If You Have a Living Trust, Do You Still Need a Will?
Creating a living trust lets you designate who will share in your estate after you die, without the beneficiaries having to go through the court probate process. However, a living trust alone may leave some of your assets unaccounted for, which means that state intestacy law will control their distribution. A comprehensive estate plan can avoid this outcome by supplementing the living trust with a special type of will, known as a pour-over will.
The main reason to use a pour-over will in conjunction with a living trust is that a trust only covers the property you have placed within its control. It happens frequently that people acquire property after creation of a living trust and, for whatever reason, do not include it in the trust. This can occur when earnings from investments are realized between the time you execute your living trust and your death. It can also happen because you have chosen to keep certain assets in your own name. For example, it’s often better for insurance purposes for motor vehicles to be owned individually.
A pour-over will is a safety net that catches any assets that you held outside of the living trust. The will has just one beneficiary: the living trust. The will should name an executor, who will be in charge of identifying assets outside of the living trust and filing paperwork to transfer them into the trust. From there, the trustee will hold or distribute the property according to the terms of the living trust.
It is true that assets passing through the pour over will may have to go through the probate process, which has a few disadvantages in terms of cost and delay. However, because the assets are limited, they are likely to be eligible for Kansas law’s simplified probate for small estates. In addition, if the value of assets passing under the will is $40,000 or less, your heirs may be able to use a small-estate affidavit to avoid probate completely.
A qualified estate planning attorney can advise you on how to make optimal use of a living trust and a pour-over will to best achieve your goals. Another reason to have a will in addition to a living trust is that a trust cannot be used to nominate a guardian for minor children. Although the appointment of a guardian is a court decision, you can use a will to express your favored choice of a guardian, which the court will likely honor.
Peggs Wheeler, LC in Wichita, Kansas guides individuals and families through the estate planning process, whether they are starting from scratch or updating an existing plan. To schedule a free consultation, please call 316-512-7853 or contact us online.