One of things that your estate planning attorney will discuss with you when you decide to get serious about planning for the distribution of your assets after you pass away is the vehicle of asset transfer that is best for you. Though the estate planning document that people are most familiar with is the last will, this is not always the best way to transfer your assets to your loved ones. Some people decide to use trusts to provide for their family members and the primary incentive behind creation of a trust is to avoid the process of probate.
Why avoid probate? One reason is because it can be expensive. By the time your estate pays the court costs, probate attorney fees, the executor’s remuneration, appraiser fees, accountant fees, and liquidation charges the overall value of your estate can be reduced by anywhere from around 2% to in excess of 5%. It is also time-consuming, and your heirs will not receive their inheritances until probate has run its course and the estate has been enclosed. Probate also opens the door for those who would be interested in challenging your will, and this is another reason why some people choose to avoid it.
If you do use a trust as your primary vehicle of asset transfer you have to make sure that nothing slips through the cracks. It is likely that you will obtain property after you created the trust, and you may have intentionally left some property out of the trust for logistic reasons. You can take care of this by including what is called a pour-over will in your estate plan.
This document simply states that any property that you have remaining after you pass away that has not already been legally accounted for will be placed into the trust. If you didn’t include a pour-over will your remaining property would be passed via the rules of intestate succession and this is a time consuming and inefficient process that can be easily avoided.