When a person in Colorado creates a trust, this is an important step in a well-rounded estate plan. It is only one element of a complete plan, though.
The Colorado Bar Association explains that another element people typically need to complement that trust is a pour-over will.
How to fund a trust
A trust is a separate entity from the trustor, and the trustor must transfer assets such as investments and real estate to the trust. This is not generally a one-time action when it comes to a living trust, as people often buy and sell assets throughout their lifetime.
Why a back-up is necessary
What if the trustee purchases a significant asset, but dies before transferring the asset to the trust? In that case, the state may distribute that asset to heirs according to Colorado’s intestate law. FindLaw explains that rather than leaving anything to chance, a person can create a pour-over will to protect those assets that are not in the trust at the time that he or she dies.
What a pour-over will does
The beneficiary of a pour-over will is the trust. When a person dies, all the assets not currently in the trust become the property of the trust, and the trustee can then manage or distribute these according to the trustor’s instructions.
What a pour-over will does not do
Unlike the assets in the trust, the assets covered by the pour-over will must go through the probate process. The executor of the will must inventory the assets, pay taxes and debts and close the estate before transferring what is left to the trust. This process may take several months, so the assets are not immediately available to the trust’s beneficiaries after the trustor’s death as the assets already in the trust are.