QUESTION: I had a customer come in and ask me to notarize some revocable trust documents. Her son, who is graduating from law school in May, had written the trust for her. I asked her if she wanted to transfer her accounts into the trust and her son said that wasn't necessary. He said she had a pour over will that would allow everthing to go over into the trust at the time of her death. I had never heard of this before and wondered if this was correct. I had always been told that they needed to transfer their accounts into the trust while they were still living.
ANSWER: Your customer's son probably had "Wills and Trusts" as a second year student. In short, it is still fresh in his mind and he knows more about the subject than most attorneys who have been practicing 10 years or more, but do not do this type of work.
Most people establishing a grantor or revocable trust simultaneously execute a "pour over" will. It is the standard accessory to this type of trust, but the bank would normally have no need to know of its existence. It works as a safety net to catch any asset that was not transferred to the trust during the lifetime of a decedent.
In this scenario, it is likely that your customer is still in good health, is capable of managing her affairs without assistance and the primary purpose of the trust is not to reduce federal estate taxes. If that is the case, they can establish the trust now, but wait to fully fund it until she is no longer capable of taking care of her affairs. If that never happens, the will transfers everything to the trust at the time of her death and its provisions control the property's management or distribution. This approach does not avoid probate, but keeps the ultimate disposition of the funds a private matter.
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