Pour Over Will
Death has a way of sneaking up on people. Even those who were diligent about their estate planning, who thought they had every asset protected, held in a living trust, and directed to the beneficiaries of their choice, will leave some things unprotected.
It's just not possible in day-to-day life to manage everything.
That's why there is an estate planning tool that can be put in place to gather up these last unprotected assets and move them into a trust. It's called a pour-over will. This article will explain how a pour-over will works and why you might want to add a pour-over will to your estate plan.
What Is a Pour-Over Will?
A last will and testament tells your executor, heirs and beneficiaries, and the probate court what you want to have done with the assets in your estate after your death. You may have specified exactly who should get what, or you may have been vague and just said your property should be split as an even share between these people.
If you use a will to transfer your assets, it will have to 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 may cost money.
To avoid the need to probate an estate, some people choose to set up a living trust. They transfer deeds to real estate and ownership of other assets into the name of the trust. Depending on whether that trust is a revocable trust or an irrevocable trust, the living owner of those assets will have more or less control over them once the assets are held in the trust.
Inevitably, though, the trustor (the person who set up the trust) will die and there will be assets that were not yet retitled or that had not yet passed into ownership of the trust. This is when a pour-over will is useful.
A pour-over will is a type of will that "pours" all of those remaining assets of the testator into a trust that is set up before his or her death. The pour-over will guarantees that the assets are transferred to the trust and then distributed to the beneficiaries of the trust.
How Do Pour-Over Wills Work?
In most states, in order to execute any valid will, it must meet the following requirements:
- The testator must be of sound mind (have testamentary capacity);
- The will must be in writing;
- The testator's signature must be on the will; and
- Two people must witness the signing of the will.
There are often two additional requirements for a pour-over will:
- The trust into which assets will be "poured over" from the will should mention the will within its creation document; and
- The trust must be created prior to or contemporaneously with the will.
Some states may require additional will formalities. Be sure to check your state's laws or talk to a local estate planning attorney so you understand what is required to create a valid will.
Upon your death, the executor of your estate will start working on your estate. Executors have to go through probate and get permission from the probate court before proceeding on with their duties. Generally, an executor's main duties are gathering the assets and paying outstanding debts and loans.
For a pour-over will, the executor will need to take all of your assets that pass under the will and put them in the living trust you created. Once the assets are put in the trust, the trustee you named in your trust will collect the trust assets and distribute them to the named trust beneficiaries.
The Disadvantage of a Pour-Over Will
There is really only one disadvantage to this type of will. A pour-over will, like a traditional last will and testament, does need to go through the probate process. The probate process is not fast. It can take many months before the assets can be distributed.
Luckily, a pour-over will only handles the assets that haven't been moved into the revocable or irrevocable trust. The beneficiaries may hope that the deceased person (also called the grantor) stayed on top of their estate plan and had already moved most of their assets and property into the trust.
The assets in the trust can be distributed immediately.
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 save the grantor time because they do not have to constantly change their trust to add or replace trust assets. The trust document must be drafted first and some assets need to have been transferred into the irrevocable trust or revocable living trust. Then the pour-over will can be used to pick up any remaining assets at the time of death. In a sense, it acts as a safety net.
- Security of private information: Information about a decedent's estate is kept private because trusts are not a matter of public record. Information about a decedent's estate is kept private because trusts are not a matter of public record.
Get Legal Advice About Your Estate Plan
Consult an experienced estate planning attorney to ensure the terms of the trust meet your needs and that your pour-over will is legally binding. Working with a dedicated estate planning law firm ensures your legal documents will fulfill your goals and protect your family. Contact an estate planning lawyer in your area today.
Can I Solve This on My Own or Do I Need an Attorney?
- DIY is possible in some simple cases
- Cases with complex assets or families are rarely cut and dry
- Complex cases may need tailored advice from a lawyer
- Many attorneys offer free consultations