A pour-over will is something that you will never see without its counterpart—a trust fund. A pour-over will is a common estate planning tool used to make sure that all property is accounted for even some of it was meant to be transferred to a trust and was not. It’s like a safety net of sorts for a trust, in case you forget to transfer property to a trust, or if you decline to transfer property for other reasons.
What is a pour-over will?
A pour-over will is commonly used in conjunction with a revocable living trust (also called a living trust). A living trust allows you to continue to have control over trust property while you are alive, and then another trustee will take over and distribute trust assets to beneficiaries according to your wishes after you have died.
Neglecting to title property in the name of the trust may happen for a number of reasons, and it could be accidental or intentional. Perhaps some of your property is not worth enough money to bother transferring it to the trust, or perhaps you will acquire property after setting up your trust and simply forget to title it in the name of the trust.
If there is property that is not part of your trust when you die, and you have no other will, then the pour-over will serves to make that property part of the trust, though it may take a few months or more for that to happen. The pour-over will states that your trust is the beneficiary of any property you own that is not already part of your trust or that does not already have a beneficiary designation (like a retirement account or life insurance policy).
If you do not have a pour-over will, any property not accounted for either in a trust or a separate last will and testament will pass through the probate process and be conveyed to any heirs according to your state’s intestate succession laws.
Just a backup
After you have set up a trust, it is your responsibility to make sure that the trust is funded (more info about how to fund a trust.) That involves retitling any property or assets intended as trust property in the name of the trust. It is not uncommon, though, for some to overlook this essential step in making sure the trust is complete. The best practice is still to make sure the trust is properly funded so that you know that it will be distributed to beneficiaries according to wishes, and so that your property avoids probate.
Even if a pour-over will ensures that all your property is accounted for when using a trust for your estate planning, any property not in the trust will likely have to go through probate. If the “remainders” of your estate (anything not covered by your trust or a separate will) are not worth a lot, then your state may have a simplified process for probate that is cheaper and faster than normal probate.
Because living trusts can be modified at any time while you are alive, it might be helpful to review your documents annually to see if there is any property that is not funded into the trust and should be. A pour-over will is there to cover your assets as a backup, but if you review your estate plan regularly, your trust will do the heavy lifting.