What Is a Pour Over Will?
A pour over will is a type of estate planning tool that involves both an existing trust as well as a regular last will and testament.
The mechanics of the process with a pour over will are that the person’s assets and property are placed into an already existing revocable living trust prior to his or her death and, upon the person’s death, those assets and property that have not yet been placed into the trust are then distributed to the trustee of the living trust to be placed into that previously existing trust.
Essentially, the pour over will grabs any assets not titled in the name of the living trust and “pours” those assets into the trust, to be distributed by the trustee in accordance with the terms of the trust.
(A living trust means a trust that has been established and is legally operational during the lifetime of the person who established the trust).
The trustee of the grantor’s previously existing living trust is named in the grantor’s will as the beneficiary of any of the grantor’s property or assets which were not already in the trust and is then responsible for the distribution and/or disposition of trust assets and property pursuant to the terms of the trust.
(The grantor is the person who established the trust and placed assets or property into it.)
The “pour over” portion of this estate planning tool’s name refers to the process by which the remaining assets are transferred, or poured over, into the existing trust at the time of the grantor’s death.
The pour over will and the existing living trust thus work in combination to ensure the grantor’s wishes are carried out seamlessly by ensuring all the grantor’s property and assets are in his or her living trust at the time of the grantor’s death.
As an example, assume that someone’s grandmother dies with total assets and property of $1,000,000 in the form of various financial assets like stocks and bonds and a home. For tax and estate planning purposes, $950,000 of the financial assets and her residence had already been properly titled and placed in the trust, with her children and grandchildren as the beneficiaries of trust.
However, when originally forming her living trust, she left approximately $75,000 in cash in a personal checking account outside of the trust that she used to pay her living expenses, $50,000 of which remains in that bank account at the time of her death.
A pour over provision in her will leaves the remaining $50,000 in her checking account to the trustee of the trust that already held the rest of her assets.
Therefore, what will happen upon her death is that the remaining $50,000 in that checking account will be added to the other assets and property that were already in the existing living trust pursuant to the pour over provision in her will and then utilized and/or distributed by the trustee in accordance with her wishes as expressed in the trust.
Why Would Someone Want to Use a Pour Over Will?
For someone with a living trust, using a pour over will is an efficient means of disposing of assets upon death that may not have been in the person’s trust prior to his or her passing for whatever reason.
The biggest benefit of having a trust and a pour over will versus going through the normal probate process is that assets that are in a trust upon the death of the trust’s grantor do not pass through the probate process, thus ensuring that the beneficiaries of a grantor’s estate can have access to the assets and property in the trust without having to first go through the hassle of probate.
Depending on the state you are in, the probate process can take years and can also subject the decedent’s assets and property to claims of the decedent’s creditors upon his or her death.
A pour over will also serves as a solution in the event of a worst-case scenario that the grantor has not transferred all assets and property to his or her existing trust at the time of the individual’s death for whatever reason. This ensures that, if it is the grantor’s intention that all of his or her property or assets be in a trust that has certain beneficiaries, this goal is accomplished.
In that respect, it acts as a sort of safety net that ensures all of the decedent’s assets end up in the trust upon the grantor’s death if that was his or her wishes. Those assets can be held, distributed or disposed of by the previously named trustee to the previously named beneficiaries in accordance with the trust’s terms.
The assets will not be distributed in some other manner pursuant to your state’s inheritance laws, but according to the terms of the trust you established while you were alive.
