We typically utilize wills to distribute our assets after death. When we retain assets until death, the probate process will be involved and our wills dictate how we would like our appointed executor, or personal representative, to distribute our assets. However, if you set up a trust during your lifetime, called an “inter vivos” trust or a “living” trust, you can utilize your will to fund your trust with any assets that you did not transfer into the trust during your lifetime.
If you created a living trust, you may or may not have transferred all of your assets, including personal property, real property, or accounts, into the trust. Your trust may be used to provide for the support of a loved one or for yourself during your lifetime. Typically, income derived from trust property is distributed according to the terms of your trust. Your trust also likely provides a blueprint for how the trust should proceed in the event of your death. Upon your death, the trust may continue to operate unchanged, the distribution of trust assets may be modified, or the trust may terminate.
An effective estate planning tool for individuals who have a living trust is a pour-over will. A pour-over will simply directs that all of the assets you own outside of your trust at death be “poured over” into your trust upon your death. This means that after your death, assets that you did not place into a trust during your lifetime, whether purposefully or accidentally, become a part of that trust. As such, the assets covered by your pour-over will can be managed and distributed according to the terms of your existing trust as opposed to your will.
A pour-over will allows you to retain full ownership and control over your assets until death, while still allowing your assets to pass according to your trust. In directing that all assets go into an existing trust, a pour-over will can make the probate process go more smoothly by eliminating uncertainty as to how assets should be distributed.