Estate planning certainly involves setting up a trust and drafting a will, but it goes way beyond that. Estate planning isn’t hard, but lawyers make it hard because they want to protect their turf. After all, we go to school for an extra three years to learn how to speak and write, so that the layman can’t understand. I’m going to cut through the legal jargon and show you the estate planning basics to show you what you need to know about setting up a trust and drafting a will.
Every estate plan will have a will. Drafting a will is the one of the first steps in basic estate planning. Even if you have a trust, you’ll have a will. If you’ve already got a will, your will will have to be redone if you want to have a living revocable trust. The will and the living trust have to “talk” back and forth to each other, so the will you have will have to be redrafted. I won’t get into the mistakes people make when they are setting up a trust and drafting a will. That’s all in the mistakes videos. Don’t forget to watch them.
Lots of people feel like they shouldn’t have to draft a will if they get a living revocable trust. When you have a living trust the will you get is a “special” type of will. It is called a “pour over will.” Drafting a will like everybody usually gets is different than drafting a pour over will. The pour over will acts as a “backstop” to the living revocable trust. It doesn’t actually distribute property, like a standard “testamentary will.”
The only function of a pour over will is to facilitate probate for assets that were not put into the living revocable trust. People screw up the living trusts (see the six mistakes videos), either in the drafting or the use of the trusts, and their family ends up going through probate, just like the families that don’t have a living revocable trust. Actually, the vast majority of people that spend the big bucks setting up a trust go through probate. If the trust is drafted properly and then it is used properly, there won’t be any probate, and there won’t be any need for the pour over will. Can you see why the pour over will is only a backstop for the living revocable trust?