultation.