When planning for the distribution of your estate, understanding the differences between a pour-over will and a traditional will is crucial. A pour-over will acts as a safety net, ensuring that any assets not placed in a trust during your lifetime are transferred into it upon your death. In contrast, a traditional will specifies how your assets should be distributed without the use of a trust. Below are three practical examples that highlight these differences.
Jane, a 45-year-old professional, decides to create a will to manage her estate. She has a few assets, including her home, savings accounts, and a family heirloom. After consulting with a lawyer, she has two options: a traditional will or a pour-over will.
Jane chooses a traditional will, specifically detailing how her assets should be distributed upon her death. Her will states that her house goes to her daughter, her savings accounts to her son, and the family heirloom to her sister.
In this scenario, Jane’s estate is settled according to her wishes, but if she acquires new assets later that aren’t listed in the will, those would be distributed according to state laws, potentially not aligning with her intentions.
Mark is a 50-year-old entrepreneur who has established a revocable living trust to manage his assets. He wants to ensure that all his assets go into this trust upon his death. Mark creates a pour-over will that serves as a backup to his trust, ensuring that any assets not already in the trust will automatically be transferred into it after his passing.
In the pour-over will, Mark specifies that any of his remaining assets should