Key Takeaways
- A pour-over will is an estate planning tool that specifies that any assets left behind by the decedent should be passed into a trust.
- A pour-over will works in tandem with a trust, and individuals can choose to use either a revocable trust or an irrevocable trust for pairing with their pour-over will, depending on their needs.
- Like any other will, a pour-over will must pass through probate to guide how assets should be distributed.
- If you notice discrepancies with a pour-over will or have concerns about how it is being managed, then you should contact a skilled probate litigation attorney as soon as possible.
Introduction
A pour-over will is a type of will that leaves your assets to the trustee of a trust when you pass away. Pour-over wills can be used to transfer personal property into a trust you created during your lifetime, known as a living trust or inter vivos (Latin for “while alive”) trust. A pour-over will can also leave your assets to a trust that will be created upon your death, which is called a testamentary trust. Regardless of the type of trust you are using, the pour-over will must indicate which assets will be moved into the trust.
While pour-over wills are still required to go through probate, there are several benefits to using a pour-over will and a trust instead of simply distributing assets through a will. First, a trust offers asset protection and allows you to have control over not only who receives what, but also how and when they can use it. For example, parents can direct that a specific portion of the inheritance be used for a child’s education or limit the amount of money they can access each year. While a will simply distributes property to its proper recipient, trusts enable you to leave specific instructions that must be followed.
Using a pour-over will and a trust also helps simplify your estate plan by including all of the substantive distributions in a single document—the trust instrument. Additionally, trusts are not a matter of public record, while wills that go through probate are. With a pour-over will and a trust, the only thing that becomes part of the public record is that your property was left to the trust. This keeps the extent of your estate and the details of your beneficiaries’ inheritance private.
What Is a Pour-Over Will?
A pour-over will is a type of last will and testament that transfers assets into a trust after the death of the will’s author. It is a useful tool for those who have created a living trust. The pour-over will specifies that any of the deceased person’s assets not already included in the trust upon their death should be moved into the trust.
A pour-over will is often referred to as a “catch-all” since it is designed to “catch” any financial accounts, real estate property, or other personal assets not yet titled in the name of the trust and ensure they are transferred over. The will acts as a safety net to prevent assets from being excluded from an individual’s estate plans and ensures that they are distributed to the appropriate beneficiaries.
How Does a Pour-Over Will Work?
A pour-over will specifies that any property not included in a living trust should be transferred to the trust after they die. To create a pour-over will, an individual must set up a living trust and then create a will specifying their intentions for the remaining property to pass to the trust. Upon the trust creator’s passing, the executor of the estate will be responsible for opening the probate process and transferring the remaining assets to the trust.
If an individual has assets that are not placed in a trust or covered under a will, then these assets will be treated as if there is no will and forced to pass through the process of intestate succession. In this event, the assets will be distributed to potential heirs in alignment with state law, instead of aligned with their true wishes. A pour-over will ensures that these assets are accounted for and placed into the trust when the decedent dies so their wishes can be carried out in alignment with the trust.
The following hypothetical case scenario may illustrate the complexities that could arise in a real-world situation, as well as possible legal mechanisms and outcomes. Still, every case is unique, so you should consult an experienced probate litigation attorney regarding your situation.
Case Scenario
Dean, a middle-aged father of two, was diligent in his estate planning and established a comprehensive trust to ensure his assets would be transferred smoothly to his heirs upon his death. His trust included his primary residence, two vehicles, prior investments, and other significant assets.
Later, Dean purchased a second home as an investment property. Because the purchase happened quickly, he temporarily held the property in his personal name with the intention of consulting his estate planning attorney and transferring the new home into his trust. Tragically, Dean passed away before he could complete the transfer.
Fortunately, Dean had established a pour-over will designed to transfer any assets not included in the trust at the time of his death into the trust posthumously, including the newly acquired property.
How a Pour-Over Will Integrates With a Living Trust
During the grantor’s lifetime, a pour-over will is a parallel tool to a living trust with both acting as separate umbrellas for asset protection, and both will list assets to be included under each umbrella. After the will creator dies, assets included in the will will pass through probate and become trust assets after the executor titles them in the name of the trust. Once the executor files for probate and carries out the process, the assets are then transferred into the revocable living trust.
After the assets pass through the probate process and are distributed into the trust, the trustee becomes responsible for managing these assets. Although they have no responsibility in administering the will, the role of the trustee is to receive these assets after probate, manage them responsibly, and distribute the assets to beneficiaries according to the terms of the trust.
Benefits of Using a Pour-Over Will And Trust
A pour-over will offers the benefit of ensuring all of an individual’s assets are accounted for upon their death and can avoid ambiguity in how to manage property. The following are some of the key benefits.
