A pour-over will is paired with a living trust to manage assets after death. It transfers any remaining assets into the trust instead of distributing them directly. This method prevents state laws from deciding how these assets are distributed. Although assets moved with a pour-over will may go through probate, they ultimately join the trust, which simplifies managing the estate under one legal structure. A financial advisor can also work with you to create and manage your estate plan.
What Is a Pour-Over Will?
A pour-over will is a legal document that directs any remaining assets in an individual’s estate into a trust upon their death. This type of will works alongside a revocable living trust, transferring any assets not already placed in the trust during the individual’s lifetime after they pass away. It acts as a safety net, catching assets that may have been unintentionally left out of the trust. If certain assets are omitted, a pour-over will could help move them into the trust after death.
Even though a pour-over will directs assets into a trust, it does not bypass probate. Any property covered by the will must go through the probate process before it can be transferred to the trust. The length and complexity of probate will depend on state laws and the value of the estate.
As such, some individuals use a pour-over will as a backup while prioritizing direct transfers of assets to the trust to minimize probate delays and maintain privacy, since assets held in a trust do not become part of the public record.
Do You Need Both a Trust and a Pour-Over Will?
Key benefits of a trust, which we have already covered, include the transfer of assets to beneficiaries without going through probate, which will also keep them private. Additionally, they can also provide control over how and when assets are distributed to minor children, individuals with special needs or those who may not manage a lump sum inheritance well.
But, a trust alone does not automatically cover all assets. For example, if you acquire new property or financial accounts and forget to retitle them in the trust’s name, those assets could end up in probate. In this case, a pour-over will help funnel any overlooked assets into the trust.
But even with a pour-over will, assets that are not held in a trust will still go through probate before being transferred. This can lead to delays and potential legal expenses. While the trust itself helps avoid probate for properly titled assets, the pour-over will only guarantees that the remaining assets eventually reach the trust. This highlights the importance of proactively transferring assets to the trust during your lifetime to minimize probate involvement.
A pour-over will alongside a trust isn’t always necessary, especially if all assets are correctly titled in the trust’s name. However, this approach requires careful estate planning and regular updates to make sure no assets are left outside the trust.
How to Create a Pour-Over Will
If you want to establish a pour-over will as part of your estate plan, here are three general steps to help you get started:
- Create a living trust. Because a pour-over will works alongside a living trust, the initial step is to establish the trust itself. A living trust holds your assets and distributes them according to your wishes after your death. Without a trust, a pour-over will has no mechanism to transfer assets, rendering it useless. When setting up the trust, it’s important to include all major assets such as real estate, bank accounts and valuable personal property.
- Draft a pour-over will. Once the trust is in place, draft a pour-over will to act as a safety net for any assets not already in the trust. This legal document directs any remaining assets to be transferred into the trust upon your death. You may want to work with an attorney to structure the will correctly so that it meets state legal requirements.
- Name beneficiaries. You will also have to clearly name beneficiaries in the trust since they will receive assets once everything is transferred. The pour-over will itself does not list beneficiaries but instead funnels assets into the trust, where distributions follow the trust’s terms.
After death, a pour-over will typically goes through probate, which is the court-supervised process of handling an estate. Probate can delay asset transfers, so minimizing what goes through probate is key. Transferring major assets into the trust while still alive reduces probate delays and keeps more of the estate out of court. However, you should still appoint an executor to manage the probate process so that all assets make it into the trust as intended.
Bottom Line
A pour-over will acts as a safety net for assets that are not transferred to a living trust. If an asset remains outside the trust at the time of death, this type of will directs it into the trust, so it follows the same distribution plan. By funneling assets into a single legal entity, a pour-over will helps streamline probate and estate settlement. Although it may still go through probate, the process is often simpler than managing multiple separate assets.
Estate Planning Tips
- A financial advisor can offer you valuable expertise when creating an estate plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- While you may be tempted to plan your estate by yourself, you should be careful with these DIY estate planning pitfalls.
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