Most people realize that a Last Will and Testament provides guidance for how an individual would like their liabilities and assets to be distributed after their death. This legal document describes how someone wants their estate to be handled once they are no longer alive to need or manage their assets. In some cases this may mean that an individual chooses to leave everything to their children; sometimes it means giving all of their assets away to charity. Drafting a will not only helps ensure that someone’s wishes are carried out after they die, but it can also be a good method to do some more advanced estate planning. Creating a pour-over will is one of those more advanced methods that can be helpful for individuals in a variety of life circumstances. You can learn more about this process and other estate planning tools from Von Rock Law by calling (866) 720-0195.
What Is a Pour-Over Will?
A pour-over will is a type of will that has a special provision to transfer certain assets to a living trust. A will of this type is worded so as to account for, and transfer, any assets that may have been overlooked or transferred incorrectly to a trust. These assets are “poured over” into a trust to be overseen by a trustee, who in many cases has already been named by the decedent long before their passing. Essentially, a pour-over will operates as a secondary method for transferring assets into a trust, with the provisions activated by the testator’s death in a manner similar to those of a transfer-on-death account.
The California Probate Code has a unique provision that allows trusts to be created after a pour-over will is in effect. In many other states, the trust would have to be created before the will, and the testator uses their will to indicate their wish that remaining assets be transferred into the existing trust upon their death. In California, however, a trustee can be named, and a trust created, after the decedent has already passed away. By creating a trust within certain time frames described by code, the decedent can still have a valid trust and pour-over will. These California provisions, enacted under the Uniform Testamentary Amendments to Trusts Act, are exceptional because, as Cornell Law School’s Legal Information Institute explains, under the current version of the California code the devise is not invalid even if the trust is altered or amended after the will is executed.
Why Would Someone Want a Pour-Over Will?
A pour-over will can be a vital part of a comprehensive estate plan. It has several benefits that make it attractive to all kinds of California individuals and families, so Von Rock Law recommends it to a variety of clients.
Combination Will and Trust
A pour-over will offers an opportunity to combine many of the benefits typically associated with a will with those commonly achieved by creating a trust. For instance, anyone who makes a trust cannot name a guardian for their minor children in a trust. Only a will can set out guardians for minor children. However, if an individual names a guardian and uses a pour-over will, they also get the benefits of using a trust, including avoiding probate in some instances and having more control over specific assets through a trust document. This degree of control and the expediency of avoiding probate can be especially helpful in such cases as the above example of establishing a guardianship and legacy for minor children.
Failsafe for Forgotten Property
A pour-over will often serves as a “catch-all” for any asset that was not moved into a trust before the decedent passed away. That way, if someone passes suddenly, their assets are still in the trust upon their death, instead of having to go through the probate process due to oversight or an interruption in the individual’s normal financial affairs. Because a pour-over will is often used as a “backup” transfer method, the hope is that the pour-over provisions will not be necessary at all because all of the assets that were supposed to be included in the trust have already been moved.
“Catch-All” for Trust Errors
From time to time, assets are not transferred properly from the individual to the trust. For instance, if the property was transferred to “John Doe (Decedent)” instead of “John Doe, as trustee of the Doe Family Trust,” the transfer may not have been completed to the trust. Instead, it may have mistakenly gone to John Doe. A pour-over will can help address some of these more common errors by ensuring everything that should have been moved to the trust is moved through the pour-over will if it was not already properly addressed.
When assets are transferred to a trust, they are often specifically named in the trust documents. Alternatively, they must be transferred using some other method, such as a bill of sale, or a deed in the case of real property. In many cases, a decedent will acquire property but then fail to update their trust documents to include this new property. A pour-over will can account for this new property by ensuring it is added to the trust even if it was not initially moved when it was acquired.
Because a pour-over will helps simplify probate, it provides significantly greater privacy to the process of distributing assets compared to probating a will. A trust is not a public record after someone’s death as a will would be. Often, the only provision that a pour-over will addresses is the direction that all property be moved into a trust. The terms of the trust itself are not included as part of a will (like a testamentary trust might be).
What Are the Drawbacks of a Pour-Over Will?
Although pour-over wills can be very helpful as a failsafe to ensure that property is moved into a trust, there are drawbacks. Specifically, users might not be able to avoid probate for some pour-over wills. If the value of the assets that will be moved into the trust is valued above a certain dollar limit in California, the probate process may still be required. That dollar limit is adjusted for inflation from time to time, but it is generally over $160,000.
Because a pour-over will is still a will, that document may need to go through the probate process. Probate is not as quick as simply having everything in a trust to start with, but probating a pour-over will is often easier compared to a standard will. Although a pour-over will still has an executor, the main responsibility of an executor in a pour-over will is to move assets from the estate to the trust.
Get Help With California Estate Planning
A pour-over will can be a good addition to many estate plans in California. You may be able to learn more about pour-over wills and other estate planning tools from a California estate planning attorney. Call Von Rock Law today for more information: (866) 720-0195.