Most people execute a Last Will and Testament as their initial estate planning document because a Will has the ability to distribute all your estate assets after your death. A Will has limitations though which is why those same people often choose to rely on a revocable living trust to distribute their estate assets at some point down the road. Once you have a revocable living trust in place, do you still need a Will? The simple answer is “yes.”
The Limitations of a Will
A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make both general and/or specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. In addition, your Will allows you to appoint someone as your Executor whose job will be to oversee the administration of your estate after you are gone. Although a Will ensures that you will not leave behind an intestate estate, a Will does have some important limitations. If you have minor children, for example, those children cannot inherit directly from your estate, meaning you cannot gift assets to them in your Will. In addition, the terms of a Will only become relevant upon the death of the Testator. If you become incapacitated, your Will cannot help. Finally, gifting assets through your Will does not allow for any continued control over those assets – once an asset is gifted to a beneficiary you have no control over how that asset is used. For these reasons and others, people often decide to incorporate a revocable living trust into their estate plan.
The Benefits of a Revocable Living Trust
A revocable living trust is often used as a primary estate planning tool instead of a Will for several reasons. First, a revocable living trust allows you to appoint a Trustee to manage and protect a minor child’s inheritance. Trust assets also avoid probate, saving your estate a considerable amount of time and money and keeping the terms of your estate distribution private. You also have the ability to control, to some extent, how assets are used by the intended beneficiaries through the trust terms you create. Best of all, a trust can also be used to plan for the possibility of incapacity by naming the person to whom you wish to hand over control of your assets as the Successor Trustee of the trust and naming yourself as the Trustee. You continue to control those assets until your death or incapacity at which time your chosen Successor Trustee takes over automatically.
What Is a Pour-Over Will?
A properly drafted revocable living trust can take the place of a Last Will and Testament with regard to the distribution of your estate assets; however, your estate may have some loose ends after your death that can only be taken care of through a Will. For this reason, a “Pour Over Will” is usually included in an estate plan when a revocable living trust is used as the primary distribution tool. You may indeed manage to transfer all of your most valuable assets into your trust prior to your death; however, you will almost inevitably leave behind some assets that fail to make it into the trust. Personal items, vehicles, less valuable assets, bank accounts used for day to day banking, and even valuable assets purchased just prior to your death are all examples of assets that might be inadvertently left out of your revocable living trust at the time of your death. If they remain unaccounted for, they will create an intestate estate that requires probate. A Pour-Over Will prevents that eventuality by directing all assets not already transferred into the trust to be “poured over” into the trust after your death. In essence, a Pour-Over Will serves as a “catch-all” tool that backs up your primary revocable living trust.
Contact a North Dakota Estate Planning Lawyer
Please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding a revocable living trust or the need for a Pour-Over Will, contact the North Dakota estate planning lawyers at German Law Group by calling 701-738-0060 to schedule an appointment.