Pour-Over Will

Death has a way of sneaking up on people. Even those most diligent about their estate planning can leave some assets unprotected. This can be the case even if you set up a living trust and direct assets to beneficiaries.

After all, it's challenging to plan for every contingency to protect loved ones. A pour-over will can address this issue. This estate planning tool is used to gather these remaining unprotected assets and move them into a trust.

This article will explain the basics of a pour-over will and how it works. It will give you information to determine whether to include a pour-over will as part of your estate plan.

What Is a Pour-Over Will?

A pour-over will is a type of will that "pours" all of the testator's remaining assets into a trust they set up before their death. Before diving into the details, it is important to understand the basics of a will and living trust. These topics are directly related to a pour-over will.

A last will and testament directs your executor, heirs, beneficiaries, and probate court. It explains what you want to be done with the assets in your estate after your death. You may have specified intended beneficiaries in your will. Or you may have been vague and said your property should be split evenly among certain people.

If you die without a will, state law on intestate succession determines how your assets are distributed. If you use a will to transfer your assets, it must be probated. That means an executor will manage your estate under the supervision of your state's probate court. This can take time, and it could get expensive, depending on the complexity of the estate. In most states, small-estate procedures are available for estates with values falling below a certain threshold.

Living Trusts

Some people set up a living trust to avoid probating an estate. A grantor transfers deeds to real estate and ownership of other assets into the name of the trust. The type of trust you create determines the level of control you have over those assets during your lifetime.

For example, with a revocable trust, the owner retains the right to control trust assets. You can change or cancel a revocable trust at any point before death. But with an irrevocable trust, the living owner lets go of control once the assets are held in the trust. Once you create the trust, it can't be changed or modified. But you can structure the irrevocable trust to allow you to change the beneficiaries.

Assets Not in Trust Before Your Death

Inevitably, the trustor (the person who set up the trust) will die, and some assets will require retitling or will not yet have passed into the trust's ownership. This is when a pour-over will is useful.

By "pouring" all of the testator's remaining assets into the trust, the pour-over will guarantees that the assets are transferred and distributed to the beneficiaries of the trust.


How Do Pour-Over Wills Work?

In most states, to execute any valid will, it must meet the following requirements:

  1. The testator must be of sound mind (have testamentary capacity).
  2. The will must be in writing.
  3. The testator's signature must be on the will.
  4. Two people must witness the signing of the will.

There are often two additional requirements for a pour-over will:

  1. The trust into which assets will be "poured over" from the will should mention the will within its creation document.
  2. The testator must create the trust before or contemporaneously with the will.

Some states may require additional will formalities. Check your state's laws or talk to a local estate planning attorney. This will ensure you understand the requirements for creating a will with a pour-over trust.

Upon your death, the executor of your estate will start working on your estate. Following a probate proceeding, your executor receives the authority to act. Executors have to go through probate and get permission from the probate court before proceeding with their duties. Generally, an executor's primary responsibilities are gathering assets and paying outstanding debts and taxes. Taxes may include any that are imposed under state law or federal estate taxes.

For a pour-over will, the executor will need to take all your assets that pass under the will and put them in the living trust. Then the trustee you've named will collect the trust assets and distribute them to the named beneficiaries. If the trustee specified in your will is unavailable, a successor trustee is appointed to administer the trust.

The Disadvantage of a Pour-Over Will

There is only one significant disadvantage to a pour-over will. Like a traditional last will and testament, this type of will must go through the probate process, which can be time-consuming. It can take many months before the distribution of assets.

A pour-over will only addresses assets that have not been moved into the revocable or irrevocable trust. In the best-case scenario for the beneficiaries, the deceased person (also called the grantor) has already transferred most of their assets and property into the trust. In this case, the trustee can immediately distribute the assets in the trust.

Advantages of a Pour-Over Will

There are two significant benefits of using a pour-over will:

  • Efficient estate management: Having a valid pour-over will saves the grantor time. It means you do not have to change your trust document constantly to add or replace assets. For this to work, the trust instrument must be drafted, and assets must be transferred into the irrevocable or revocable living trust. Then the pour-over will can be used to pick up any remaining assets at the time of death, acting as a safety net.
  • Security of private information: Trusts are not a matter of public record. Thus, information about a decedent's estate is kept confidential.

Get Legal Advice About Your Estate Plan

Consult an experienced estate planning attorney to ensure the terms of the trust meet your needs. Your attorney can ensure that your pour-over will is legally binding. Working with a dedicated estate planning law firm ensures your legal documents will fulfill your goals. A comprehensive estate will also make life easier for your loved ones following your death. Contact an estate planning lawyer in your area today.

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