Albuquerque Pour Over Will Lawyer

When someone dies with a pour over will, all (or nearly all) of their estate property is transferred to a trust they created during their lifetime — also known as a “living trust” — by listing the trust as the sole (or primary) beneficiary.

Placing estate assets into a trust, rather than bequeathing them directly to a beneficiary, can have several advantages. The assets can be allowed to grow in value, and their eventual distribution to a beneficiary can be delayed for preferred reasons. For example, a trust can hold onto assets for a beneficiary who is a minor at the time of the will creator’s death.

For a pour over will to work, the will creator (called a testator) must already have a trust in place. In Albuquerque, or anywhere else in New Mexico, the assets also must first go through probate.

Talk to a pour over will lawyer if you are interested in using this arrangement to your full advantage as part of your estate planning strategy. You can schedule a confidential, no-obligation consultation with New Mexico Financial Law at any time when you call 505-503-1637 or contact us online.

Questions You Can Answer With the Help of an Albuquerque Pour Over Will Attorney

Pour over wills are a relatively simple form of will, but they nevertheless require careful planning and strategization. Foremost, the testator will need to form a trust prior to their death. They must also have adequate preparations in place for the trust to successfully assume control over the assets. A successor trustee must be named, for example, in case the testator was acting as sole trustee during their lifetime.

New Mexico Financial Law can meet with you to discuss your will, trust formation, or any other estate planning arrangements. With the help of our Albuquerque pour over will attorney, you can determine how you might answer critical questions, like the following:

• Do you already have a living trust in place? If not, do you intend to create one and place the majority of your valuable assets into it?
• Who would you want to appoint as successor trustee to yourself, if you intend to (or already do) serve as the trustee of an existing living trust? Would you prefer to have someone handle it who is personally connected to you, like a spouse or child? Or would you rather have a professional trustee serve?
• Do you intend to designate the same person as trustee and personal representative (i.e., the executor) of your estate when you die?
• Is the person you want to serve as a personal representative a beneficiary of your trust?
• Do you have a spouse? Are they the co-grantor of your living trust?
• Does your living trust follow a special structure? For example, is it set up as an irrevocable life insurance trust?
• Do you want your living trust to turn into a specialized type of trust following your death, such as a bypass trust?
• Do you want your pour over will to use your trust to completely dispose of your estate? Or do you intend to bequeath some assets to living beneficiaries through the will after probate concludes?
• What other estate planning tools do you have in place that could interact with or be affected by your pour over will?
• Do you anticipate any creditor claims against your estate that could prevent key assets from being placed into a trust?
• How long do you intend for your trust to keep assets after your death? Is it going to be just for a few years, or for multiple generations?

Your Albuquerque pour over will attorney can help you consider how you might answer these questions, along with other estate-related questions that are relevant to your unique situation. Your attorney can also review your current estate plans along with any assets not currently held by your trust that would pour over into it following your death. With this information in hand, they can help you form a one-of-a-kind strategy for achieving your goals after the end of your life, ensuring you leave behind a legacy that supports loved ones while clearly upholding the values you consider most dear.

What Is a Pour Over Will? How Would One Work in Albuquerque?

A pour over will can be a rather simple form of will. Most times, it lists a trust as its sole beneficiary.

By comparison, a “regular” will usually distributes the property of the decedent’s estate to multiple beneficiary parties. These parties might include the testator’s spouse, children, other relatives, and the closest friends they cherished in life. The testator’s personal representative is responsible for entering their will into probate, handling any creditor claims or will contests, and then distributing the estate’s assets to heirs once probate concludes.

In Albuquerque — and throughout the rest of the state — a pour over will still causes assets to enter probate (which is not the case in every state). The difference is that once probate concludes, the entire estate (or the majority of it) is transferred to one beneficiary: a trust.

There’s one catch, though, to this arrangement: the testator has to have a living (also called an inter vivos) trust in place before they die.

How Does a Living Trust Work, and How Does It Interact With an Albuquerque Pour Over Will?

A trust is a legal arrangement involving three main parties:

• The grantor, who forms the trust by giving it ownership of their assets
• A trustee, who is responsible for obeying the trust’s rules, managing its assets, and eventually distributing those assets to beneficiaries
• Beneficiaries, who receive assets via distributions from the trust

Note that a person can serve as a trustee and be a beneficiary, too. However, it is often inadvisable for the person serving as personal representative of an estate to serve as trustee and be a beneficiary of the trust. With this arrangement, it could be possible for assets already held in the trust to be considered as part of the overall estate. This situation mostly occurs with life insurance trusts, so consult with an Albuquerque pour over will lawyer to watch out for special complications.

Living Trusts and Pour Over Wills Can Reduce the Complexity and Expense of Probate

Critically, any assets transferred to a trust during the grantor’s lifetime count as existing outside their formal estate. Consequently, these assets will not be subject to probate. They are also less likely to be subjected to (but not wholly immune from, in many cases) creditor claims related to the grantor’s debts.

Put another way: transferring assets into a living trust can greatly simplify probate while helping the grantor protect certain assets from creditor claims. The estate representative has fewer assets to handle or distribute, which can reduce the time, cost, and effort of going through probate.

