What Are Pour-Over Wills?

Pour-over wills are wills that decree that all assets belonging to the Testator transfer into his or her trust immediately upon death. Pour-over wills are a way of ensuring that any assets that the trustor neglected to add to his or her trust, whether accidentally or on purpose, will be incorporated as part of the trust even after the execution of the applicable will.

A pour-over will first requires the Testator to create a trust and appoint a trustee to manage the trust upon the Testator’s death. Rather than listing the assets and specifying to whom each is to be given, the will simply states that all of the assets in the Testator’s estate at the time of his death transfers immediately into the trust.

There are two occasions where assets intended for the trust be distributed to beneficiaries of the trust: 1) in the event the trust becomes invalid and 2) when it becomes difficult or impossible to fund an unfunded trust upon the death of the trustor.

Estate plans often pair pour-over wills with living trusts, subsequently requiring trustors to transfer their assets prior to their deaths.

With the exception of those who are rather affluent, it is typically in the best interest of trustors to implement a revocable living trust that allows said trustors to control the assets in their trusts up until the precise moment the trustors pass away.

If you plan to leave behind a substantial amount of assets as part of your estate, you might opt for an irrevocable trust. An irrevocable trust will essentially permanently remove assets from the estate, resulting in reducing or eliminating the estate tax burden that your beneficiaries will face upon receiving their portion of your estate.

What is the purpose of a pour-over will?

You may be wondering what the need for a will would be if you already have a trust in place. Even though a living trust makes it possible for you to have control over the distribution of the assets you’ll leave behind, you are still going to be using and controlling said assets while you’re alive. Additionally, people generally acquire more and more new property as their life continues.

As you accrue more assets over time, you may forget to transfer said assets property into your already established trust. Another possibility is that you might not have the opportunity to add the assets in the first place, as we must acknowledge that accidents happen, meaning not everyone passes naturally.

Your pour-over will catches that property and tells the court you want it transferred to your trust. Without the will, those assets will be treated as if you died without a will and will be distributed according to local intestacy laws, which may be very different from your personal wishes. It is important to note that assets transferred under a pour over will are still subject to probate, unlike the assets already in the trust at the time of the individual’s death.

Another advantage to ensuring your assets transfer to your trust is privacy. Unlike wills, trusts do not become public record after you die. This means only your beneficiaries will know who inherits your property.

With pour-over wills, you’ll name a residual beneficiary, which is the term for the person who will receive your residual estate. A trustee is equipped with the responsibility of managing your trust and distributing the contents within it in accordance with the terms set forth within your trust.

It is best that you not assign the role of trustee to the same person who fills the shoes of the residual beneficiary. Doing so would result in the same person inheriting your residual estate.

It is highly recommended that you elect a will executor who will make sure your wishes are carried out in the exact way you have defined within your will. If you indicate that the residual estate must be transferred into your trust account, the executor will be responsible for ensuring that this is completed.

Will executors move property into trusts, and from there, the trustee has official control over the assets within the trust. You may elect the same person to act both as trustee and as will executor in an effort to streamline the process.

However, some people prefer to name two separate people for each of the roles because

it prevents a single person from having complete control over all decisions and aspects of what they leave behind and creates checks and balances within the process. If you choose to name two people rather than a single individual, try to ensure they get along, as they will be working closely together as they manage your trust and your estate.

A pour-over will can simplify the administration of your estate, ensure there are no loose ends from assets you may not have gotten around to transferring to your trust prior to your death, and maintain privacy. Before you make any major decisions, consider speaking with an estate planning professional who can help you understand how a pour-over will may help you.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at info@esmlaw.com.

A pair going over a will