Are you curious about wills and pour-over wills? Are the benefits of having a will something you want to know more about? If so, you’ve come to the right place.
What is a pour-over will with a living trust?
A pour-over will is a document that allows you to transfer assets from your bank accounts into your living trust without probate. It’s part of an estate plan known as an “A/B” trust, including this pour-over will and another type of trust called a revocable living trust or an A trust.
Probate is the legal process when someone dies, and their assets pass to heirs or beneficiaries under a will. The beneficiary then receives what’s left of the decedent’s estate through either intestacy (no will) or distribution under the terms of the will.
Probate can be expensive, slow, complicated, and open to public scrutiny. There are laws that determine who is responsible for settling an estate, depending on which state you go to. These laws control:
- How much notice you must give before opening a probate file
- Where you must file the probate file
- How long an executor has to settle the estate
- Who gets appointed as the personal representative
- Other requirements that you must meet.
In some states, you can bypass probate by transferring assets from your bank and brokerage accounts into your living trust. A pour-over will allow you to share these assets without probate. The purpose of a pour-over will be to enable you to establish a revocable trust. Also, an irrevocable life insurance trust (ILIT). You typically use a revocable living trust as the central part of your estate plan. It provides privacy, helps you avoid probate, and can provide more control over how your assets pass at your death.
What is the Difference Between a Will and a Pour-Over Will?
A will is a document that states what you want to happen to your assets after you die. A pour-over will is simply a will drafted to include language to transfer assets into a revocable living trust. An A-B trust is an estate plan that provides for two separate trusts. The first trust is an irrevocable life insurance trust (ILIT). You transfer all your life insurance policies into this ILIT, which names the person who will receive the death benefits after you die. It allows you to avoid probate on any policies transferred to it because it’s an irrevocable trust that you cannot change.
Depending on who drafted it, the second trust is called either a revocable living trust or an A-B trust. This type of estate plan is known as an A/B. The irrevocable insurance trust and the revocable living trust are linked together.
The beneficiaries of the A trust are the beneficiaries of the B trust. The assets in your revocable living trust (the B) pass to your heirs without probate because the ILIT already owns them before you die. It is what makes this type of estate plan known as an “A/B” trust.
According to LegalShield, “Creating a Will on your own can be overwhelming and time-consuming.” If you want to speak to a will and testament lawyer, contact them today.
