How Do I Use Pour-Over Wills and Trusts to Make a Smart Estate Plan?
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How Do I Use Pour-Over Wills and Trusts to Make a Smart Estate Plan?

What are pour-over Wills? How does a pour-over Will work? This article explains what a pour-over Will is, how to make one, and the benefits of creating this document to ensure your plan follows your wishes! Keep reading to learn more!

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Steve Jobs was a visionary tech leader who grew Apple from a dream in his garage to a worldwide behemoth that is now worth trillions of dollars. The same meticulous planning Jobs used to chart Apple’s success served him well when it came to executing an estate plan that aligned with his values. When Jobs died from pancreatic cancer at age 56, he had a personal worth of over $10 billion. He was also Disney’s largest shareholder, holding about $4.4 billion in total Disney stock. 

Jobs used living trusts to distribute all of his assets, leaving a massive estate mostly to his wife. We don’t know the exact parameters of Jobs’ estate plan but we do know that he and his wife transferred three properties into living trusts shortly after his cancer diagnosis. Jobs and his wife spoke publicly about their disdain for generational wealth. Jobs did not leave an inheritance to his four children, preferring to have them make their own way in life. 

You don’t have to amass Steve-Jobs-Level wealth to make Pour Over Wills and trusts work for you. If you want a smart estate plan that minimizes taxes, avoids probate, and maximizes your privacy, read about how FastWill can help you craft a plan that follows your wishes.

How Does a Pour Over Will Work?

A Pour Over Will designates your trust as the beneficiary of any assets that are not otherwise specified in your estate plan. A Pour Over Will works in tandem with a trust. You should transfer assets into your trust right after you create the trust. However, if you didn’t do this, or you didn’t transfer every asset you owned before death, then a Pour Over Will acts as a safety net. It gathers up assets that had not been transferred to a trust at the time of your death.   

For example, let’s say you created a living trust and funded it with $1 million dollars, an investment portfolio, and two rental properties. But you did not include the family home in the trust. Even though your family home isn’t listed in your trust documents, if you have a Pour Over Will it will be "poured over" into your trust when you die. 

Now let’s say you don’t have a Pour Over Will. What happens to the family home? It will have to go through the probate system, where it will be handled according to your will. If you die without a will, then your house will be distributed according to the laws of intestacy, which apply when you don’t have a will. The entire process will be public record.

If you use FastWill to make a Pour Over Will, all of your assets can be "poured over" into your trust and distributed according to the instructions in your trust document.

Benefits of Using a Pour Over Will

There are several benefits to using a Pour Over Will in your estate planning. The first one is that it gives you the maximum ability to control what happens to your estate. If you designate your trust as the beneficiary of any assets that are not otherwise specified in your estate plan, you’ll know that your property will be distributed the way you want. The flexibility of a Pour Over Will also means you can easily make changes during your lifetime whenever you have a major life event or even if you simply change your mind.

A Pour Over Will also avoids probate. This means that your heirs will spend no time in court waiting for an administrator to make decisions. It also saves the expense of probate court. Since probate court proceedings are a matter of public record, if you have a simple will, anyone can access information about your estate. By using a Pour Over Will and a trust, you get to ensure that your plans remain private.

Don’t Forget to Fund Your Trust

If you google the words “how to create a trust as part of an estate plan” you’ll definitely find plenty of articles telling you to consult an estate planning lawyer. That’s good advice, but there’s one thing these lawyers won’t do after they create your trust and will documents:  move assets into the trust. Estate planning lawyers are experts in using the right legalese to set up your estate plan, but they generally don’t handle their client’s actual assets. 

There are good reasons to include a trust in your estate plan. They are flexible, private, and often confer tax benefits. However, trusts are only good if you fund them. And a surprising number of people die before putting assets in the trust. That’s what happened to actor Paul Walker, who created a revocable living trust back in 2001 but never funded it in his lifetime. When he died, all that estate planning he did as a young man amounted to nothing, because his $25 million estate wound up passing by will, which involved the very public probate process.

Was this malpractice on the part of the lawyer? No, lawyers usually don’t get in trouble if their clients don’t follow through on their estate planning advice. 

How to Fund a Trust

Your trust document will not be legally binding unless the assets are correctly retitled or transferred into the trust. For some assets, you’ll need to change a beneficiary designation to name the trust as the primary or secondary beneficiary.

How to Create a Pour Over Will and Trust

Creating a Pour Over Will with FastWill is a straightforward process. 

  1. The first step is to create your trust. 

  2. After a trust is created, you should make a list of all of your assets, including your home, bank accounts, investments, and personal property.

  3. Step three is to transfer your assets to your trust.

  4. Next, use FastWill to create a Pour Over Will that designates your trust as the beneficiary of any assets that are not otherwise specified in your estate plan.

  5. Don’t forget to review and update your estate plan regularly to ensure that it still reflects your wishes and your current circumstances. Once you’ve established your estate plan with FastWill, changes are easy to make.

A Pour Over Will is an invaluable tool in your estate planning toolkit as long as you follow the right steps for creating and funding a trust.

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