As your wealth grows in California’s dynamic economy, you’ll want to secure your assets and ensure they get distributed according to your wishes after you’re gone. One option to consider in your estate planning is a pour-over will. Understanding how this tool works and its potential advantages can help you decide if it’s the right choice for your wealth protection strategy.
What is a pour-over will and how does it work?
A pour-over will transfers any assets not already in your trust into your trust when you pass away. As a new high-earner in California, you may find it especially helpful. This is particularly useful in fast-growing industries like tech and real estate, where you might accumulate new assets rapidly.
Pour-over wills work with revocable living trusts. The process follows these steps:
- You establish a revocable living trust and move the majority of your assets into it.
- You also create a pour-over will that names the trust as the beneficiary of any assets not in the trust when you die.
- When you pass away, any assets you didn’t transfer to your trust during your lifetime “pour over” into the trust through the will.
For busy professionals like you in California’s high-growth industries, this combination of a pour-over will and revocable living trust offers the flexibility to manage newly acquired assets as your career progresses, while simplifying your overall estate management.
Benefits and considerations of pour-over wills
To make informed decisions about your estate plan, it’s important for you to understand both the pros and cons of pour-over wills. Several of its benefits that you can enjoy as a new high-earner in California include:
- Simplicity: Easier handling of California’s complex probate process
- Privacy: Better protection for your estate, as trusts aren’t public in California
- Comprehensiveness: Useful for sudden wealth gains from events such as a stock launch
- Backup protection: Ensures forgotten assets still end up in your trust
However, assets passing through a pour-over will might still need probate. To avoid this, transfer as many assets as possible into your trust during your lifetime. Use the pour-over will mainly as a safety net.
A pour-over will can become an important component of your comprehensive estate plan. As a new high-earner in California, it can offer protection for your fast-growing assets while complying with state-specific rules for will creation and execution. You can structure pour-over wills and trusts in various ways to address your different needs. For help in tailoring these tools to your unique circumstances and ensuring compliance with California law, consider consulting with an estate planning attorney.