What Is a Pour-Over Will?
A pour-over will is a legal document that ensures an individual’s remaining assets will automatically transfer to a previously established trust upon their death.
- Pour-over wills ensure that assets are transferred to a trust.
- Pour-over wills can help avoid issues with a living trust.
- Pour-over wills work with both revocable and irrevocable trusts.
How a Pour-Over Will Works
A pour-over will works in conjunction with a trust. In estate planning, trusts provide a way to avoid the probate process when transferring assets after the grantor’s death. When the time comes to settle an estate, assets funded into the trust get distributed to beneficiaries as directed by the grantor. A pour-over will covers assets that the grantor has not funded into the trust at the time of death. Absent explicit directions provided via a will, remaining assets would instead be subject to laws of intestate succession as established by the jurisdiction in which the individual died.
Pour-over wills act as a backstop against issues that could frustrate the smooth operation of a living trust. They ensure any assets a grantor neglects to add to a trust, whether by accident or on purpose, will end up in the trust after execution of the will. The will can also provide extra protection against legal issues with a trust by stipulating that the assets intended for the trust be distributed to the trust’s beneficiaries should it become invalid or, in the case of an unfunded trust, should it become legally difficult or impossible to fund at the time of the grantor’s death.
Revocable and Irrevocable Trusts
Estate plans typically pair pour-over wills with living trusts, which require that grantors transfer assets to them prior to their death. Most smaller estates use revocable living trusts, which allow grantors to control the assets in the trust until they pass away. Larger estates will sometimes use irrevocable trusts to reduce the tax burden for beneficiaries, particularly if they will be subject to an estate tax. Once grantors transfer assets to an irrevocable trust, the assets come fully under the control of the trustees. Pour-over wills work with either type of trust.