When you start thinking about protecting your loved ones with an estate plan, the terminology you encounter may be confusing. Maybe you’re thinking about creating a will, but then you see mention of self-proving wills (which are just ordinary wills with different evidentiary procedures), living wills (which aren’t actually wills at all, but advance healthcare directives), and holographic wills (which are simply handwritten wills, but create complications in probate and aren’t always valid).
One of the strangest terms you encounter may be “pour over will.” However, this is one case in which the language paints an accurate picture.
What is the Purpose of a Pour Over Will?
A pour over will is used in conjunction with a living trust. A trust can be an efficient and cost-effective way to pass property from one generation to the next, but it’s more complicated than a will in one very important way. A properly-drafted will doesn’t require any action when the testator acquires new property. However, a trust can only pass property that is owned by the trust. If the grantor relies on the trust and doesn’t create a will, then any property outside the trust will be subject to distribution according to the state’s intestate succession statute.
While many people assume that assets will go to those closest to them under intestate succession, the outcome isn’t always what the deceased would have chosen.
Some possible examples of property that would not pass through the trust include:
- The grantor buys a new car after creating the trust and titles it in his own name
- The grantor forgets to transfer his interest in a real estate holding into the trust upon creation
- The grantor’s estate becomes entitled to assets after his death or during a final illness
While the first two examples are more common, the third can be significant. For example, if the grantor dies in an automobile accident, the estate may be entitled to compensation for wrongful death. However, the trust won’t own that interest, which means that any compensation received would go into the estate for distribution. Without a will, that distribution would follow the rules of intestate succession, which could result in a very different outcome than the deceased would have chosen.
A pour over will provides a safety net to ensure that assets like those described above are distributed according to the deceased’s wishes, rather than allocated according to a statutory formula.
How Does a Pour Over Will Work?
The pour over will is a relatively brief legal document that makes the living trust the beneficiary of the estate. Thus, any property held in the deceased name, or interests acquired at the time of death, such as the wrongful death claim described above, will be transferred into the trust.
A pour over will may be used in conjunction with an unfunded or largely unfunded trust, with most or all of the deceased’s property transferring to the trust through probate. However, this approach defeats some of the advantages of using a living trust rather than a will. For example, the property will still have to pass through probate to become property of the trust, which can mean unnecessary time and expense. In addition, while a living trust is private, passing property through probate to reach the trust makes far more information a matter of public record.
When the pour over will is used as a safety net, the bulk of the grantor’s assets will be owned by the trust during his lifetime, facilitating a smooth transition upon his death. Any property that he neglected to transfer to the trust during his lifetime, or interests that arose at or after the time of death, would be transferred to the trust in accordance with the terms of the pour over will.
An Experienced Estate Planning Attorney Can Help
The relationship between living trusts and pour over wills is just one of the many areas of estate and probate law that may seem alien and complex to a lay person. An experienced estate planning attorney can explain the options and help you determine the best means of protecting your loved ones.