Because I am a woman of my word, here is a full-on discussion on pour-over wills!
To recap, everyone’s usual notion of what a will is–that is, a document that distributes properties after death–is just one kind among the other different kinds of wills there are. One of these is a pour-over will, and it’s what we’ll get to know more about today!
What is a pour-over will?
As much as I want to give you a straightforward answer to this very straightforward question, the concept would be so much easier to understand if I instead provide some context before anything else. (Everything will be simpler later on, I promise!)
First, let’s brush up on trusts, which a pour-over will cannot exist without.
If you could recall our analogy, a trust is pretty much like an “account” that the trustor (this is you!) will have to fund by transferring assets into the account. Once funded, this will then be managed by your chosen trustee for the benefit of your designated beneficiaries.
From there, you, as the trustor, shall have two types of assets: your trust assets, and your currently owned (or later acquired) assets not transferred into the trust.
All clear so far, I hope? ;)
Now, upon the death of a trustor, chances are not all assets will end up in the trust. It could be an oversight on the part of the trustor. It could also be because these properties were acquired only after the trust was created, and the trustor failed to update her estate plan. Failure to update the plan is one thing; failure to retitle assets into the trust is another, and this is yet another reason why assets don’t end up in the trust.
Here is where a pour-over will becomes relevant.
If the trustor so desires (which is most likely the case!), she can have her remaining assets poured over into the trust upon death. Yes, you guessed it–by executing a pour-over will!
The pour-over will ensures that everything else that was left untransferred into the trust would nevertheless be passed to the trust, and be distributed under the terms of the trust.
You may look at it as a safety net. A pour-over will prevents any issue that tends to defeat the purpose of a trust–why you established one in the first place. It could be because you feel like probate isn’t for you (often the case!), or you want to avoid paying hefty taxes (often the case, too!), or you just want to make sure that all your hard-earned assets are passed on to
your loved ones the way you intend them to.
Essentially, a pour-over will is an extra protection in conjunction with your trust–the perfect backstop for when there are leftover assets.
Do I need one?
The answer, of course, will depend on your estate plan.
Obviously, you will not need a pour-over will if, in the first place, you did not incorporate–or have not yet incorporated–a trust in your plan. There’s nothing to pour over into if there’s no trust!
If you do have a trust established, a pour-over will is definitely encouraged (hard to say no to added protection!), but is not in any way required. Your trust can stand even without a pour-over will accompanying it, and dying without one in place doesn’t always mean headache!
How so? Through good estate planning, of course!
A person who does a good job at estate planning during her lifetime (with a good estate planning lawyer oiling the wheels!) would be able to effectively avoid issues concerning leftover assets after death. With careful and diligent estate planning, there would be little to no residual estate, thereby eliminating the need for a pour-over will. Ah, the wonders of prudent planning!
Now that we have pretty much covered the basics, it's time to hear from you!
If there’s anything else on the topic of pour-over wills you want clarified, or if you think you’re sure about getting one but don’t exactly know where to start, I’m here to help out!