Posted in Triplett & Carothers on August 5, 2022

Pour-over wills are a way of ensuring that any assets that the trustor neglected to add to his or her trust, whether accidentally or on purpose, will be incorporated as part of the trust even after the execution of the applicable will. Essentially, a pour-over will grants supplemental protection for trustors because it requires assets that are intended for the trust to be distributed to the beneficiaries of the trust under two occasions.

Those two occasions are in the event that the trust becomes invalid and in the case of an unfunded trust that either becomes legally difficult or impossible to fund upon the official time of death of the trustor.

Furthermore, estate plans often pair pour-over wills with living trusts, subsequently requiring trustors to transfer their assets prior to their deaths.

With the exception of those who are rather affluent, it is typically in the best interest of trustors to implement a revocable living trust that allows said trustors to control the assets in their trusts up until the precise moment the trustors pass away.

Do you plan to leave behind a substantial amount of assets as part of your estate? If so, you might opt for an irrevocable trust as a way of reducing the tax burden that your beneficiaries will face upon receiving their portion of your estate.

This is especially wise if your beneficiaries will be met with an estate tax. However, in any case, a pour-over will can help.

What is the purpose of a pour-over will?

You may be wondering what the need for a will would be if you already have a trust in place. Even though a living trust makes it possible for you to have control over the distribution of the assets you’ll leave behind, you are still going to be using and controlling said assets while you’re alive. Additionally, people generally acquire more and more new property as their life continues.

As you accrue more assets over time, you may forget to transfer said assets property into your already established trust. Another possibility is that you might not have the opportunity to add the assets in the first place, as we must acknowledge that accidents happen, meaning not everyone passes naturally.

Your pour-over will catches that property and tells the court you want it transferred to your trust. Without the will, those assets will be treated as if you died without a will and will be distributed according to local intestacy laws, which may be very different from your personal wishes.

With pour-over wills, you’ll name a residual beneficiary, which is the term for the person who will receive your residual estate. A trustee is equipped with the responsibility of managing your trust and distributing the contents within it in accordance with the terms set forth within your trust.

It is best that you not assign the role of trustee to the same person who fills the shoes of the residual beneficiary. Doing so would result in the same person inheriting your residual estate.

It is highly recommended that you elect a will executor who will make sure your wishes are carried out in the exact way you have defined within your will. If you indicate that the residual estate must be transferred into your trust account, the executor will be responsible for ensuring that this is completed.

Will executors move property into trusts, and from there, the trustee has official control over the assets within the trust. You may elect the same person to act both as trustee and as will executor in an effort to streamline the process.

This happens due to the fact that such a dynamic creates a situation in which there is only one point of contact for both your trust and your estate. Even so, some people prefer to name two separate people for each of the roles because they prefer to incorporate checks and balances into the process.

It is also a way by which people can prevent a single person from having complete control over all decisions and aspects of what they leave behind. If you choose to name two people rather than a single individual, it helps to ensure that they can get along, as they will naturally be working closely together as they manage your trust and your estate.

A pour-over will effectively names your trust as the beneficiary of any property not already held within your estate. Before you make any major decisions, consider speaking with an estate planning professional who can help you understand how a pour-over will may help you.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.

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