Monday, 27 May 2024

Estate planning: Do I need a will if I have a trust?

Many people wonder why they need a will if they have a living trust in place. The answer is because the will and trust serve different purposes.

The type of will used with a trust in place, however, is not your typical “stand-alone” will, i.e., a will used when no trust is in place, but is a so-called “pour over will,” so named because it transfers all assets left outside the trust into the trust.

The trust controls any assets that have been transferred by the client prior to death, but the pour over will controls every other asset (if any) that was not transferred and serves other important purposes. Now let’s explore the reasons why a will is still needed with a trust.

As mentioned, a pour over will serves to deal with the possibility that assets belonging to the client were left outside the trust at the time of death.

Often the client will have some assets – such as vehicles, boats and a checking account – that are typically left outside the trust. This will not trigger a probate so long as the total cumulative gross value of these non-trust assets is under $100,000.

Forty days after the death, the executor named in the will submits a sworn affidavit with an attached death certificate to take possession of these assets and transfer them into the name of the successor trustee.

Sometimes, the pour over will has to be probated because other assets were not transferred into the trust; or assets were taken out and not placed back into the trust (such as when a home is refinanced).

The pour over will transfers all of the omitted assets into the trust for purposes of distribution to the beneficiaries (presuming outright transfers) or for purposes of holding these assets (or their sale proceeds) for the benefit of the beneficiaries (under the terms of the trust).

Another reason – one that may not come up so often – is if the deceased person has legal business pending at the time of death.

The will, you see, nominates whomever the decedent wishes to represent his or her own estate in all legal matters. That person is most often the same person as the successor trustee in charge of the trust assets.

There are many different scenarios where an executor would be needed to deal with ongoing legal matters. For example, if the decedent died in a manner that gives rise to a lawsuit, or has a personal injury lawsuit pending at the time of death, then the will nominates the decedent’s choice for an executor for purposes of completing such legal affairs in the name of the decedent.

Another example is when the decedent owed monies to creditors or was being sued personally then the executor would be the person to handle the defense against these claims.

In any of these situations, the will would need to be probated in order to obtain so-called “letters testamentary” that actually appoint the executor; only then is there an executor with powers.

Filing the decedent’s last federal and state tax returns is another reason for naming an executor.

The decedent will usually die owing or being owed tax monies for tax years still open at the time of death. The executor has the responsibility to file any tax returns as due, and to pay any tax monies owed or claim refunds (as the case may be) on all open years.

Lastly, a will may also be used to nominate guardians of minor children. This important function, however, is often better left to a separate document for the nomination of a guardian.

Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 55 1st St., Lakeport, California. Dennis can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it.This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or by phone at 707-263-3235.

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