Did you know that, if you have a Revocable Living Trust, you also need a will? How does this make sense, when a trust is designed to help you avoid probate, and a will is designed to be probated?
The answer lies in the fact that, in order to avoid probate, your Revocable Living Trust has to be fully funded when you pass away. This means that all property owned by you in your individual name must be transferred into your trust. If you pass away with any of this property left out of your trust, the property will have to go through the probate process before ownership of it can be transferred to anyone else.
So, why would anyone leave property out of a Revocable Living Trust? People are constantly acquiring property, and it’s easy to forget to transfer a new asset into your trust. Also, there are situations where a new asset is purchased, and the owner passes away before funding the property into his or her trust. Plus, there are some types of personal property that, for practical reasons, are better owned by you as an individual rather than funded into your trust.
When someone passes away leaving property out of their Revocable Living Trust, that property has to be probated. This is where the pour over will comes in. A pour over will is a special type of will that works in conjunction with a Revocable Living Trust. The will states that any property that’s subject to probate is to be distributed to your trustee, who will then manage and distribute the property according to the terms of your trust. So, the property ultimately ends up where you’ d originally intended for it to go.
If you don’t have a will, then property left out of your trust goes through probate and is distributed according to state intestacy statutes. State law may not send your property to the same place your trust agreement would send it.
A pour over will acts as a catch-all to make sure that, even if your trust is not fully funded when you pass away, your intentions are still honored.