Using a Pour-Over Will in Estate Planning
A pour-over will is a special type of last will and testament used in conjunction with a trust-based estate plan. It can save the day when the grantor of a trust—the person who created it—neglects to transfer all their property into the trust over the years and has no other will to determine which beneficiaries should receive that omitted property.
How a Pour-Over Will Works
Instead of governing the distribution of all your property, a pour-over will state that any assets that have not been funded into your revocable living trust should go there when you die. It effectively names your trust as the beneficiary of any property it does not already hold. That property does not pass directly to a living beneficiary through some other means, such as a beneficiary designation on a life insurance policy or a retirement account.
One of the beauties of having a living trust is that they avoid probate of the property with which they've been funded. Unfortunately, any of your property that isn't funded into your trust before you die will require probate, even if it's directed to your trust via a pour-over will.
Your property will pass to your heirs according to state law if you neglect to fund it into your trust, don't create a pour-over will, or don't have any other will in place directing where those assets should go. These are called laws of "intestate succession," and they can vary somewhat by state.
Each state has a list of kin so closely related to a decedent that they inherit from them by law for lack of any other estate plan. The list invariably includes surviving spouses, your parents, and your descendants—children, grandchildren, or great-grandchildren. Siblings and more distant relatives are often left out in the cold.
This state-by-state guideline means if you don't have a pour-over will—or other documents that direct property to a specific beneficiary, your wishes may not be followed. Say you forget to fund your new vacation home into your trust. Then that home might go to the son you've been estranged from for years—if you're not married—simply because of your blood tie to him.
Your Pour-Over Will Should Be a Safety Net
Ideally, you won't need your pour-over will. You'll know it's there in a worst-case scenario, but it won't have to go into effect because all your property has been transferred into your living trust at the time of your death.
Make it a point to sit down with your trust documents at least once a year. Make sure you haven't acquired any new property over the last 12 months that should be funded into the trust. If you want a particular beneficiary to receive that new asset in the event of your death, you can add this provision to your trust agreement. Revocable living trusts can be changed at any point during your lifetime as long as you're mentally competent.