31 Jul WHAT IS A POUR OVER WILL AND DO I NEED ONE? Justin Crain, Partner
If you have a trust in place, a pour over will is a necessary part of your estate plan. A pour over will directs that assets outside of your trust that are part of your estate should “pour over” into your trust when you die. A pour over will leaves the balance of a person’s estate to their trust and is a standard part of trust planning. Ideally, there should be no need for the will at death when a trust plan is in place because all of a person’s property should pass through their trust or by other contractual means. In fact, the point of many trust plans is to avoid transfers by will. However, if assets are forgotten or have not been made part of the trust during a person’s lifetime, a probate proceeding could be triggered unexpectedly due to that trust funding problem (or for other reasons). In the case that a probate proceeding is triggered, this type of will “pours” the assets that are outside of the trust into the trust.
Situations that could inadvertently lead to a probate include:
- Failure to re-title bank accounts and securities to the trust.
- Failure to re-title real estate to the trust.
- Creating new financial accounts after the trust is established in an individual capacity instead of as trustee.
- Purchasing new real estate after the trust is established and taking title in an individual capacity instead of as trustee.
- Forgetting to retitle real estate to the trustees after conducting a refinancing transaction.
- Funds becoming payable individually to a person with a revocable trust, such as an inheritance, but the person does not collect the funds before death.
- Property that cannot be held in trust or is intentionally not held in trust does not have proper beneficiary designations.
Since the pour over will is a safety-net in the event that there is a problem with trust funding, for example, the majority of legal language concerning a person’s assets who has a trust in place is contained in the trust instead of this type of will (the pour over will). The pour over will should be consistent with the trust it references and may go as far as stating that the specific terms of the trust apply even in an instance where the trust is no longer in force or in the event that the pour over will has to be probated.
This type of will typically names the same person who was designated as trustee of the trust as the executor of the pour over will while additionally mirroring the people named as alternates in the trust as alternate executors of the will as well (although common, this is not required). The reason this is common is because if the trustee of the trust is also the person named as the executor of the pour over will and the pour over will has to be used (in probate for example), then the same person will be the trustee of the trust and the executor of the will and will most easily and efficiently be able to distribute funds and assets to the revocable trust at the end of probate administration.
The pour over will is an important and necessary part of a comprehensive estate plan when using trusts in your planning. Working with an estate planning attorney with experience in trust-based planning will help to ensure that you have not only the proper trust program in place but also the necessary safeguards to ensure that you are protected in the event of unexpected circumstances.