If you’ve looked into creating a revocable living trust to avoid probate, you may have heard of a “pour-over will.” This kind of will is often used with a living trust. Under the terms of a pour-over will, all property that passes through the will at your death is transferred to (poured into) your trust. Then it’s distributed to the trust beneficiaries you named while you were alive.
Advantages of Pour-Over Wills
Why have a will that does nothing but transfer property to your trust? (For that matter, why do you need a will at all if you’re using a living trust to leave your property?) The answer is that many estate planners think it’s a good idea to have all your assets covered by the terms of just one document, the trust document. This arrangement offers several advantages.
Simplicity. When everything is controlled by just one document, the trust, it makes it clear who gets what. It’s also easier for the executor and trustee who are in charge of wrapping up your estate after your death.
Completeness. You’re not going to transfer everything you own into your living trust. (No one does.) A pour-over will takes care of assets that you don’t get around to transferring to the trust before your death.
Privacy. Trusts, unlike wills, are private; they don’t become public records after your death, available to anyone who wants to look at them. This keeps the details of who inherits your property more private. (Michael Jackson was just one celebrity who left a will that simply poured all his property into his trust. Reporters and the curious rushed to read the will once it was filed with the court, but learned nothing about who was to inherit.)
Step 1: Getting Assets Into the Trust
Like other wills, a pour-over will nominates someone to serve as executor of the estate—that is, to wrap up the estate after your death. Normally, the executor's duties include gathering the assets, paying debts and taxes, and eventually transferring the assets to the beneficiaries named in the will. In the case of a pour-over will, however, the executor has just one job: to take all assets that pass under the will and put them into the living trust.
You’re going to all the trouble of setting a revocable living trust to spare your family the expense and delay of probate. So it would defeat the purpose if a formal probate proceeding were necessary just to get assets into your living trust. But it’s a possibility. Unless your estate qualifies for probate shortcut, assets that pass through the pour-will will need to go through probate.
Fortunately, in most cases, not too much property passes through a pour-over will. If you do good job of estate planning, you’ll transfer all of your valuable assets to the trust while you’re alive. Only the leftovers—things of minor value—should pass under the terms of the will. And if the value of the property that passes under the will (often called the “probate estate”) is small enough, your estate may qualify for special “small estate” probate procedures. These procedures are quicker, simpler, and less expensive than regular probate. In most states, they can be used for any kind of property except real estate.You can make your will online, quickly and easily, using Nolo's Online Will.
Step 2: The Successor Trustee Takes Over
Once the assets are held in the name of the trust, they become the responsibility of the successor trustee—the person you named in your living trust to take over at your death or incapacity. A successor trustee’s job is similar to that of an executor, except that that the trustee has control only over trust assets (and has no control over property that’s part of the probate estate). Your trustee will collect trust assets, including those transferred under the terms of your pour-over will, and distribute them to the trust beneficiaries. A trustee, unlike an executor, doesn’t need a probate court’s approval to act.
The trustee will follow the instructions you left in the trust document. If you want all trust assets given to the beneficiaries right away, that’s what the trustee will do. If you want the assets (or some of them) to stay in the trust, to be managed for the benefit of children or young adults, the trustee will keep them in the trust. In that case, the trustee will have a much more complicated job, requiring careful management, investment, and spending over a period of years.