As we age, we begin to think differently about our lives, our possessions, and our legacies. One of the greatest acts of love and compassion is to establish a careful and intentional estate plan, which clearly outlines your desires for after you have passed away. Doing so tells your children, your spouse, and everyone you care about that you loved them enough to protect them and make their time of grief less complicated. After all, it is difficult enough to deal with the passing of a loved one without having to also deal with a complex estate without a written plan.
For those with larger estates, the term “pour over will” often comes up, but you might not understand what this is and why you may need one. At Five Points Law Group, our experienced estate planning attorneys aim to make your final estate plan simple and straightforward, even for those with large or complex estates.
Estate Assets and Non-Estate Assets
First, it’s important to understand the difference between assets that are part of your estate and assets that are not. A will controls only those assets and liabilities that belong to your final estate. Despite common misconceptions, most of your assets are probably not even part of your estate. For instance, the following items generally do not pass to heirs and family members through your estate:
Pour Over Wills and Their Uses
Think of a pour over will as a catch-all for people who choose to utilize a trust for their estate plan. Unlike a traditional will, a pour over will acts to “pour” all residual assets that a person has, whether known or unknown, into a trust. This way, if at some point a person’s trustee discovers assets that were never properly transferred into the trust, they can simply be passed back into the trust and distributed privately according to the terms of the trust, rather than through a court proceeding, such as probate.
Benefits of a Trust With Pour Over Will
Section 43-2-690 of the Alabama Code allows estates with less than $25,000 in total net assets to be administered through a simple document called a small estate affidavit. Therefore, those with more than this amount will likely need to use the courts to administer their estate through probate, unless they take reasonable steps to prevent this. A trust is a simple way to do this. Once you place assets into a trust, they are no longer technically your assets. Therefore, when you die, they do not “pass through” the probate estate. Instead, they are privately administered by your named trustee. Of course, there may be disputes that require court involvement. But in most cases, the trustee has broad powers to administer the estate. By also having a pour over will, you ensure that any items you may have forgotten can easily and efficiently be transferred to the trust, rather than passing to someone you did not intend to receive them.
For help building your own custom estate plan in Birmingham or the surrounding areas of Alabama, call Five Points Law Group today.