In estate planning, a “pour-over will” is a document signed in conjunction with the creation of a living trust. A pour-over will is like any other last will and testament, except that it distributes—or “pours over”—any probate assets to the related living trust. In this sense, the pour-over will is a backup that ensures no assets remain outside of the trust.
The Difference Between a Will and a Trust
Many people simply dispose of their estate through a will. This means the person leaves an estate subject to probate before the California courts. When the person dies, his or her will must be filed with the court, an executor is named (usually by the will) and assets are distributed according to the terms of the will.
A trust operates along similar lines. A person typically creates a living trust and names themselves as trustee. When he or she dies, the trust names a successor trustee who distributes the trust's assets. This is similar to a probate estate, except there is no need for a formal court proceeding. A trust may be kept private, while a probate estate becomes a matter of public record. A trust may also be wound up more quickly than a probate estate, where the executor must comply with certain legal deadlines and requirements.
The Need for a Pour-Over Will
A living trust involves more than signing a trust document. A person must actively transfer all of his or her assets into the trust. For example, if you own a home, you would sign a deed transferring the property from yourself to you as trustee of your living trust. If all of your assets are titled in the name of the trust, then upon your death there may be no need to open a probate estate at all.
However, trusts are rarely complete. A person may acquire many assets between the time they created the trust and their death. Even with careful estate planning, some assets may remain outside the trust. In that case, a pour-over will is necessary to complete the trust. The pour-over will directs your executor to transfer any assets remaining in your name to the trust.
This does not mean you should rely on a pour-over will in lieu of transferring assets into a living trust during your lifetime. Like any will, a pour-over will is subject to formal probate. This means the executor may have to wait several weeks or months before making the final transfer to the trust. This can defeat the very purpose of the trust, which is to expedite the distribution of a person's assets after their death.
Deciding the Best Option
A pour-over trust is only necessary when a person chooses to include a living trust as part of his or her estate plan. Depending on your circumstances, a simple will may be the better option. Before you commit to anything, you should always consult with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.