On this week’s Money Wisdom Question Series with Heath Grossman, CFP®, he tackles an important question: if you have a trust, do you also need a will?

The short answer is yes. When you’ve established a trust, it is likely that you also created a will to accompany it. These two legal documents work hand-in-hand to ensure your estate is managed effectively and according to your wishes.

Understanding Testamentary Trusts and Pour-Over Wills

When planning your estate, it’s crucial to understand different mechanisms that can help manage and distribute your assets. One is a testamentary trust, which is a trust created by a will that comes into effect upon the testator’s death. This type of trust can be beneficial for managing assets on behalf of beneficiaries who might not yet be ready to handle inheritances on their own. Testamentary trusts allow you to set specific terms for how the assets will be managed and distributed over time, offering control and protection for your heirs.

In other cases, your will might function as a pour-over will. This document serves a unique purpose by providing instructions to transfer any assets that were not already included in the trust during your lifetime into it upon your passing. This acts as a safety net, ensuring that all your assets are eventually managed within the trust, even if some were left out initially. This can simplify the administration of your estate and provide peace of mind that your wishes will be carried out as intended, reducing the potential for disputes among beneficiaries and minimizing the risk of assets going through probate unnecessarily.

The Role of a Will in Estate Planning

Moreover, a will can specify beneficiaries for certain assets that are not directly mentioned in the trust, providing a clear directive for asset distribution. This becomes particularly useful if your trust was not designed correctly or deemed ineffective due to legal oversights or changing circumstances, as the will acts as a fail-safe in such situations. It ensures that assets are not left in limbo and that your intentions are honored, even if the trust falls short.

In summary, having a will alongside your trust is crucial for comprehensive estate planning. It ensures that all your assets are accounted for, including those that might be overlooked or not specifically mentioned in the trust, and your wishes are carried out smoothly without unnecessary legal complications. A well-prepared will can prevent potential conflicts among beneficiaries and provide peace of mind that your estate will be handled according to your desires.