Control Over Asset Distribution
A pour-over will provides an estate with security and assurance that all assets will be distributed according to the decedent’s wishes. A pour-over used in conjunction with a trust allows an individual to separate which assets they maintain ownership of during their lifetime from those they wish to transfer to a trust.
The establishment of a trust then allows the trustor to create clear terms and conditions for the distribution of their assets—these might include waiting until a beneficiary’s 18th birthday or other criteria that need to be met before an heir can receive their inheritance. This can provide additional asset protection for minors or other vulnerable beneficiaries.
Simplifying the Estate Plan
A pour-over will provides a grantor with the ability to clearly specify which assets they want to be transferred to the trust upon their passing. This simplifies the estate plan by offering flexibility and a safety net in the event of various contingencies. A pour-over will minimizes the amount of work needed to address various circumstances that can arise, such as a change in an asset portfolio.
Case Scenario
In our case scenario from above, Dean’s newly purchased investment property was to be formally transferred into his trust thanks to his pour-over will, which served as a simple, catch-all solution to ensure that any assets not yet titled in the trust would still be included. Because the property was directed into the trust through the pour-over will, it could be managed and distributed according to the terms and wishes Dean had clearly outlined in his trust.
Addressing Privacy Concerns
Because a pour-over will’s provisions are generally very simple, it allows for more privacy for the estate and reduces the amount of information to be shared. Typically, in the probate process, a will is considered public record, and the process requires that all interested parties in a will be notified that the probate process is taking place.
However, a trust is not public record. By using a pour-over will for asset transfers into the trust, the majority of information remains confidential. A pour-over will typically only contains simple provisions about distributing select property into the trust, while the confidential trust specifies more detail around which beneficiaries should receive assets and under what terms..
Potential Drawbacks and Limitations of Pour-Over Wills
Although pour-over wills can offer several advantages compared to other estate planning tools, they are not for everyone. It’s important to weigh the potential downsides of using a pour-over will to understand if it’s the right option for you.
Some of these drawbacks and limitations are:
- Contrary to some people’s beliefs, a pour-over will does not allow you to bypass probate, still requiring time and money in the probate court.
- Relying on your pour-over will instead of funding the trust directly may offer drawbacks compared to establishing a trust alone since it requires going through probate, which may be more costly or time-consuming.
- The concept of a will and trust working together may be complex for some people to grasp and can lead to confusion or disputes regarding asset distribution terms or timelines.
- Although a pour-over will is more private than a standard will, a pour-over will still requires going through probate, which is a matter of public record and can release sensitive information.
If you are considering developing a pour-over will, it’s important to consult an estate planning attorney and a financial advisor so that you can weigh the pros and cons for your estate. If you are a family member of a deceased loved one who established a pour-over will and you believe you are not receiving your rightful inheritance, you should consult a probate litigation attorney regarding your options as soon as possible.
Pour-Over Wills in Different States
The laws surrounding pour-over wills can differ in various states. For example, California and Texas have similar laws regarding pour-over wills, but there are some nuances between the two.
California
A pour-over will is a common estate planning tool in California for individuals who want to place some of their assets in trust and maintain ownership of the remaining assets until their death. California offers some unique considerations that apply to pour-over wills.
California’s Probate Code also provides the unique option of creating a trust after a will has already been created, which offers more flexibility in estate planning.
Assets in a pour-over will may be able to avoid probate if the cumulative value of the assets is less than $184,500—this amount generally allows assets to be transferred under small estate probate laws.
Texas
Pour-over wills in Texas are subject to the same requirements as other Texas wills. For example, the creator must be at least 18 years old and of sound mind, the will cannot be revoked, the testator must have mental capacity, and the will must be properly witnessed.
Assets included in a pour-over will may be able to bypass a probate administration if the applicant seeks to probate the will as a muniment of title. The applicant must obtain a muniment order from the probate court and prove to the Court that the deceased person’s estate does not owe any unpaid debts besides mortgage(s). The applicant must also prove that there is no necessity for estate administration. If those requirements are met and the applicant follows proper procedures, a pour-over will can be probated in Texas regardless of the size of the estate.
Probate Process with Pour-Over Wills
Although pour-over wills are unique from a standard will, they must still pass through the probate process. Any property included in the trust before the decedent’s death can be distributed directly to the beneficiaries without probate.
However, any assets covered by the pour-over will that are not yet in the trust must go through the probate process so they can be transferred accordingly. Other assets may be able to avoid probate if they are under the state threshold for simplified probate.
A Heggstad petition may provide another avenue for avoiding probate with a pour-over will. California Probate Code 850, also known as a Heggstad petition, often goes hand-in-hand with pour-over wills, as it is another legal option for transferring assets into a trust if a decedent failed to title property in the name of a trust despite intending to do so.
