What is a Pourover Will? It is a precautionary Will used to fund assets into your Trust, in case you forget to do so during your life.
Maybe you have heard of a Pourover Will, but do not really know what that means. I have written before about four critical documents in an Estate Plan. There are more pieces, but four seem central.
1. A Trust does a lot of things. It holds assets in a place that you have access during your life. Your Successor Trustee(s) can also access such for your behalf, if you become later in need of assistance. And ultimately, your Trust distributes assets, usually after your death, according to your directions.
2. A Durable Power of Attorney is a way for you to delegate authority for someone to act on your behalf, but not against your competent wishes.
3. A Living Will, if you like, allows you to memorialize your intent. In essence, it says that if you become in a condition that your quality of life may not be restored, and you would be maintained by machines, you would rather not have your life extended in that condition.
4. A Pourover Will is a precautionary document, as described in more detail below.
A Trust controls (and ultimately distributes) only those assets which it owns.
In this way a Trust is fundamentally different that a Will. With a Will, one does not change title to assets during their life. Rather, the probate process is required to move the assets (through inventory, administration and claims) to the beneficiaries.
Again, a Trust controls only those assets it owns. On occasion, people neglect to put a significant asset into their Trust before dying. This is where the Pourover Will steps forward. This type of Will is a precaution, so that if assets were left out of the Trust, this Will can be employed to move the assets into the Trust, so they can be controlled according to the wishes of the decedent.
A Pourover Will goes hand in hand with a Trust.
While one may not intend to leave significant assets out of their Trust, it can happen. If something is first overlooked, the Pourover Will can help.
What is a Pourover Will? It is a precautionary Will used to fund assets into your Trust, in case you forget to do so during your life.
Guardians and Conservators: their selection can be crucial. Minor children who lose their parents, and adults who need help both may be dependent.
It’s not really a very well-known topic but a guardian and conservator are important in a couple situations where people need someone else to care for them.
Children
First is a minor child. In the absence of a parent, and while a child is young, they don’t have legal capacity … they cannot go contract with a dentist for services, they can’t consent to their own field trip at school, they can’t buy insurance … all sorts of things that they can’t sign, as a child. That child needs a guardian and conservator
Adults with impairment
Another group of people are adults with an impairment who cannot handle their own affairs. Sometimes that can be due to a life-long condition or it can be someone who starts losing capacity, losing their memory, suffers from dementia or Alzheimer’s later in life. They may need someone to help handle their affairs. So you have heard the term guardian and you have heard of a conservator. What are those two things?
It is a pretty common sense division of duties. A Guardian is someone who cares for your person or your health, all sorts of care decisions. A Conservator cares for your finances and your property. So it is a pretty obvious division there. As a parent of the child, you would do both of these things, but if they’re different people (the Guardian and the Conservator), the duties may be divided among them.
State Law
Kansas law gives you the right to nominate Your Guardian conservator for your children in your will or your trust. You can make nominations, so that if something happens to you and your spouse, for instance, and your child or children were still minors, you will have nominated guardian and conservator for your children.
And under Kansas statute, as long as the court finds that the child is in need of a guardian conservator, the statute says the court SHALL appoint your nominee(s). So your your nominee in your estate plan has great weight, as it should.
Guardians and Conservators may help an “adult with an impairment.” That could be someone has a condition their entire life such that maybe they need some help with their affairs. It can also be someone who has capacity, but a little later in life maybe they begin slipping. So, while they are competent, they can nominate someone as guardian and/or conservator in their power of attorney document, and the court is to – by law – prioritize that person as a guardian conservator for the adult with the need.
That’s a little circular because you hopefully should not need the appointment of a guardian conservator when you have a good Durable Power of Attorney document in place. But that’s kind of a safe backup. I often, in a power attorney document, name a nominee as a guardian and conservator, and that power of attorney document should take care of things.
Example – how does it work?
So, let’s say I sign a power of attorney document and I name Bob to be what is called my “attorney in fact” (a person who has delegated powers in my power of attorney). If that’s thorough and covers business and healthcare decisions, the durable power of attorney document itself should carry the day. Just by signing that (while I have full capacity) with the various and broad enumerated powers, I pretty much take care of things. There should not be a situation where I need a power attorney later in life.
So, those are some ins and outs for minors or adults needing a guardian and conservator. I hope this clears things up for you. It can be a bit complex, but it should work out for you.
For instance, in a Trust you might name a nominee as the guardian and conservator for your child(ren) in case something would happen to you (and your spouse) at a young age. Then your trust is also going to provide funds for your children. So the nomination and the assets of the Trust kind of work hand-in-hand: there will be someone in your trust who can provide funds and someone (perhaps the same person, perhaps not) in the person of a guardian and conservator who can care for the child(ren), sign that field trip consent, who can take the child to the dentist and represent legitimately that they can speak for this minor child.
Guardians and Conservators: their selection can be crucial. Minor children who lose their parents, and adults who need help both may be dependent.
