Pour-Over Will is a Safety Net for Assets not in a Revocable Trust

December 2, 2024

Estate planning can sometimes feel daunting, especially when it comes to ensuring that your assets go to the right people without hassle. The pour-over will, especially when paired with a revocable trust, can provide peace of mind. A pour-over will is like a safety net for assets that are not in a revocable trust.

This type of will allows any remaining assets you hadn’t transferred to your trust during your lifetime to “pour over” into the trust when you pass away. This ensures that everything is gathered into one place—the trust you created—so it can be distributed according to your wishes.

Even though pour-over will still need to go through probate, they streamline the process by consolidating everything into your trust, making it easier for the appointed trustee to handle everything in one place. According to Investopedia, pour-over wills cover any assets left outside the trust at death.

A revocable or living trust is a legal arrangement you create while alive. It allows you to transfer your assets into the trust’s ownership, and you can continue to control these assets, making adjustments or even dissolving the trust if you choose. This type of trust is often used to help avoid the probate process for assets placed within it.

When you set up a pour-over will alongside a revocable trust, the will is a backup for any assets that might not make it into the trust before you pass away. Let’s say, for instance, you acquire a new property but forget to transfer it to your trust. A pour-over will ensure that property eventually lands in your trust, keeping your wishes intact.

While the assets already placed in a revocable trust bypass probate, any assets that transfer via a pour-over will still go through this legal process. However, since the pour-over will usually contain fewer assets or smaller items, the probate process can be more straightforward and less expensive than it might be for a standard will covering all your assets. Probate rules vary by state, but having a pour-over will simplify things since it consolidates your assets into your trust, making it easier to administer your estate.

Not everyone needs a pour-over will. However, it’s a valuable tool in certain circumstances. Here are some situations where this combination might make sense:

You Have a Complex or Changing Asset Portfolio: If you often acquire new assets , it can be easy to overlook transferring something to your trust. A pour-over will capture anything not moved to the trust, ensuring that nothing gets left behind in the probate process.
You Want Flexibility and Control During Your Lifetime: A revocable trust allows you to control your assets and adjust as your needs change. Pairing this with a pour-over will ensure that any missed items are still distributed according to your intentions.
You’re Concerned About Privacy for Your Beneficiaries: Probate records are typically public, so any details in a standard will might be open to view. However, funneling your assets into a trust through a pour-over will add privacy.

A pour-over will pair with a revocable trust can offer several benefits:

Simplicity: Consolidating everything into a single trust makes it easier for your beneficiaries and trustee to manage your estate.
Reduced Legal Complications: This setup can help avoid disputes over assets, since everything is eventually directed to the trust where your wishes are clear.
Peace of Mind: Knowing that your assets will end up in the right hands, even if you forget to transfer something to your trust, can provide significant reassurance.

While a pour-over will is like a safety net for assets that are not in a revocable trust, be aware of a few drawbacks. Assets undergoing a pour-over must still undergo probate, meaning they aren’t entirely shielded from court proceedings. However, this may be a minor inconvenience if the peace of mind it provides outweighs the potential cost of probate.

A pour-over will also slow down the distribution of assets since probate can take time. This is worth considering for families or beneficiaries needing a quicker transition.

Setting up a pour-over will and revocable trust usually involves some paperwork and the help of an estate planning attorney. An attorney can guide you through drafting both documents, ensuring that your assets are accounted for and that any remaining assets will flow smoothly into your trust upon your passing.

Are you thinking about a pour-over will and revocable trust? It’s never too early to start planning. If you would like to learn more about trusts, please visit our previous posts.

Reference: Investopedia (April 1, 2024) “Pour-Over Will Definition and How It Works With a Trust”

Photo by Lukas

‘Pour-Over’ Will is vital to a Revocable Trust

October 9, 2023

A revocable living trust gives a married couple or individual the power to direct what should happen after they die to assets and possessions placed within a Revocable Trust. The trust also indicates who should be in charge of carrying out these instructions without the involvement of a probate court judge, explains a recent article, “How does a Pour-Over Will work?” from Coeur d’Alene/Post Falls Press. A ‘Pour-Over’ Will is vital to a Revocable Trust.

A Last Will and Testament, referred to as a “will,” is the traditional document that leaves instructions about what you want to happen to your assets when you die and includes the name of your executor, the person you want to carry out your wishes. If you have a will, do you still need a trust? Probably.

A Revocable Living Trust will only concern the specific assets and possessions you’ve placed into the trust. This is known as “funding the trust.” When the trust is first established, your estate planning attorney will help you with the steps needed to ensure that assets are retitled so they are owned not by you but by the trust.

As time passes, if you acquire new assets or possessions, you might forget to have them placed in the trust. This is a common oversight and can have major implications for the success of your overall estate plan.

If you die and there are assets outside of the trust, they will likely need to go through the court-controlled probate process. You were trying to avoid this in the first place by establishing a trust.

If you don’t have a will, these assets will be distributed according to state law instead of your wishes.

There is a solution—the Pour-Over Will.

A Pour-Over Will is a little different than a traditional will. It includes specific instructions to place any assets not placed inside your trust into the trust as soon as possible. This type of will still has to go through probate, but probate will only apply to assets left out of the trust and can typically be probated less formally.

A ‘Pour-Over’ Will is vital to a Revocable Trust. While the goal in using a Revocable Trust is to avoid probate completely, the Pour-Over Will is an important “just in case” document to have if you have Trusts.

Parents of minor children have yet another reason to have a Pour-Over Will, even when there is a Revocable Living Trust. A will is used to name the person or people you want to serve as guardians for your minor children, if both parents are deceased. Leaving this decision to be made by the court rather than by you is something to be avoided at all costs. If you would like to learn more about revocable living trusts, please visit our previous posts.

