Estate planning is the process of organizing your financial affairs and outlining how you want your assets distributed after you pass away. One potential tool in this process is a pour-over will. Pour-over wills are a specific type of will that ensures any assets not included in a trust are transferred to it upon death. They are designed to work hand-in-hand with a living trust, ensuring that all your assets are properly managed and distributed after your death.
Here’s what you need to know about pour-over wills, how they work, and who might need one.
Understanding Pour-Over Wills
When you create a living trust, you transfer most of your assets into it. But life is busy, and sometimes people forget to move all their property into the trust. That’s where the pour-over will comes in. A pour-over will catches any assets that you haven’t already placed in a living trust and “pours” them into the trust when you pass away.
This means that everything you own will end up in your trust, even if you forget to transfer something during your lifetime.
What Makes Pour-Over Wills Unique?
A significant advantage of pour-over wills is their simplicity. You don’t have to list out everything you own in the will itself — instead, you’ll state that everything should go into your trust. This can greatly relieve many people since they make assets easy to manage.
Privacy is another important feature. Since the details of your asset distribution are handled by your trust, not your will, they don’t become part of the public record. This keeps your financial affairs more private.
Pour-over wills are also flexible, as they work well with living trusts that can be changed over time. When your life circumstances change, you can update your trust without having to rewrite your will.
How Is a Pour-Over Will Different from Other Types of Wills?
There are several types of wills, each serving different purposes. Traditional wills specify how assets should be distributed directly to beneficiaries, while living wills outline a person’s wishes regarding medical treatment if they become incapacitated.
In contrast, a pour-over will only dictates what happens to assets that haven’t already been placed in your trust. While these assets must go through probate since the trust does not own them prior to your death, the assets are distributed according to your trust’s terms, which remain private.
Who Should Have a Pour-Over Will?
If you have already established a living trust, a pour-over will can be a valuable addition to your estate plan. It ensures that any assets you might acquire after creating the trust will still be managed according to your wishes.
Additionally, anyone concerned about the time and expense of probate should consider a pour-over will, as it helps simplify this process for a portion of your estate.
Why Use a Pour-Over Will?
There are several advantages to using a pour-over will. First, it’s part of a comprehensive estate planning strategy. It works together with your living trust to create a complete system for managing and distributing your assets.
Another big plus is that pour-over wills can help you minimize probate. Probate is the court-supervised process of distributing a person’s estate. It can be time-consuming and expensive. By funneling assets into a trust, a pour-over will helps simplify the probate process.
Pour-over wills may also offer asset protection. Once your property is in the trust, it’s managed according to the trust’s rules. This can protect your assets from creditors or legal challenges.
Other Considerations and Potential Disadvantages
Pour-over wills have some potential drawbacks. One major issue is that they still require probate, which can be lengthy, expensive and can delay the distribution of assets to beneficiaries. If not properly coordinated with the trust, a pour-over will can lead to confusion and legal trouble.
Cost is another factor to think about. Setting up a living trust and pour-over will typically costs more than creating a basic will. However, many people find that the benefits outweigh the upfront costs.
How Do You Create a Pour-Over Will in North Carolina?
If you’re considering a pour-over will in North Carolina, it’s important to understand the legal requirements. First, you need to draft the will, specifying that all remaining assets should be transferred to your trust. Then, like all wills in the state, a pour-over will must be executed in accordance with North Carolina to be a valid will.
It’s advisable to work with an estate planning attorney to create a legally sound will that aligns with your overall estate plan. Your attorney can help draft the document, review it, and ensure it is executed properly.
Call Charlotte Estate Planning Today for Help with Pour-Over Wills
While pour-over wills offer unique benefits, it’s important to remember that estate planning is a personal process. The best course of action depends on your individual circumstances and goals.
An experienced estate planning attorney at Charlotte Estate Planning can guide you through the process of creating a pour-over will and living trust, helping you form a comprehensive estate plan that accurately reflects your wishes.
Call today at 704-766-8836 or contact us to schedule a consultation and discuss how we can help you create a secure future for your loved ones.
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