Why You Still Need a Will, Even With a Trust

You’re the responsible one. You established a living trust. Someone you believed to be trustworthy told you it would help keep your family out of probate court. You felt like an adult, having taken care of your affairs. So, when the attorney placed a will on the table and asked you to sign it as well, you probably thought, “Did I just pay good money for a trust that I don’t need?” You didn’t. Wills and trusts aren’t two competing entities working toward the same goal; they address very different gaps in your overall estate plan. Most effective estate plans use both.

What a trust does, stated

A trust is a box you own and populate. You transfer your items (your home, your investment accounts, maybe a bank account) into the box. This process is referred to as “retitling” or “funding,” as it changes the ownership of the item from your name into the name of the trust.

The part that confuses many people is hidden within the previous statement. A trust only has jurisdiction over what’s transferred into the box. Transfer an account to an alternate name and that account will remain untouched by the trust. That’s why we see the will enter the picture.

Pour-over will covers unfunded items

I have never encountered someone who funded their trust completely accurately. I’m fairly certain you won’t either. You create a new savings account two years later and forget to fund it into the trust. You inherit some cash from an aunt. You purchase a vehicle. At your death, all of these items reside outside of the box, awaiting distribution.

That’s exactly why we include a pour-over will. The pour-over will is a simple document stating, in plain English, that all property that wasn’t initially moved into your trust will be poured into your trust upon your passing. All remaining assets are then distributed according to the provisions of the trust rather than being distributed under your State’s intestacy laws.

One honest observation I want you to take away. While the pour-over will will ensure that any orphaned asset is directed into your trust upon your death, any assets that flow through the pour-over will may ultimately require passage through probate before being distributed as intended. We’re dealing with a relatively small portion of your total estate and not the entire pie, however, it remains a legitimate reason to continue funding your trust during your lifetime rather than relying solely on the will to clean up after you’re deceased.

Only a will can appoint a guardian for minor children

There’s nothing more important than this issue. If you have minor children, your will is where you name the people you desire to raise them if both parents are deceased. A Trust can’t perform this function. The naming of a guardian is something that a court will honor and will seek guidance from your will.

So, if you have a trust but no will, you have given a judge the authority to decide who should raise your children. Don’t allow that to happen. Choose a guardian, speak with that individual before drafting your documents, and name them in writing. Also, choose an alternate guardian in case your primary choice becomes unavailable when needed.

Everyday items need a home too

Trusts are developed for large title-bearing items and become cumbersome about smaller items which often carry the greatest emotional significance. Your wedding band. The handmade quilt created by your grandmother. The coin collection in the desk drawer. No one transfers jewelry into a trust nor should they have to.

A Will provides a clear solution to sorting your everyday personal property without creating any issues. Many Wills provide an option to reference a separate written listing (sometimes called a memorandum of personal property), allowing you to identify specific items and assign them to people. The best part of using such a listing is that you can modify it as frequently as desired without involving lawyers or generating additional fees for updating your documents.

• Jewelry and watches
• Family heirlooms
• Furniture, art, and household goods
• Cars, tools, and equipment not moved into the trust
• Checking accounts and cash
• Anything you bought or inherited after funding the trust

What happens to any unfundable items left outside the trust

Let’s say you die with an account in your own name and no will whatsoever. The money in that account doesn’t disappear, nor is it automatically funneled into your trust either. Instead it’s passed according to your State’s intestacy laws, which represent the default rules applied to estates where owners failed to provide instructions, and may divide things in a manner you wouldn’t have chosen otherwise.

Include a pour-over will in your estate planning strategy and that lone account will be redirected into your trust instead of being divided among heirs per your state’s default laws.

Wills and trusts are two separate tools working together

Think of the trust as the main plan and the will as the backup plan standing behind it. The trust holds and distributes the majority of your estate privately and bypasses probate entirely for all items you successfully funded into it. The will identifies guardians for minors, collects any items you inadvertently missed transferring into the trust (via the Pour-Over provision), and manages your personal effects.

This dual approach is how it’s commonly accomplished today. Estate attorneys develop them simultaneously for this reason; so, don’t interpret inclusion of a will as confirmation that your existing Trust was unnecessary.

Your short to-do list

If you have a trust already, give it one afternoon. Make sure it’s doing the job you paid for and that the will is up to date.

Photo by Romain Dancre on Unsplash