While a basic Last Will and Testament can accomplish the distribution of your entire estate after your death, you will likely choose to incorporate more sophisticated estate planning tools into your estate plan as your estate grows over the years. For example, at some point, you may choose to establish a Family Wealth Trust to use as your primary method of distributing your estate. One mistake you do not want to make, however, is eliminating a Will completely from your overall estate plan. Instead, you should continue to include a Pour-Over Will in your comprehensive estate plan even if your plan relies on a Family Wealth Trust to distribute the bulk of your estate.
What Does a Basic Last Will and Testament Accomplish?
A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make both general and/or specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. Your Will also allows you to make two additional important decisions. First, you will appoint someone to be the Executor of your estate in your Will. The Executor of your estate is responsible for overseeing the probate of your estate following your death. Second, you have the ability to nominate a Guardian for your minor children in your Will. Your Will, in fact, is the only opportunity you have to tell a judge who you would want to take over the care of your children if a Guardian is needed. A Will works fine to distribute a relatively simple and modest estate; however, if you have minor children, complex assets, and/or distinctive estate planning goals, you should consider incorporating a trust into your estate plan as the primary vehicle by which your assets will be distributed after your death.
What Is a Family Wealth Trust?
A Family Wealth Trust, or FWT, is a trust that is used to protect your assets for future generations. Despite the name, you need not be “wealthy” to benefit from an FWT. One significant benefit to an FWT is that, when drafted properly, an FWT can protect assets from creditors both now and after your death. Assets held in an FWT may also safe from claims made by a beneficiary’s spouse in a divorce. If you have minor children, those children cannot inherit directly from your estate. An FWT can protect your children’s inheritance until they reach the age of majority and are able to inherit directly. Finally, because the assets are held in a trust they are not required to go through probate, offering one of the most important advantages of using a trust to distribute your estate. All of these benefits make a Family Wealth Trust a popular option for distributing estate assets; however, relying on an FWT to distribute your estate assets does not entirely do away with your need for a Will.
What Is a Pour-Over Will?
A well thought out and properly drafted Family Wealth Trust can take the place of a Last Will and Testament with regard to the distribution of estate assets. In reality, however, your estate may have some loose ends after your death that can only be taken care of through a Will. For this reason, a “Pour-Over Will” is usually included in an estate plan when an FWT is used as the primary distribution tool. You may indeed manage to transfer all of your most valuable assets into your FWT prior to your death; however, you will almost inevitably leave behind some assets that fail to make it into the trust. Personal items, vehicles, less valuable assets, bank accounts used for day to day banking, and even valuable assets purchased just prior to your death are all examples of assets that might be inadvertently left out of your FWT at the time of your death. If they remain unaccounted for, they will create an intestate estate that requires probate. A Pour-Over Will prevents that eventuality by directing all assets not already transferred into the trust to be “poured over” into the trust after your death. In essence, a Pour-Over Will serves as a “catch-all” tool that backs up your primary Family Wealth Trust. Together they ensure that your estate is distributed according to your wishes.
Contact Illinois Estate Planning Lawyers
For additional information, please download our FREE estate planning worksheet. If you have additional questions or concerns about the need for a Pour-Over Will, contact the experienced Illinois estate planning lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.