The executor of an estate can file a Heggstad petition with the court to add property, like real estate, financial accounts, or other personal assets to a trust. When a pour-over will exists, it can be used to demonstrate the decedent’s intentions to include the assets in question in the trust. The court may then use the pour-over will as evidence to approve a Heggstad petition and add these assets to the trust without probate.
If a petition is denied or probate is still necessary, an executor is responsible for reviewing a pour-over will and determining which assets to distribute to the trust in accordance with the decedent’s wishes.
This involves the following steps:
- The named executor must petition the probate court to review the legitimacy of the will and receive an official appointment as the executor
- The executor must notify all interested parties of the estate of the beginning of probate and their appointment.
- The estate executor must review the terms of the will and verify which assets are to be transferred into the trust.
If there are any assets not covered under the pour-over will, then these assets will have to pass through intestate succession to be distributed to legal heirs in accordance with state intestacy law.
Case Scenario
In Dean’s case, the pour-over will allowed his newly purchased investment home to be transferred into his trust, but the property could not bypass the probate process. During probate, Dean’s executor, identified in his will, filed the pour-over will with the probate court, which formally validated it.
The executor then identified and valued the investment property, ensured any associated obligations (such as property taxes, utility bills, or outstanding mortgage payments) were addressed, and used available estate funds to pay any remaining debts and estate taxes. Once all obligations were settled, the court approved the transfer of the property into Dean’s trust.
Had Dean not created a pour-over will, the transfer of the newly purchased property would have been significantly more complicated. Without a will, the asset would be subject to intestate succession laws, which vary by state but generally prioritize close family members. In Dean’s situation, this would likely mean his surviving spouse and children would inherit the property according to state statute, and the court would appoint an administrator to oversee the distribution. This process may have produced results that did not fully reflect Dean’s estate planning goals or his intended treatment of the new property.
Considering a Pour-Over Will In Your Estate Plan
A pour-over will is a good option when your primary estate plan is a revocable living trust and you want to ensure it is fully funded upon your death. Using the will in combination with the trust ensures that all assets are ultimately accounted for and distributed according to the terms of the trust so that your beneficiaries receive their rightful inheritance.
Ultimately, a pour-over will may be a good option in the following instances:
- You have a complex estate and are concerned about assets being excluded from your trust upon your death.
- You prefer that information about your estate and its assets not be public record, like in a standard will.
- You want all assets to be distributed according to the terms of the trust for consistency.
- Frequent life changes like the acquisition of new property or opening of new accounts may result in assets not making it into the trust.
However, there are situations where this type of will may not be ideal. When considering the option of a pour-over will in your estate plan, remember that this tool will not allow you to avoid probate. This type of will is also rendered useless if you do not have a revocable living trust to transfer assets into as your primary estate plan.
If you have a complex estate with multiple types of assets and are looking to maximize your estate tax benefits, a pour-over will paired with a revocable trust may not be enough. You may consider additional or alternative tools like an irrevocable trust or charitable trusts that offer unique benefits for asset appreciation.
Can I Contest a Pour-Over Will?
Yes, a pour-over will can be contested like any other will.
Under California or Texas law, anyone who is regarded as an interested person can contest the validity of a will. The definition of an “interested person” is construed broadly, but can often include:
- The personal representative of the estate
- The trustee of the inter vivos or testamentary trust
- Beneficiaries of the trust
- The estate’s creditors
- The deceased’s legal heirs
In order to challenge the validity of the will, you will need a legal basis to do so. California law recognizes various types of will contests, which are detailed below.
The Person Making the Will Did Not Have Testamentary Capacity
For a will to be legally binding, the person making it must have what is called “testamentary capacity.” This means they must be “of sound mind,” which is defined as having the mental capacity to appreciate the nature and extent of their property, the people who will inherit their estate, and the fact that they are creating a will. If the deceased did not have the requisite testamentary capacity at the time the will was executed, an interested party could contest the will on these grounds.
The Will Was Improperly Executed
A will can also be challenged as legally invalid if it does not comply with the specifications and formalities required by California or Texas law. These criteria include the following:
- The will must be in writing.
- The will must be signed by the person creating the will in the presence of two witnesses.
- Two witnesses must sign the will in the presence of each other and the person creating the will.
The Will Was Created as a Result of Fraud or Undue Influence
Interested parties may also contest a will that was created as a result of fraud or undue influence. For a fraud claim to succeed, the person contesting the will must be able to show that the deceased made or changed their will because of fraudulent misrepresentations made by a beneficiary. Fraud can also occur at the time the will is executed if a third party represents the will as another document or claims it would not be legally binding.
Similarly, an undue influence claim asserts that the person making the will did not do so of their own free will because another person exercised improper influence over them and manipulated them into changing or making a will. Undue influence generally involves someone the deceased trusted or relied on, such as a relative, close friend, caretaker, or mentor.