Reference: Coeur d’Alene/Post Falls Press (Sep. 10, 2023) “How does a Pour-Over Will work?”

Ways to use a No-Contest Clause in your Planning

September 25, 2023

There are different ways to defend a last will and testament from a claim filed by an individual or a group of individuals who want to alter the terms you put into your will. One way is to hope your executor or, if the issue concerns a trust, your trustee, can effectively defend your choices, says a recent article from Kiplinger, “What Do No-Contest Clauses Have to Do With Undue Influence?” Another is to include a no-contest clause, which would disinherit all heirs if they lose their challenge or for even filing a challenge in the first place. There are ways to use a no-contest clause in your planning.

A no-contest clause can be a strong deterrent for a beneficiary who believes they are entitled to more than the amount provided if they know that just by filing a challenge, they’ll forfeit their share. However, it may not be powerful enough for someone completely omitted from the estate plan altogether. Many estate planning attorneys recommend leaving something for even a disliked heir to give them a reason not to challenge the will.

There are more reasons than disgruntled heirs to have a no-contest clause in your will. A no-contest clause can help if your will omits any heirs at law not specifically mentioned in the document or revoke the share provided for anyone seeking to claim a share in your estate, increase their share, or claim certain assets in your estate.

A no-contest clause is also useful if an heir is trying to invalidate your will, or any provision in it or to take part of your estate in a way not specifically described in your last will and testament.

Many no-contest clauses treat a challenger as having predeceased you or having predeceased you leaving no heirs, thereby passing their share according to other terms in the document. In certain states, it is very important to include a specific direction as to what should happen to these forfeited shares. Your estate planning attorney will know how your state’s laws work and how best to include this language in your will.

However, what if the person challenging the will has a good reason to do so? For instance, numerous cases have been brought to court because probable cause existed where the decedent was subjected to undue influence and even elder abuse by a caregiver or a relative in charge of their finances.

In many cases, family members only learn of the abuse after discovering the depletion of the estate and the admission of a new last will to favor the elder abuser over the decedent’s family. The no-contest clause could cause a complete disinheritance for a family member seeking to protect the estate and any other heir who appears in court to support the petition.

Not all states treat the no-contest clause the same. Some refuse to enforce them as a matter of public policy. Others strictly construe the clause because they disfavor any forfeitures. Your estate plan should be created with a no-contest clause aligning with the laws of your state. Your estate planning attorney will explain the ways to use a no-contest clause in your planning, and create a will designed to avoid punishing a challenge brought in good faith. If you would like to learn more about no-contest clauses, please visit our previous posts.

Reference: Kiplinger (Sep. 1, 2023) “What Do No-Contest Clauses Have to Do With Undue Influence?”

Pour-Over Will can be Extremely Valuable in your Estate Plan

July 13, 2023

The pour-over will can be extremely valuable in completing your estate plan. You may have come across the term “pour-over” will in a conversation with an estate planning attorney, especially as it relates to revocable living trusts. When written alongside a revocable living trust, a pour-over will ensures that certain unallocated assets will be, in the end, accounted for, according to a recent article, “4 Concepts You May Be Getting Wrong About Pour-Over Wills” from The Street.

Assets not already transferred to a trust during your life will be transferred or “poured over” into the trust after going through probate after your death.

Probate is the court-supervised legal process used to verify your will and appoint an executor to handle estate affairs.

The goal of the pour-over will is to provide a safety net for any imperfections or oversights during the estate planning process. They are popular for this reason. However, they are also poorly understood and often incorrectly used. Here are four key misconceptions and mistakes to be aware of.

Pour-over wills are unnecessary if you have a revocable living trust. Not true. Many people make the mistake of thinking they don’t need a pour-over will because of their revocable living trust. However, this is wrong. Very few people are as diligent about updating their trusts as they need to be and often die without finalizing the transfer of all assets into their trust. People also simply forget to make transfers. The pour-over will solves this problem.

The executor doesn’t matter because I’m going to fully fund my revocable living trust. Wrong again! Life often gets in the way of the best of intentions. For example, if you have a large digital asset, like crypto, and completely forget to transfer it into your trust, your executor will be in charge of it. As an aside, you’ll want your executor to be someone knowledgeable about crypto and finances.

I have a living trust and pour-over will. I’m done with estate planning. This would be like saying you had your car washed and won’t ever have to wash it again. The pour-over will takes assets left in your name and moves them into your trust after your passing. The pour-over is a safety net. However, it’s still got to be kept current. Estate planning attorneys recommend a review of your plan every three to five years or whenever there’s a trigger event, like death, divorce, or remarriage. A trust-based estate plan needs to be reviewed every time a new asset is acquired.

There’s no need to do anything in the event the living trust hasn’t been set up when I pass because of the pour-over will. Wait, what? Not true. It’s always possible the disposition of assets into the trust could be invalid or inoperative. To be sure, name the same beneficiaries as presently provided in the trust agreement as contingent beneficiaries in your pour-over will. This will ensure that your objectives are realized, even if somehow a defect in the trust instrument invalidates the intended transfer.

The pour-over will can be extremely valuable in completing your estate plan. However, it still requires reviewing every three to five years to avoid any problems. Talk with your estate planning attorney to see how this can work to strengthen the rest of your estate plan. If you would like to read more about trusts, please visit our previous posts.

Reference: The Street (June 14, 2023) “4 Concepts You May Be Getting Wrong About Pour-Over Wills”

Photo by Karolina Grabowska

Category: Pour-Over Will

Pour-Over Will is a Safety Net for Assets not in a Revocable Trust

‘Pour-Over’ Will is vital to a Revocable Trust

Ways to use a No-Contest Clause in your Planning

Pour-Over Will can be Extremely Valuable in your Estate Plan

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