When taking the first steps to create an estate plan, people might hear a lot about wills and trusts. As this happens, it's natural to wonder if specific types of estate planning instruments will actually be beneficial. One increasingly common strategy is to use a pour-over trust in conjunction with a will as people take important steps to protect their legacies.
On a very basic level, pour-over provisions are included in a will to direct any remaining assets at the time of death into a trust. This way, the totality of a person's assets can fall under the protection offered by a trust.
In many cases, a pour-over provision coincides with a living trust. A person can establish a living trust protect and distribute certain assets while he or she is still alive. However, in most cases, people don't put all of their assets in a living trust. As such, establishing a pour-over trust provides that all remaining assets are transferred efficiently through the use of a single legal instrument.
Pour-over trusts are allowed in states that have adopted the Uniform Probate. Fortunately, Michigan is among those jurisdictions. Keeping this in mind, this option is available to residents who could benefit from including a pour-over provision in their wills.
Trusts are generally very complex legal instruments. As such, this post isn't intended to serve as guidance. Many people might not understand whether or not a trust -- including a pour-over instrument -- will meet their unique financial needs. By seeking trustworthy advice, a person can put together a smart estate plan that works within the framework of Michigan's estate laws.
Source: WestLaw, Family Estate Planning Guide § 5:15 (4th ed.)