There are two main factors that could complicate this arrangement, however:

1. The grantor has assets they own personally that were never transferred to the trust’s ownership, such as a recently purchased vehicle or miscellaneous income
2. The grantor may have failed to properly arrange the transfer of an asset to the trust prior to their death

In either case, if the grantor dies without a will, any assets considered to be part of their estate are going to be declared intestate. An intestate estate automatically transfers to the decedent’s relatives, according to state laws.

A pour over will, therefore, acts as an “insurance plan” of sorts against having intestate property. It also “mops up” any property that never formally made its way into the living trust, either because the grantor failed to do so or because their efforts to do so did not succeed, for whatever reason.

Can a Pour Over Will Be Used If the Testator Never Created a Living Trust?

Technically, a will that transfers property into a trust that has not been created yet is a testamentary trust will, not a pour over will.

Testamentary trusts are created through a provision of a will. Since the assets transferred into them come from the grantor’s estate, these assets must first go through probate. The testamentary trust then receives the assets after probate concludes.

While both arrangements mean that a trust must wait until probate concludes to receive its assets, a previously created living trust can immediately provide value to beneficiaries after its grantor dies. Assets already held in the trust could, for example, be transferred immediately to beneficiaries. Or, the trustee can continue handling the assets and managing them, creating a seamless transition after the death of the grantor.

As a common example, a residential property placed into a living trust can be physically maintained and financially managed by the trustee from the moment the grantor first falls into bad health. By comparison, a home owned by a testator remains their property until they die. It then temporarily becomes the property of their estate after their death. The estate’s representative is responsible for managing it until probate concludes. Only then can an heir finally inherit it and begin looking after it themselves.

In the case where a trustee is already responsible for the home, it can be possible for the eventual recipient to go ahead and move in before the original owner even dies, if this is compliant with the rules of the trust. Alternatively, the trustee can take steps to begin selling the home without needing approval of beneficiaries, if the trust instructs them to do so in order to liquidate its value and free up cash funds.

A testamentary trust can provide some asset management continuity benefits, but only after probate has concluded. In the meantime, the asset’s ownership status effectively remains in limbo until it is properly transferred out of the estate.

Common Trust Arrangements That Can Take Advantage of an Albuquerque Pour Over Will

A pour over will can be used to transfer assets to any type of living trust, including simple trusts that merely hold onto assets until the estate is fully dealt with. Alternatively, the grantor/testator can arrange for a more specialized form of trust to be formed, or they can provide instructions for a living trust to be converted into a different type of trust following their death.

Some of the most common trust arrangements used alongside a pour over will include:

• Irrevocable Life Insurance Trust (ILIT) — These trusts receive life insurance proceeds as a beneficiary. They can also manage other assets, which can generate income to help pay for the life insurance policy’s premiums. This arrangement can simplify the process of handling benefits while giving policy proceeds the opportunity to grow before they are distributed to beneficiaries.
• A-B (Marital + Bypass) Trust — An A-B trust structure usually begins as a joint trust established by two spouses. When one spouse dies, their half of community property and all of their separate property can be placed into a newly formed bypass trust. The surviving spouse can draw income from this trust, but the assets are usually reserved for the couple’s children (or other beneficiaries), who receive their distributions after the surviving spouse’s death.
• Charitable Trust — A living trust can be formed as an irrevocable charitable trust during the grantor’s lifetime, or it could convert to one after the grantor’s death. These trusts will either pay out a regular income to a charity (charitable lead trust) or a non-charitable beneficiary (charitable remainder trust) for a set period of years. After the trust’s term expires, non-charitable beneficiaries (with a lead trust) or a charity (remainder trust) receives the remaining trust balance. Both types of arrangements can have tax benefits for the estate and the trust’s beneficiaries.
• Asset Protection Trust — These trusts can protect assets from creditor claims during the grantor’s lifetime (if it is irrevocable) as well as after their death. Note that any assets transferred to the asset protection trust through a pour over will first have to go through probate. During probate, they could be subjected to creditor claims. However, any assets already contained in an irrevocable asset protection trust during the grantor’s lifetime (i.e., before probate) are likely to be protected.
• Special Needs Trust — A special needs trust can support someone with a disability without affecting their income qualifications for public benefits programs. If a testator wants to leave significant property to someone who is on Supplemental Security Income (SSI) and/or Medicaid, they should leave the property to a trust rather than the person receiving benefits.

Get Advice and Assistance From an Experienced Albuquerque Pour Over Will Law Firm

Pour over wills may seem straightforward compared to other wills, but the reality is that careful preparations must be put in place before the testator’s death. The testator needs to form a living trust if they have not done so already. They should also consider all of their available trust options, in light of their goals, to ensure that they are using the best trust and will arrangements available.

New Mexico Financial Law can consult with you to help you put everything in place so that managing your estate and following through with your wishes can be as easy as possible for everyone involved. Schedule an appointment with our Albuquerque pour over will law firm today when you call us at 505-503-1637 or contact us online.