A pour-over will is a type of will that’s created in conjunction with a trust. It can help facilitate the transfer of assets, if a trust’s grantor (the person establishing the trust) has failed to transfer all intended assets into the trust. In many cases, according to Beck & Lenox, the person who owns the assets simply overlooked them. For example, someone who bought 20 CDs over the years may have forgotten the existence of one or more of them. A pour-over will can be an important part of a person’s estate planning checklist. Should you have a pour-over will? Bankrate’s recent article entitled “Do you need a pour-over will in your estate plan?” gives us more information.
This type of will has a provision that directs the will to “pour-over” any residual assets left in the person’s estate into a living trust that is overseen by a trustee upon the grantor’s death.
A big benefit of this type of arrangement is that it’s a backstop, in case there were assets the grantor didn’t specifically fund into the trust before their death. This allows these assets to avoid the intestate rules (when someone passes away without a valid will), even though they were not specifically part of the living trust.
A person might designate certain assets to be titled in the name of a living trust they’ve established to facilitate passing these assets to the trust’s designated beneficiaries upon the grantor’s death. The trust avoids probate on these assets. However, any assets, such as an IRA or a life insurance policy, that passes on to heirs via a beneficiary designation wouldn’t be eligible for inclusion in this type of trust.
A pour-over will allows the grantor to state that any assets that had not previously been included in the trust should be added to the trust upon their death. Therefore, assets that may have been acquired after the trust was established are eligible for the same treatment as the assets that had already been funded to the trust.
It’s also simple and eliminates the need to decide which heir receives certain assets because everything eventually becomes part of the trust. These assets are, therefore, distributed via the terms of the trust.
It also helps avoid a lengthy probate case due to a significant asset that wasn’t included in the trust or elsewhere.
However, this type of will doesn’t eliminate the probate process. The will still needs to go through probate. There may also be possible legal challenges, which can be costly to litigate and take time to resolve.
Ask an estate planning attorney if you should have a pour-over will as a part of your estate plan.
Reference: Bankrate (April 20, 2022) “Do you need a pour-over will in your estate plan?”