To successfully invalidate a will for undue influence, the person contesting the will must be able to show the following:
- The deceased and the influencer had a confidential relationship.
- The influencer is a substantial beneficiary of the estate.
- The influencer played an active role in obtaining the will.
If these three factors are present, the court will presume that undue influence occurred, and the estate will have to prove that there was no undue influence for the will to be found valid.
Pour-Over Wills vs. Other Estate Planning Tools
A pour-over will can be a highly beneficial estate planning option under the right circumstances. Still, it’s important to consider all your options before committing to this option for your estate.
Regular Will vs. Pour-Over Will
A regular will and a pour-over will are both similar in that they allow an individual to specify their wishes for how they would like their assets distributed upon their death. However, a regular will is a standalone document that distributes assets directly to identified beneficiaries, while a pour-over will works in tandem with a trust.
A regular will must detail how assets should be distributed to beneficiaries and under what terms. A pour-over will is a much simpler document, typically only specifying which assets should be transferred to the trust.
The option of using a pour-over will allows for greater control over assets, placing ownership of some assets in the hands of the trustee and retaining control of the others. A pour-over will also allows for remaining assets to be accounted for, ensuring there is a place for these assets to be included in estate planning.
If assets are not included in a standard will, they must pass through intestate succession during probate, which is the process where assets are distributed to legal heirs based on state intestacy laws. Intestate succession can be a time-consuming process and may result in an instance where state law does not align with a testator’s true wishes.
Testamentary Trust vs. Pour-Over Will
A testamentary trust is a trust established upon an individual’s death, created by their will. This means that all of the assets owned by the decedent are transferred into the trust at the same time. Like a pour-over will, though, the assets outlined in a testamentary trust must go through probate before being transferred into the trust.
On the other hand, a pour-over will allows you to differentiate between your assets, giving you the ability to separate some of your assets into a trust while maintaining ownership of the others for the remainder of your life. For many people, this added flexibility is beneficial for organizing their asset management process according to how likely they are to want to retain control over select property.
Each option provides its own benefits for asset protection. A testamentary trust may allow you to be more specific in your estate planning and set clear terms for how to distribute your assets. A pour-over will may allow you to reduce the amount of time needed to transfer your remaining assets into the trust since the trust is already established, and any assets previously in the trust can avoid probate.
Legal And Financial Considerations
Using this type of will presents several important legal and financial considerations. Because the will still has to pass through probate, you will be subject to paying for probate costs, which may include court filing fees, attorney’s fees, and executor compensation, if applicable in your jurisdiction.
Because the probate process is required, it may also delay the transfer of assets to the trust and ultimately trust distributions. Probate may take anywhere from a few months to a year or more, depending on the assets that are included in the pour-over will. While a trustee would be able to distribute assets according to the terms of the trust when all assets are initially included in the trust, the use of a pour-over document may delay the ability to make distributions until assets can be transferred to the estate.
Finally, using a revocable trust as a primary estate planning tool may leave tax benefits and opportunity for asset growth on the table. Assets included both in a revocable trust and those that are still part of the taxable estate are subject to estate taxes and income taxes. In some cases, such as in high-net-worth estate planning, individuals prefer to use an irrevocable trust to maximize tax benefits and separate assets from their taxable estate for reduced estate tax liability.
It’s important to consult both an estate planning attorney and financial advisors in the process to ensure that you are maximizing your tax benefits for your assets, minimizing estate costs, and using the best possible estate planning tools for your situation.
Take Control of Your Estate: Understand The Power of a Pour-Over Will with RMO Lawyers
A pour-over will can be a valuable estate planning tool for some, but it can create some conflict and confusion surrounding estate assets. If you would like to contest a pour-over will that you think is legally invalid or affecting your right to an inheritance, you should contact a probate attorney immediately. Overturning a will is a challenging process, even for a simple pour-over will. For this reason, you will have much greater odds of succeeding if you work with an experienced probate litigation lawyer to handle the will contest.
At RMO Lawyers, our team of probate and estate administration attorneys can help you navigate the process of estate management and administration. If you experience any disputes related to a pour-over will, our probate estate litigation attorneys may be able to help you navigate them. With decades of experience in probate and trust litigation, we understand the intricacies of probate and trust law and the nuances that can arise in each case. We’ll approach your case with compassion and empathy to navigate unique family dynamics, uphold the best interests of the estate, and secure a beneficiary’s rightful inheritance.
Schedule a consultation with our team to learn more about your legal options and how we can help you navigate them.
Glossary
Pour-over will – A type of will that directs any remaining assets not included in a trust to be transferred or “poured over” into a pre-established trust upon the testator’s death.
Living trust – A legal arrangement in which assets are transferred to a trust during a person’s lifetime to avoid probate and manage their estate.
Testamentary trust – A trust established upon the death of an individual.