A Trust is not a mystery; here is an example. Let’s talk about what might be included in a somewhat routine trust. You should understand how it works.
A Trust is not a mystery; here is an example. When you sign your Trust, we will also put property into your Trust. The Trust can manage only what it owns, and funding the Trust keeps your family from having to go through probate upon your death.
During life.
During your life, you use the property held in your Trust just as you would if there were no trust. Upon any incapacity, your Trust is there (and through administration by your named Trustee) to care for you.
At your death.
Upon your death, your Trust remains there for your spouse during their life and any incapacity. Also, upon your death, your Trustee may distribute things per your Trust’s Personal Property Statement. So, your Trustee might deliver your hobby items to your child, your collectibles to your nephew, and divide your quilts among your children.
Upon the death of your spouse, your Trustee may distribute (per the terms drafted into your Trust):
funds in support of minor children or grandchildren until they reach the age of majority;
funds set aside for post-high school education or training of certain people;
real estate, divided among your children;
any charitable contribution you may have directed;
remainder of assets to people you name (to receive right away or upon reaching certain ages, if you like).
Once the Trust has distributed all property, its function is at an end, so it terminates.
A Trust is not a mystery; here is an example.
I hope you have a better understanding now. If not, let me know! I am Dan Covington. You can always find me at EstatePlanKansas.com or on Facebook at “Estate Plan Kansas.” Let me know what I can do for you: https://estateplankansas.com/contact/
Two fundamental pieces of an Estate Plan. A Trust or Will conveys assets upon death. A Power of Attorney names someone to help with your finance and health.
Durable Power of Attorney
You authorize someone to act on your behalf during your life for business and finance and healthcare
He/she can act not against your competent wishes, but very helpful:
Provides mechanism and assets for you during life and during incapacity
Provides assets during life of surviving spouse
Distributes after life of both of you to your ultimate beneficiaries
Does all of this without need of probate
Will
state your wishes, such as, “I leave everything to my spouse; if my spouse should not survive me, then divided equally among my children”
Executor must probate your Will for it to be effective
probate is often a 6-month process, or longer, involving the court, attorneys, notice, publication, deadlines and various levels of court supervision
Again, there are two fundamental pieces of an Estate Plan. One is to convey your assets, and the other puts someone in place in case you need help handing your affairs.
How does my Trust avoid probate? Why is it that a Will needs to be probated through months of administration in the court system, but my family can handle my Trust without that procedure?
A Trust is a Contract.
First and foremost, a trust is a contract. Kansas law has determined that trusts are enforceable agreements. Because they are enforceable agreements, trusts are valid methods to transfer assets presently and upon or after one’s death.
How does a Will work?
Your Will might say that you want everything to go to your spouse. It may continue to say that if your spouse does not survive you, then divide your assets among your children. Granted, it will contain more language than that. But, that is the essence. When you die, your Will is offered to the court for probate. Then it can act on (control) any property that you owned, so long as it did not already pass to someone else. For instance, you may have a bank account or a vehicle that you jointly own. The full phrase is really “joint title with right of survivorship”. This means that upon proof of death of one owner, the property becomes owned by the survivor.
Now, once your Will is offered and accepted for probate, it can direct the distribution of those assets you owned individually. Now your Executor must follow a procedure of administration. Once notice is given to creditors, heirs, devisees and legatees, your estate can pay expenses of administration and claims. Then, your Executor will seek approval to distribute assets as directed in your Will. This is often a 6-month or more process.
So, how is a Trust different?
Again, a Trust is a contract. It is a contract that you enter into with your Trustee. You convey property into your Trust during your life. And, you draft provisions into your Trust so that upon your death, your Trustee has legal authority over that property. Since your Trust already owns your property, the property does not need to be probated at your death, to move it out of your hands.
Your Trust will likely direct that your Trustee pay some taxes and final expenses. Then it may direct that they manage and/or distribute your property according to your directions in the Trust. There are some notice and transparency requirements, but essentially, your Trustee has the authority to distribute your assets per your wishes. It is important to note, your Trustee is obligated to act only as directed in the Trust document, without discretion to vary from the agreement (the Trust).
What really happens, upon death, with a Trust?
Basically, the Trustee needs to take care of a few things, and without involving the court system. The Trustee gives notice to beneficiaries, and takes care of final expenses and taxes. Then the Trustee can, without any court requests or approval, distribute the assets. Again, this is all as directed in the Trust document. The Trustee might, depending upon the language of the trust document, manage assets for a time. The management may last until the Trustee distributes assets to certain people only for certain reasons (like education) or at certain times (like the person reaching their 21st or maybe 30th birthday). Once the Trustee has completed distributions, they terminate the Trust.
Wrap-up.
How does my Trust avoid probate? So, a Trust is different because it does not require that a court set aside the assets for administration and distribution. Trust assets are already set aside, prepared for management and distribution.
