In the early phase of estate planning, there is a fair amount of research needed to decide whether a will or trust is right for your assets. As each document serves a separate function, the inevitable question arises: can you have both a will and a living trust?
Not only is it possible to have both documents prepared, it’s highly recommended by estate planning attorneys. This is especially true for individuals with minor children or family members for whom you want to ensure special care.
Scroll through our list below to learn a little more about each document and how to begin your estate planning process.
What is a “Revocable Living Trust?”
Opening a trust is a legal procedure which creates a separate entity that is able to hold assets– the legal equivalent of an off-site safe. For families with minor children, this is an important way to ensure your family is still able to collect assets such as 401(k), IRA, and life insurance policies even after your death.
To place assets in a trust, all you need to do is name the trust as a beneficiary of the asset. This does not apply to houses, though. For houses, a deed is done transferring the house from you as an individual to you as a trustee (boss and creator) of your trust. It is then recorded. Any asset in a trust or naming a trust as a beneficiary will avoid probate. This saves time and money in the event the creator of the trust dies.
Trusts come in two types: revocable trusts and irrevocable trusts. A living trust– or a trust made and controlled by the individual who created it– falls into the revocable category. This means at any time before the person’s death, they can change the beneficiary designations, trust assets, and restructure how assets are distributed. An irrevocable trust means that once it is written, it cannot be changed.
What Can I Put in a Trust?
Any and all assets can be linked to a trust. Trust assets must be distributed according to the terms of the trust should its creator dies.
However, even the best effort is usually not enough to get every single personal asset listed within a trust. Sometimes assets are missed and sometimes a new property is acquired but not retitled to the name of the trust before the owner’s death.
In these cases, there is a backup plan in place to make sure any remaining assets are accounted for and relocated into the trust– the pour over will.
The “Pour Over” Will
A pour over will is a basic type of will often drafted as a complementary document to a living trust.
Creating a pour over will ensures that any assets not otherwise properly naming the trust are, on your passing, transferred into the trust. This serves a few functions, the two most important being:
- It helps your family avoid probate
- It ensures that your wishes regarding those assets will be followed
The caveat to this process is that assets needing to pass through a pour over will on their way to the trust are subject to the probate process.
When to Reassess
Living trusts and pour over wills should be reassessed during your lifetime. If you have major life changes, a divorce, purchase new property or have more children or grandchildren, your trust and pour over will should be reviewed. This can easily be done with the help of an estate planning lawyer.
How to Get Started
Early estate planning is an important safeguard for your family and has the potential to be a simple process with the aid of an experienced Arizona attorney. Paula Hannah can help with all your estate planning needs including drafting living trusts, pour over wills, or amending existing documents– all in plain english and simplified terms. For a consultation on your case, contact us