What Is a Pour-Over Will?
Are you using or planning to use a trust-based estate plan? If so, you may consider creating a pour-over will to ensure that all of your assets are distributed according to your plan. A will attorney can help you create this useful type of will. Learn more about pour-over wills below.
A pour-over will is special in that you can automatically transfer your remaining assets to a trust upon your death. If you have a trust-based estate plan or intend to create one, a pour-over will can ensure that none of your assets are left out of the plan. It is like a safety net to prevent any frustrating obstacles when it comes time to execute your estate plan and distribute your assets.
How a Pour-Over Will Works
Trusts offer a way to transfer assets to your heir(s) without needing to go through probate. When you transfer your assets to a trust, the trustee(s) will become the legal owner(s) of the assets. You can continue to benefit from the assets as a beneficiary of the trust. However, the assets will not need to go through the probate process because you don’t legally own the assets.
Of course, it can sometimes be practical to keep some assets directly in your control. Additionally, you may gain new assets after funding your trust(s) or simply forget to include something. Using a pour-over will means that those remaining assets will automatically be moved to your trust(s) rather than going through the traditional probate and distribution process.
Furthermore, a pour-over will can include other instructions about the trust(s). For example, it can indicate what should happen if the trust becomes invalid. If the trust is unfunded at the time of your death, the will can help minimize legal issues.
The Process of Creating a Pour-Over Will
If you want to use a pour-over will for your estate plan, there is a simple process to follow. Consider consulting an attorney to help with making the most advantageous decisions for your assets.
Step 1: Create Your Living Trust
The first step is to create a living trust that you can fund with your assets. A living trust is one that you fund while you are alive. You can choose between a revocable and irrevocable trust. Most people choose the former because it allows the grantor (you) to continue to use the assets. An irrevocable trust is more restrictive but has some tax advantages.
While you are still alive, you are the trustee of your trust. However, you will also need to designate a successor trustee who will control the trust after you pass away. This can be a close relative or friend. It can also be a professional you hire to act as the trustee.
You will also need to select one or more beneficiaries and fund the trust with assets. Create a schedule that describes which assets are owned by the trust.
Step 2: Draft the Pour-Over Will
Drafting a pour-over will is a lot like creating a traditional will. However, instead of distributing your assets to your heir(s) directly, you will distribute them to your trust(s). Unlike your trust documents, your pour-over will can act as a catch-all for whatever assets you haven’t already explicitly transferred to your trust(s).
You can also include other instructions in your will. For example, if you have dependent children, you may name a guardian for them in your will. You can also choose to bequeath certain assets directly to beneficiaries in your will. Discuss with an attorney how best to distribute your assets to achieve your desired results.
Step 3: Ensure Legal Compliance
The most significant step of creating a pour-over will (or any type of will) is ensuring that it complies with all legal requirements to be valid. These requirements depend on the jurisdiction that you live in.
Typically, you will need to sign and date your will in front of witnesses. They may also need to sign and date the will. There are certain phrases and terminology that must be included in a will. These can be provided by a template. However, it can be helpful to have a professional check your will to ensure that it is valid.
Once it is executed, store your will and trust documents in a safe place. It is usually a good idea to keep these documents in a safe deposit box or with an attorney.
Finally, you will need to change the ownership of your assets so that they will be in your trust’s name. In many cases, you will need to indicate in the ownership documents (such as real estate deeds) that the assets are held in trust.
Reasons To Establish a Pour-Over Will
A pour-over will can be a powerful tool for estate planning. These are a few reasons you may want to use one.
Avoid Probate
Pour-over wills are used with trust-based estate planning. This method can help to avoid the probate process for your heir(s). Probate can be long and complicated. So, this is a major favor for anyone you want to distribute assets to.
Minimize Tax Burden
In some cases, trusts can help to manage the tax burden of your estate. Most people are not liable for the federal estate tax (only around 2,000 estates per year pay this). However, some states have their own estate tax rules. Irrevocable trusts are especially valuable for this.
Prevent Legal Obstacles for Heir(s)
Inheriting assets can be complicated without a well-defined estate plan. If you fail to transfer all your assets to your trust(s) or a trust becomes invalid, having a pour-over will can help to minimize the challenges for your loved ones.
Work with an Experienced Pour-Over Will Attorney
Passing assets on to descendants is a goal for many people. Having a well-organized estate plan will ensure that the process is as smooth and advantageous as possible. Hire a local pour-over will attorney to help with your trust-based estate plan.
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