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Ramifications of a pour-over will

On Behalf of | Dec 8, 2021 | Estate Planning

A pour-over will is a special tool that is useful for people in North Carolina who have trusts as a major element of their estate planning. This is a great way to plug in any holes or issues in a will that is tied to a trust.

Understanding trusts

Trusts are a great tool for people who have substantial assets to leave behind. With a trust, the grantor places their assets inside the trust and names one or more beneficiaries of the trust. This can help to manage the taxes of the estate and is useful if the heir of the estate is underage or otherwise does not have the capacity to manage a large financial portfolio.

However, a trust does have one key issue: The person who is writing the will needs to specify all of the assets that go into the trust. This is a good idea because it forces them to plan out what should and should not go into the trust, but it introduces the risk that some assets will be left out.

Where a pour-over will comes in

A pour-over will is a way to cut through this problem. It is a supplemental document that specifies that any asset not specifically named will by default be added to the trust. That way, an asset that was forgotten or left out can go into the trust automatically. Otherwise, it can be a challenging legal process to get forgotten assets sorted out. It’s an important part of the estate planning process.

Correctly structuring an estate plan for a large estate can be hard, but a pour-over will helps to fill in the gaps and act as a backstop for forgotten assets. It’s a key tool for anyone who will use a trust.