In general, estate plans are either will-based or trust-based. Both wills and trusts are powerful estate planning mechanisms (and each has its own advantages and disadvantages).
BUT DOES IT EVER MAKE SENSE TO HAVE BOTH A WILL AND TRUST IN YOUR ESTATE PLAN? THE ANSWER IS…YES.
Our trust-based estate plan packages always include a “pour-over” will to provide for the distribution of any assets inadvertently excluded from the living trust. In other words, the pour-over will acts as a backstop that can be used in the event certain assets are accidentally omitted from the trust. This allows the client to rest easy, knowing that all of his or her property will be properly distributed.
Also, sometimes a will creates a trust after probate. These kinds of trusts, which arise from a will and become effective when the testator dies, are referred to as “testamentary trusts.” Testamentary trusts are often created to care for young children because minors cannot directly receive substantial gifts. A testamentary trust allows the testator to leave a gift to a minor child and appoint a trustee to manage the trust until the minor becomes old enough to handle that responsibility him or herself.
ONE OF THE MOST FUNDAMENTAL ESTATE PLANNING DECISIONS IS WHETHER TO MAKE A WILL OR A LIVING TRUST.
But it is important to remember that trust-based plans should also include a will, and wills can create testamentary trusts.
Does the terminology confuse you? Don’t worry – you are not alone. To learn more, visit the estate planning section of our web site, or contact an attorney today.