Using a Pour-Over Will in Estate Planning

A pour-over will is an estate planning document built to ensure that anything in your estate that has not been funded into your living trust before your death is automatically funded into your trust afterwards. Pour-over wills exist to generally to prevent having assets outside of the trust after death.

If one is building an estate plan centered around the use of a trust, then the absence of a pour-over will might leave neglected or recently-acquired assets outside of any real estate plan, thereby making them subject to local intestate law (by which assets are usually distributed to the next of kin).

Given that using a trust sometimes requires a pour-over will, it makes sense to question the usefulness of a trust over a generic last will and testament. But trusts carry a distinct advantage over wills, one that, for certain people, makes an additional safety net such as a pour-over will worth it.

Why You Might Use a Living Trust

A trust is an agreement between three parties, wherein the creator of the trust (the grantor) entrusts certain assets and funds to a second party (the trustee) on behalf of the third (the beneficiary). In estate planning terms, the unique benefit of a trust is that it allows for the distribution of anything held within the trust to the beneficiary without requiring a probate process.

This is because upon a trust’s creation, anything funded into the trust is no longer completely owned by the trust’s grantor. A revocable living trust allows a grantor to exercise greater control over the trust’s contents than an irrevocable living trust, but for all intents and purposes, a trust is a process by which assets are transferred by a grantor to a beneficiary through the trustee, and that process begins while the grantor is still alive.

Probate exists usually to legitimize a will and ensure that anything that belonged to the decedent is properly and legally distributed to their heirs, either as per their legitimate instructions, or as per local intestate law. However, because a trust allows a grantor to separate themselves from their property and initiate its transfer long before they die, anything in a trust no longer needs to pass through probate to be legally transferred.

The same goes for a few other examples of beneficiary designation, such as in certain forms of property amended with a transfer on death deed, as well as accounts marked payable on death, and any retirement accounts and life insurance accounts with named beneficiaries. These designations allow for these assets and funds to immediately transfer to the beneficiary without first requiring a probate process to officiate everything.

Why might one wish to dodge probate? For two major reasons:

      1. Privacy
      2. Time

Cons of the Probate Process

The probate process exists in every state, and while there are minor differences in probate law depending on whether a state has its own Probate Code or relies on the Uniform Probate Code drafted by the NCCUSL, the probate process is generally summarized as a process designed to authenticate and validate a will.

However, after a will has been validated, probate court also offers the setting for a will’s execution, or more generally, the supervision of the entire estate distribution. Only a probate court can officially name an executor (though they will usually name the executor the decedent named in their will), and grant them the powers needed to assemble and take stock of the decedent’s estate, and finally, after all liabilities are paid and any eligible creditors have come forth, distribute the remainder as per the will.

If no will is provided, then an executor is named usually based on competence and kinship with the decedent. The probate process can be very lengthy depending on the size and scope of the estate, as well as its contents. Some assets make it much harder to probate an estate than others.

For example, any estates with properties in multiple states, let alone multiple countries, are difficult to probate. When an asset such as a home isn’t explicitly given to a single beneficiary, the probate process may require the liquidation of the home in order to properly distribute it.

Another appreciable con is the fact that probate is a matter of public record. This means that anyone can request to see the details of your probate process in the future. These details may include the size and contents of your estate, as well as how you’ve distributed the estate.

In cases where an estate is sure to cause problems or complications during probate, or when someone would wish for their estate plan to remain completely private even after they’ve died, a will and full probate process is simply out of the question. That’s where a trust becomes handy. However, anything not explicitly listed and funded into a trust is outside of the trust’s scope and must pass through probate.

Pour-Over Will Assets Still Need to Go Through Probate

A pour-over will is very different from a regular will. It is meant to be a safety net and, if all goes well, it should go unused when the time comes. But should you pass away before having had the chance to amend your trust and estate plan in general, it will act as an important safety net for your trust-based estate plan. Nevertheless, a pour-over will cannot protect its contents from probate.

However, if you minimize how much of your estate must ultimately pass through a pour-over will, your estate may end up being eligible for an expedited probate process. This is a much simpler probate process reserved for smaller estates, and it takes only a fraction of the time and resources. Consult with an estate planning professional to figure out if this might be a good idea for you.

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