You may already be familiar with the many benefits of having a revocable living trust. It’s often one of the key documents in an estate plan. You can place titled assets like your home, car, boat and bank accounts in a revocable living trust that you control while you’re alive simply by making your trust the legal owner of these assets. There are also ways to include other types of assets in this trust. Further, you can remove or add assets as you choose because you’re the trustee.
A big advantage of putting high-value assets in a revocable living trust is that they can pass directly to your designated beneficiaries without having to go through probate, which can be a long and costly process for your loved ones. The successor trustee you designate to take over upon your death (or incapacitation) will be in charge of ensuring that this happens as efficiently as possible.
With all of this said, it’s important to be aware that a revocable living trust doesn’t replace a will. That document is still a required part of an estate plan. While it may not be where you list inheritances, you’ll need it to designate your personal representative (executor), legal guardians for your children and/or pets, if applicable and address other matters.
What is a pour-over will?
You likely heard the term “pour-over will” when creating your estate plan that includes a revocable living trust. Or you may hear it if you have yet to take this step. That refers to another purpose of one’s will – to “pour over” or include any assets not named in the trust.
These assets can include anything from home furnishings to clothing and anything else not worth including in your trust. Maybe more importantly, it includes more valuable assets you may not have gotten around to re-titling in the trust name or simply forgotten about. These assets are known as your “residuary estate.” They don’t have to be named specifically. The pour-over clause included in the will covers them. In your pour-over will, you’ll provide instructions for how you want these assets to be handled.
Note that these “residuary” assets may still need to go through probate since they aren’t in the living trust. However, most of them likely won’t be worth enough to be subject to probate. By addressing them in your will’s pour-over clause, however, they won’t be subject to intestate succession law, which determines how assets are inherited when a deceased person leaves no will.
Setting up a revocable living trust and pour-over will really isn’t very complicated – as long as you have sound legal guidance to help ensure that it’s done correctly and meets the unique needs of you and your loved ones.