Pour-over wills provide peace of mind for both you and anyone else who stands to inherit all or part of your estate. They are so named because any assets not specified in a valid last-will-and-testament will “pour over” into a living trust, and thereby into the hands of the intended recipient(s).
How Are Pour-Over Wills Helpful in the Estate Planning Process?
People who decide to distribute their estate via a living trust usually also have a pour-over will to protect any assets that might fall through any cracks in the trust. Pour-over wills are designed to distribute possessions, monies, and properties which aren’t specifically transferred in a living trust. A pour-over will is a good way to avoid probate court. They also ensure that your beneficiaries receive what you intend them to, as well as provide for any assets you might build or receive, but die before you can itemize them in the trust.
In order to avoid the probate process, lessen taxes, and keep up to date on legal interpretations and any new legislation, it’s a good idea to sit down with your attorney at least once a year to revisit your pour-over will and living trust structure. You should also update these documents after a major purchase or financial restructuring. Doing so can help to make the execution of a pour-over will as smooth and trouble-free as possible for your beneficiaries.
If I Have a Living Trust, Do I Need a Pour-Over Will?
It’s a smart plan to include a pour-over will with a living trust because it provides for several different circumstances in which assets might not be mentioned. For example, the person who creates the will might leave out an item, piece of property, or monetary asset. This can happen either by mistake or on purpose—the owner might not be sure who he or she would like to leave some property to, for example, and decide to table the issue until a later date. But if the person dies before making the specification, what do you think will happen to that asset? A pour-over will can avoid costly and expensive probate court.
Another reason for needing a pour-over will comes when the grantor (the person who is the original owner of the asset) does not retitle such objects as cars, stocks, or property to the intended beneficiary. This can happen for many reasons. In general, someone who intends to leave possessions to another person, group of people, or charitable organization to a living trust will retitle them to the trust. That means the items and money become the legal property of the beneficiary as soon as the person’s will is executed. It’s best to update both the pour-over will and the trust when property changes hands.
Sometimes, that’s not always possible.A person who purchases some stock and then dies immediately afterwards will not have had a chance to transfer it to the living trust. (It’s terrible and sad, but it does happen.) The state may consider such assets as personal property instead of that of the living trust’s. Pour-over wills can provide a safety net for such occurrences.
A grantor may also forget to include a major item in a living trust. Many people, once they have legally established a will, prefer not to think about it and consider their affairs settled. However, for example, if a person files a valid will and living trust with an attorney and then ten years later buys some property, he or she may neglect to formally include it in the language of the living trust.
Changes in family structures, either due to personal fallouts, divorce, or business changes, can create tangled beneficiary situations as well. A pour-over will allows for these unintentional errors, and the trust is in less danger of being subject to the probate process.
Elements of Pour-Over Wills
Since a pour-over will’s beneficiary is not a specific person or group of people, but the living trust itself, it allows the grantor more flexibility as her or her circumstances change throughout his or her life. Business issues, financial matters, and the legal status of debts and properties should all be taken into consideration when forming a pour-over will.
Pour-over wills still demand certain requirements and formalities. Every state has different procedures. The creation of a pour-over will should be overseen by a lawyer to ensure that it is valid, and that it coordinates with your living trust. A valid living will, in most jurisdictions, requires at least one witness who is a capable legal adult. The will should be in writing and it must be signed by the grantor. In most states, the pour-over will should be notarized, and the grantor must be of sound mind when he or she signs it.
Working with the Uniform Testamentary Additions to Trust Act
One aspect of pour-over wills to keep in mind is the Uniform Testamentary Additions to Trust Act, also known as UTATA. Created in 1960 by the National Conference of Commissioners on Uniform State Laws, or the NCCUSL.The UTATA encodes the pour-over provision into law,and 44 states have adopted it. Although it was first used to transfer property and money only, it was modernized in 1991, and now covers other assets as well.
In most states, UTATA stipulates that the document establishing the living trust must be created at the same time as (or prior to) the will. The trust is also required to refer to the pour-over will in question. UTATA also states that if an asset in question is not named by the will or the trust, it istreated the same as assets which are. Grantors should be careful when deciding to make any changes to their living trust, because some states demand that the pour-over will be updated also.