There is a lot of talk about the advantages of living trusts, an estate planning tool most people have probably heard of. Pour-over wills, sometimes associated with living trusts, are much more unfamiliar to the average person. What is a pour-over will—and should you have one?
Simply put, a pour-over will is a will that distributes all of the assets remaining in the sole name of the person making the will (the testator) to a trust upon their death. The trust may be one already in existence when the will is made, or may be created at the same time as the will.
Though most people who have a living trust fund the trust during their lifetimes, there's no requirement that this be done if there is a pour-over will. The trust can simply wait, a vacant receptacle, waiting for the pour-over clause of the will to be applied and pour all of the testator's assets into the trust.
A pour-over will can be useful even if you have most of your assets in a living trust. Most people acquire and transfer assets throughout their lives. If you make a mistake and fail to fund everything into the trust, the pour-over will puts it into the trust after going through probate.
This leads us to one of the primary advantages of a pour-over will: thoroughness. If you would like all of your assets distributed according to the terms of your trust, a pour-over will is one way to accomplish that. The will "pours" all the assets that are in the deceased's sole name, no matter when acquired, into the trust.
Just as the pour-over funnels assets into the trust, it also makes things somewhat simpler on the distribution end. All distribution is controlled by the terms of one document: the trust instrument. The executor of the estate has clarity: his or her duty is to gather all estate assets and turn them over to the trustee, whose duty is to distribute them in accordance with the trust's terms.
Many people don't think about privacy when making an estate plan, but privacy is one other advantage of a pour-over. Wills must be filed with the probate court in Ohio, which means they become a matter of public record. Trusts, however, do not. This means that if you have a pour-over will, any person nosy enough to go looking for a record of your will to see who inherited what will only be able to see that all (or most) of your assets were distributed to your trust.
If there are certain specific items that you want to bequeath to a certain person, such as leaving your wedding ring to your daughter, you can still make provision for that in the will. The last will and testament will pour over only those assets not specified for distribution via the will.
With all of these advantages, why wouldn't someone want a pour-over will? Well, there are potential downsides, too. It's important to balance the pros and the cons before deciding to rely upon a pour-over will. A pour-over will is still a will, and property distributed via a will is subject to probate. Most people who create living trusts do so in part to avoid the probate process. So you will want to do everything possible to make sure that having a pour-over will does not subvert your intentions and lead to an extended probate process.
Your living trust will need to continue through the end of the probate process for your will so that assets not distributed directly through the will can be poured into it. Your goal is to keep the probate process brief or eliminate it altogether.
The best way to do this is to work with an experienced estate planning and probate attorney to make sure that your trust is updated as needed to include any significant assets you acquire. The pour-over will serves as a backup, gathering up any minor assets you haven't gotten around to adding to the trust. If the assets outside the trust at the time of your death have a small enough value, they may qualify for a simplified probate process or be able to bypass probate altogether.