Estate planning is an essential step in protecting your loved ones after you die. It can help ensure that your assets are distributed according to your wishes while helping your loved ones avoid probate and reduce estate taxes. There are different ways in which estate planning can help protect your legacy, depending on your goals.
In this article, we will discuss using a pour-over will with a living trust as an estate planning tool.
Probate in North Carolina
In North Carolina, the probate of a will is the process by which a will is established as valid and executory. The court reviews the will to ensure it is in accordance with state law and then appoints an executor to carry out the will’s provisions. If there are any questions about whether the will is valid or not, the court may order additional processes to be conducted. Once the will has been probated, it becomes legally binding.
While this may seem like a straightforward process, it usually is not. Remember, your loved ones are probably still mourning, but during this period, for probate, they need to make out considerable amounts of time, energy, and money to complete it successfully.
What Is a Pour-Over Will?
Pour-over wills are a popular type of will that allow individuals to make explicit, written instructions about their wishes for their property and affairs after they die. When compared with a standard will, however, this instruction is usually a simple one: “all the assets in this will should go to my trust.” In other words, it’s a safety net.
But isn’t a standard will a safety net too, you may ask? Well, yes, it is. However, pour-over wills are a type of will that is typically used when the person making the will does not want their estate to go through probate.
It is important to note that a pour-over will not be written as a stand-alone document; instead, it will be used in conjunction with a living trust. Below, we will tell you about a living trust. We will then discuss how a living trust is used alongside a pour-over will.
What Is a Living Trust?
A living trust is a legal document that allows you to transfer property into a trust. Unlike other trusts, living trusts will enable you to control and manage your assets while you are still alive. This is because the living trust is named after the person or persons who created it, and it remains in effect until either the trust principal or named beneficiaries die, dissolve the trust, or revoke it.
When you create a living trust, you appoint a successor trustee to manage your assets and fulfill your wishes. Since you are the main trustee, the baton passes on to the successor trustee when you die or become incapacitated. You also name beneficiaries who will receive the income and property from the trust when you die. Essentially, by setting up a living trust, you can protect and oversee your assets and at the same time, while you are alive, also make sure that they become immediately available to the beneficiaries of the trust (e.g., your family members) after you die.
Given the above benefits, living trusts are a popular estate planning tool used by people in North Carolina. It is also popular because the trust can be set up in no time and can be modified as needed.
How a Living Trust Is Used Alongside a Pour-Over Will
As we mentioned earlier, living trusts are often used in conjunction with pour-over wills. Each has its own advantages, and they are most beneficial when used together.
By making a living trust, you can stay in charge of your finances and other matters and also make it easier for your estate to be managed after you die. Pour-over wills complement the living trust by encompassing things that you might have overlooked and otherwise would have required your loved ones to go through probate.
Essentially, both options work hand in hand to make your estate plan more efficient and less expensive for your loved ones.
Want To Get Started With Creating a Living Trust and a Pour-Over Will in North Carolina?
As you have seen, a pour-over will and a living trust in North Carolina can provide you with the certainty and security you need while ensuring your loved ones are taken care of. If you are thinking about making a pour-over will with a living trust, please talk to a lawyer at our firm to make sure the document is drafted correctly and meets all of your legal and financial needs.