How do you know which will option is best for your needs? While most people likely assume a simple will or last will and testament will cover their wishes, it’s important to ensure that the correct selection is secured before an emergency develops. Learn the difference between simple wills and pour-over wills.
The most important estate planning document for most people is a simple will. For those who die intestate, i.e., without leaving a will, the cost to the estate can be significant. State law determines who will inherit the property of a person who dies intestate. (Family members are often required to cover the costs of funeral expenses and probate.) Additionally, the state’s succession plan may distribute assets in a way that the decedent never would have intended. All too often, disputes over property can cause family feuds.
A simple will or last will and testament can avoid these issues. A simple will is a legal document that states who you want to inherit your assets and belongings after you pass away.
Some people in Florida who have created an estate plan that is primarily based on a living trust might also want to make a pour-over will. The advantage of a pour-over will is that it can ensure that any assets not placed in the trust or passing through other means, such as a beneficiary designation, will become part of the trust when the person dies.
A pour-over will is intended to act as a safeguard. It is better to review an estate plan annually or when there are major changes to the family, tax law or assets.
If a person does not have a pour-over will or a will that designates what will happen to assets not placed in the trust, those assets may be distributed according to state law. The result could be family members receiving assets they were not intended to have.
People who do not have a trust as part of an estate plan might want to discuss the advantages with an attorney. A trust may be useful to control how assets are distributed to a beneficiary who may be irresponsible with an inheritance, to a relative with special needs, or to a minor child, etc. A person can specify when distributions are made or set up the trust so that the trustee manages when distributions happen. There are several other complex ways to set up trusts to reduce estate tax or provide charitable contributions. In some cases, an irrevocable trust may be used to protect assets against creditors.
Learn more about Wills and Trusts at an Estate Planning Workshop. Attendees will receive free consultation certificates.