Backup and Pour-Over Wills

Most people who make a living trust—like the one you make with WillMaker—should also make a backup will to take care of a few things that you can't do in your trust, like name guardians for minor children, name an executor, and name beneficiaries for any property that you don't put into your living trust. In your backup will, you can name specific beneficiaries for your non-trust property, or you can make a pour-over will by naming your trust as the beneficiary of your non-trust property. However, before you do that, read the cautions below.

Why Make a Backup Will?

Having a living trust is a great way to avoid probate, but it's important to have a will as well. First, a will is an essential backup device for property that you don't get around to transferring to your living trust. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your trust -- which means that it won't pass under the terms of the trust document. But in your backup will, you can include a clause that says who should get any property that you haven't specifically left to someone.

If you don't have a will, any property that isn't transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives, in an order determined by state law. These laws may not distribute property in the way you would have chosen. For example, if you die leaving a spouse and children, all the property that isn't subject to a living trust or will may be divided among your spouse and children. If your children are minors, that means there must be a court proceeding to get a guardian appointed to manage the property for them.

Second, in a will you can name someone to be the personal guardian of your minor child, in case you and the child's other parent die while the child is still under 18. You can't do that in a living trust.

Avoiding Conflicts Between Your Will and Living Trust

When you make both a living trust and a backup will, pay attention to how the two work together. If your will and your trust document contain conflicting provisions, at the least you will create confusion among your inheritors, and at the worst, bitter disputes -- maybe even a lawsuit -- among friends and family.

Here are some no-no's:

• Don't leave the same property in your living trust and will, even if it's to the same beneficiary. If you transfer the property to your living trust and name a beneficiary in the trust document, that's all you need to do. Mentioning the property in the will raises the possibility of probate.
• Don't leave the same property to different beneficiaries in your will and your living trust.
• Don't name different people to be executor of your will and successor trustee of your living trust, especially if you think they might quarrel about how your affairs should be handled. There's one important exception: If you make a trust with your spouse, you may want to name your spouse as executor of your will, but not as successor trustee -- the successor trustee takes over only after both spouses have died.

Pour-Over Wills

Some lawyers advise people who make living trusts to make "pour-over" wills instead of a plain backup will. A pour-over will takes all the property you haven't gotten around to transferring to your living trust and, at your death, leaves it to the trust.

Pour-over wills (named so because everything is "poured over" from the will to your living trust) do not avoid probate. If the value of the property left through a pour-over will is small, however, some states exempt it from probate or offer streamlined probate procedures. This is true whether or not the will is a pour-over one.

If probate is required, a pour-over will actually has a disadvantage that standard wills don't: It forces the living trust to go on for months after your death, because the property left through the will must go through probate before it can be transferred to the trust. Usually, the property left in a living trust can be distributed to the beneficiaries, and the trust ended, within a few weeks after the person's death.

EXAMPLE: Joy transfers her valuable property to her living trust. She also makes a pour-over will, which states that any property she owns at death not specifically left to someone in the will goes to the living trust. When Joy dies, the property left through her will goes to the trust and is distributed to the residuary beneficiary of her living trust, her son Louis. The living trust must be kept going until probate of the will is finished, when property left by the will is poured over into the living trust.

If Joy had simply named Louis as the residuary beneficiary of a plain backup will, the result would have been the same, but the process would have been simpler. The living trust would have been ended a few weeks after Joy's death. And after probate was finished, Louis would have received whatever property passed through Joy's will.

A pour-over will can be useful if you set up a child's subtrust for a young beneficiary in your living trust. You may want any property that child inherits through your will to go into the subtrust. Otherwise, you would create two trusts for the beneficiary: one in the will and one in your living trust.

EXAMPLE: Jessica makes a living trust and leaves the bulk of her property to her 12-year-old son. She arranges, in the trust document, for any trust property her son inherits before the age of 30 to be kept in a subtrust. Jessica also makes a backup will, in which she again arranges for a subtrust to be set up if she should die before her son is 30. So if Jessica dies before her son reaches 30, two subtrusts will be set up for him.

If Jessica used a pour-over will, any property her son inherited through the will would go into the subtrust created by her living trust. Only half the paperwork would be necessary.