A revocable or irrevocable trust is a versatile and beneficial estate planning tool. It is used often in comprehensive estate plans to avoid probate. Many individuals plan for all of their assets to be included in these trusts. Unfortunately, unexpected circumstances can mean certain assets are not in a trust that were intended to be. An experienced estate planning attorney can review options to address this type of situation through the use of tools like pour-over wills.
What Is a Pour-Over Will?
A pour-over will is a will that automatically transfers all untitled assets to a trust. This provides further protection for your assets. A pour-over will is beneficial in unexpected circumstances, such as if you accidentally didn’t transfer certain assets or did not have time before you passed. This will also be helpful when you simply don’t want to place certain assets into the care of a trust but want them to be transferred through a trust after your death.
Understanding a Trust
Pour-over wills only work in tandem with a trust. This can be either a revocable or irrevocable trust. A trust is similar to a basic last will and testament because it lists beneficiaries to your assets and places someone in charge of estate administration. However, a trust avoids probate, which a will cannot do. A trust is also a private entity rather than a document in the public record.
With a revocable trust, you still have control over the contents of the trust, including the assets. An irrevocable trust is managed by the trustee you place in charge and can only be modified in specific circumstances. This lack of control is often why people choose not to place assets into an irrevocable trust and instead have them transferred through a pour-over will.
For both types of trusts, a pour-over will can name the trust as the beneficiary to all assets not already in a trust or passing to a beneficiary.
What Does a Pour-Over Will Do?
A pour-over will is a contingency plan that ensures certain assets are distributed according to your wishes through a trust when those assets have not been listed in your will or trust(s) already. The pour-over will is also used to list instructions when there are issues with the assets that were meant to be transferred. The trust may have dissolved or been found invalid. The pour-over will can act as a standard will and distribute assets to your beneficiaries.
When you do not have a pour-over will or will listing these assets, they are distributed by state intestate succession laws. These laws determine the distribution of your estate by finding your closest living relatives and giving the inheritance to them. This may not be how you want your estate or those specific assets to be distributed. A pour-over will can avoid this outcome and move assets to a trust where they can be administered and distributed more quickly.
Does a Pour-Over Will Go Through Probate?
Yes, a pour-over will goes through probate, and the assets may be subject to certain taxes depending on the state. A pour-over will is likely to manage and transfer assets more efficiently than a standard will, although there will be more delays in the process than if the assets were already held in the trust.
The process of transferring the assets in probate can take more time if there are numerous or high-value assets in the pour-over will. This is why it’s important to use a pour-over will as a contingency and not as the primary method of transferring assets. You should remain up-to-date on transferring your assets to limit the time your family must spend in probate.
FAQs
Q: What Is the Difference Between a Will and a Pour-Over Will?
A: The main difference between a will and a pour-over will is that a last will and testament is a document that distributes all your assets after death, while a pour-over will is used to move specific assets into a trust. Those assets can be distributed via the trust’s instructions. The basic will can be used without a larger estate plan, while a pour-over will only function if there is a trust into which to place assets.
Q: Why Would You Want a Pour-Over Will?
A: A pour-over will is beneficial for individuals who have one or multiple trusts in their estate plan but do not have all their assets placed into the trusts. A pour-over will can state that all assets not in a trust should be moved to a trust. You may have forgotten to transfer the assets, been unable to after acquiring the assets, or wanted more control over the assets than some trusts allow.
Q: What Are the Disadvantages of a Pour-Over Will?
A: One of the disadvantages of a pour-over will is that it does not avoid probate. The will is entered into probate court and must be approved before the assets can be transferred. Often, individuals create a trust for the primary purpose of avoiding the long, public, and costly probate process for their loved ones. A pour-over will cannot do this. However, without a pour-over will, assets that are not in a trust will go through probate anyways.
Q: What Should Be Included in a Pour-Over Will?
A: A pour-over will should state that all assets you or your spouse obtain should be transferred into the ownership of a trust if it is not already in a trust or listed in your will. The specifics of a pour-over will can vary based on your current asset and trust arrangement. You can provide more details about where assets should go. You can list the distribution of the assets as a contingency if there are issues with the trust itself.
Contact Stange Law Firm for Estate Planning Support
If you are unsure whether a pour-over will is beneficial or necessary in your estate plan, speak with a skilled estate planning attorney. An attorney can help you determine its uses and explore other estate planning tools that can help you. When you need legal guidance, the attorneys at Stange Law Firm can help. Contact our firm today.
