"Do I still need a will if I have a trust?" Stick around, because the answer might surprise you, and I'll share some valuable insights that could make a big difference for you and your family.
Your Trust Avoids Probate
Think of your trust as a treasure chest for your home, savings and other assets. It's a powerful tool that helps you avoid probate and manage your affairs smoothly. But what happens to stuff that doesn't make it into your treasure chest? That's where your will comes in, and it's more important than you might think.
A Pour-Over Will Acts as a Safety Net
When you have a trust, we use a special type of will called a "pour-over will." Imagine it as a safety net that catches any assets you might have forgotten to put in your trust. It makes sure those leftover items end up where you want them to go.
Let me give you a real-life example to show you why this matters. Say you've set up a trust and you've been really diligent. You've put your house, your main bank accounts, and your investment portfolio into the trust. But then, out of the blue, you inherit your aunt's valuable antique car collection. Life gets busy, and before you can add those cars to your trust, the unexpected happens.
Or perhaps you purchased a different or even a second home and forgot to have it put into your trust when you bought it. These assets could end up going through probate.
In the Absence of a Will, the Probate Courts Decides Who is in Charge and Who Receives Assets
And if you didn’t have a will in place, the probate court would get to decide who is put in charge of probate and to whom these assets would go based on state law. However, by having a pour-over will in place, the court would instead follow the instructions in your pour-over will where you would name the successor trustee or trustees of your trust, you can have more than one, as the executor and instruct the court to “pour” the assets into your trust- hence the term a “pour over will”. That way your trust still controls who gets the assets along with any protections or restrictions you may have placed on receipt of those assets within your trust.
We can also instruct the court that you would like an informal proceeding and ask that no bond be required to make it potentially faster and less expensive as well.
A Will is Where You Name Guardians for Your Kids
But there's another crucial role your will plays that your trust simply can't do - it names guardians for your minor children. This is huge for parents. While your trust manages the money and assets for your kids, your will is the document that decides who takes care of your children if something happens to you. It's not a pleasant thing to think about, but it's incredibly important for your peace of mind and your children's future.
4 Advantages of a Trust
Now, you might be thinking, "Chuck, if I have this pour-over will that catches everything, why should I bother putting anything in the trust at all?" That's a great question, and I'm glad you asked! Here's why:
1. Probate avoidance: Assets in your trust skip the probate process entirely. This saves your family time, money, and a lot of stress during an already difficult time. Probate can be lengthy and expensive, and it's public - meaning anyone can look up what you owned and who got what.
2. Privacy: Unlike a will, your trust isn't made public after you pass away. In today's world, privacy is more important than ever, and a trust helps keep your family's affairs private.
3. Immediate access: If you become incapacitated, your successor trustee can step in and manage things right away. With a will, you'd need to go through court proceedings to appoint someone to manage your affairs.
4. Flexibility: Trusts offer more flexibility in how and when your assets are distributed. You can set up provisions for young beneficiaries, protect assets from creditors, or even incentivize certain behaviors.
You Need Both a Will and a Trust
So, to wrap up this part: Yes, you need both a trust AND a will. They work together like a dynamic duo to make sure all your bases are covered.
But here's the thing - and this is really important - setting up a proper estate plan isn't just about having these documents. It's about making sure they're tailored to your specific situation and work together seamlessly. Every family is unique, and your estate plan should reflect that.
For example, let's say you have a blended family. You want to make sure your current spouse is taken care of, but you also want to ensure your children from a previous marriage receive an inheritance. A properly structured trust can help you achieve this balance, while your will can name guardians for any minor children.
Or maybe you own a small business. Your trust can include provisions for the smooth transition of your business.
These are just a couple of examples, but they show why it's so crucial to have a comprehensive, well-thought-out plan. If you would like to put a plan in place to make it as easy and inexpnsive as possible for your family to manage everything if you became incapacitated or were to pass away, call us today to schedule a consultation at either our Minnesota office at 763-420-5087 or our Florida office at 941-909-4644. Or, you can fill out the contact form on this page and a member of our team will contact you to schedule a consultation.
Or, if you are not yet ready to schedule a consultation and would like additional information, we have some resources for you.
If you would like to learn more about wills and trusts and how you can make it as easy and inexpensive as possible for your family, Click Here to sign up for my online masterclass where I reveal insider strategies for your will, trust, financial power of attorney and health care documents, as well as how to minimize or even avoid estate taxes, and how to protect the money you leave for your children and grandchildren in the event they get divorced, get sued or something else happens to them.
If you would like to learn more about how to protect your home and savings from long-term care and nursing home costs. I have two resources for you:
