A “pour-over” will is one that works in conjunction with a trust. Assets owned by the person who creates the will, the “testator” in legal terminology, are automatically “poured” into a trust that is established before, or at the same time as, execution of the testator’s will. In essence, the trust is the main beneficiary of the pour-over will.
The pour-over will contains provisions that allow any assets the testator failed to transfer into the trust during their lifetime to pass into automatically or “pour over” into the trust when the testator dies. It is intended to be most useful for smaller assets that a testator may have forgotten to transfer into a trust before their death, or for assets the testator chose not to put into their trust for whatever reason.
A pour-over will does not avoid probate. Rather, it does have to go through probate. However, it can provide privacy. If a testator has a pour-over will, the will may be accessible to the public when it is probated, but the trust document is not public. So when the assets pour into the trust via the will, the trust’s beneficiaries are not publicly disclosed.
Pour-over wills act to prevent issues that could frustrate the smooth operation of a living trust. They ensure any assets a grantor neglects to add to a trust, whether by accident or on purpose, will end up in the trust after execution of the grantor’s will. Both revocable and irrevocable wills can work with pour-over wills, although the use of an irrevocable trust is unlikely because irrevocable trusts are inflexible. Once a trustor puts property in an irrevocable trust, it is difficult, if not impossible, to remove them.
What Kind of Trust Can Be Used with a Pour-Over Trust?
A pour-over will can work with a lifetime revocable trust. This kind of trust is created by a person known as a “trustor.” The trust is a “lifetime” trust because it is set up during the trustor’s lifetime and intended to remain in existence throughout the trustor’s life. Because the terms of the trust can be changed or even terminated by the trustor during their lifetime, it is a revocable trust.
The trustor may, if they choose, add or remove beneficiaries to the trust, or change the amount and type of assets in the trust at any time during their lifetime. But a pour-over will can also work with an irrevocable trust.
As noted above, for the trust to be valid, the trust must either exist before the will or must be executed at the same time the will is executed. The trust does not need to contain any assets before the assets are poured over into it through distribution under the will. This is, however, somewhat unlikely as a pour-over will is generally used to transfer assets into a trust that has already been funded during the testator’s lifetime.
What Kind of Assets Can Be Transferred in a Pour-Over Will?
Most types of assets can be poured over into a trust per the provisions in a will. These would be standard assets such as real property, including houses and land, as well as personal property, including jewelry, cash, and cars.
There are certain assets, however, that cannot be transferred to a trust via the pour-over provision in a will. These assets can include 401k accounts and property held in joint tenancy. These are assets that, by law, must pass to a specific person or entity. For example, the surviving joint tenant acquires joint tenancy assets by law.
However, if the asset is one that passed to a surviving joint tenant and is then poured over via a will to a trust, this would be allowed. The proceeds of a 401k account may go to a designated beneficiary. Any asset that passes outside of a will would not be transferred via a pour-over will.
What Language Must Be in a “Pour-Over” Will?
For a pour-over will to be valid, it must include certain language. Specifically, the will must provide that property in the decedent’s estate will be distributed to a trust. The will typically names a person referred to as an “executor” responsible for administering the estate’s probate and transferring assets to the trust. There is also a “trustee,” who is the person responsible for managing the trust for the benefit of the trust beneficiaries.
Both the executor of the will and the trustee of the trust have a fiduciary duty to ensure that the testator’s intentions as to who is to receive property are honored.
What Are the Responsibilities of the Executor?
The pour-over will is effected by the executor placing the testator’s assets into the living trust. Of course, the will may make other dispositions of some of the testator’s assets. This is allowed, and the executor would follow the will in this regard.
Once this placement is made, the trustee collects the trust assets, then distributes them to beneficiaries or maintains them in the trust, whatever is provided by the trust document.
What Are the Advantage of a Pour-Over Will?
The advantages of using a pour-over will include:
- A pour-over will is one way to transfer assets to minors. Assets are transferred to the trust rather than directly into the possession of minors, and the trustee manages the trust. The trust document can charge the trustee with ensuring that the minors do not receive the assets until they reach an age specified in the will. Or the trust can be set up to ensure that the minors do not spend assets beyond a certain dollar amount;
- Any assets the testator may have neglected to put into their trust during their lifetime can be transferred into the trust at the testator’s death via a pour-over will. The testator does not constantly have to update the trust to add or replace assets.
- In addition, if a change to the trust does need to be made, the change is usually easier to make than a change to a will. A change to a will must be done by redoing the will and observing the necessary formalities, i.e., the testator must sign the will in the presence of witnesses. There must be two witnesses and the like;
- As mentioned above, trust documents, unlike will documents, do not become public records when the testator dies.
- The identity of the heirs of the testator’s property is kept private;
- Assets may be poured over to a revocable living trust created by someone other than the will’s testator. Assets can be poured into any existing trust, even executed by others.
What Are the Disadvantages of a Pour-Over Will?
One of the main disadvantages of the pour-over will is that the will must go through probate. Probate is the process of proving a will, which means having it declared valid and effective following the death of the testator.
Certain events must happen during probate; for example, any tax liability must be determined and paid. Probate can be expensive and time-consuming. Only when probate administration is complete can the property pass to the trust and start working for the trust beneficiaries.
Do I Need the Help of a Lawyer?
If you are thinking of a pour-over will for yourself, you should consult an experienced will attorney. Your attorney can guide you through the process of drafting the will and the trust document that must go with it.
They can also advise you on what assets should go into the trust during your lifetime. The attorney can prepare the necessary documents correctly to ensure that your wishes regarding asset distribution are respected after your death.