Many people believe that someone must choose a will or a trust for his or her estate plan. However, these people may not realize that it is often a good strategy to have both documents.
Including a trust in your estate plan can have many benefits. Unfortunately, you must remember to transfer ownership of each asset to the trust for this type of plan to work. Assets that are not in your trust at the time of your death will usually not avoid probate or get distributed to your beneficiaries based on the provisions of your trust. This is where a will can help.
What is a pour-over will?
A pour-over will is a special type of will that you can use with a trust-based estate plan. In this type of will, you can document your wishes for the property left out of your trust to be added to your trust upon your death. This can help ensure that the property you intentionally or unintentionally leave out of your trust during your lifetime gets distributed according to your wishes after your death.
Although you could have all of your property added to your trust after your death, this may not be the best plan for every situation. People usually use pour-over wills as a safety net because property that pours into a trust via a will must still go through probate.
What happens without a pour-over will?
Without a pour-over will, the items left out of your trust will usually be distributed according to South Carolina’s intestate succession laws. This could result in:
- An estranged relative inheriting something of value
- A court selecting someone you do not trust to manage your final affairs
- A loved one not receiving something you intended him or her to have
Accidents can happen even if you have the best intentions to make sure you add every asset to your trust. If you make a significant purchase just before your death, there may not be time to have the item properly added to your trust. You may also overlook an item or forget about an item.
Fortunately, you can avoid the unintended consequences caused by these mishaps. A pour-over will may not be appropriate for everyone. However, it can serve as an effective safety-net for those who create a trust-based estate plan.