Many people understand the concept of a last will, though they may not know much about how it functions in action. But far fewer people have heard of a pour-over will. Yet these are powerful tools that could be an important part of your estate planning, if you knew how they work.
That’s why we’re going to dive into the difference between a last will and a pour-over will. To begin, we’ll look at how a last will and testament operates. Once we have this information at our disposal, we’ll turn our attention over to pour-over wills to see how they are different. Finally, we’ll take some time to examine how a pour-over will works in action compared to a last will.
What Is a Last Will and Testament?
A last will and testament is a type of legal document that you would create as part of your estate planning process. A last will is an individual’s way of communicating their final wishes to their loved ones and the world. Who is getting the family car? What possessions are to be sold or donated to charity? What happens to the children they had custody of? Who should manage the financial interests that were acquired over a lifetime?
Without a last will and testament, the courts are left to figure out all of these questions (and more) themselves. This means that the individual who has passed on has absolutely no say in what should happen to their stuff. This can lead to some real drawn out legal battles over who should inherit what. Famously, the artist Prince passed away without a will and it has taken six long years to sort out various legal battles about inheritance, and the case is still ongoing!
You write a will during your lifetime to convey instructions once you die. Everybody should have one, regardless of how young they are. A will can be updated throughout your lifetime and so you are expected to pull it out and add to it when you get married or when you buy some new asset or property.
When you pass away, your will ideally names somebody that’s still alive to act as the executor of your estate. They would then administer your estate by following the guidelines set out in the will. The probate court may supervise to ensure that the wills are carried out correctly. Because the probate court has a tendency to supervise, it means that the estate is fairly safe when there is a will because the executor has less room to try anything underhanded.
In cases where an executor did misuse their powers as administrator of the estate, legal action can be taken against them and it is possible to have them removed from the room and replaced with a more trustworthy executor or give it over to the hands of the probate court (though wouldn’t recommend the latter).
What Is a Pour-Over Will?
A pour-over will is a type of will that is a legal document that functions alongside a living trust. So in order to understand what a pour-over will is you need to first understand what a living trust is. The good news is that these are useful tools that you should learn more about anyway.
A living trust is a type of trust that functions while you’re still living, thus the name. You are able to transfer assets into the trust. The assets would belong to the trustee of the trust for the benefit of the trust beneficiaries rather than to your estate but you would still be able to use and spend them during your lifetime, or gift them to loved ones. It’s a way of avoiding the probate process and reducing how much of your personal life winds up on the public record.
A living trust is a flexible agreement but the key thing to note is that your assets must be transferred to the trust if you want it to be in charge of them. It can be easy to forget to transfer certain assets over or you could have a date set to transfer something in but then pass away suddenly. In this scenario that asset would never get transferred into the trust and so it would go through probate with the rest of the estate.
But if you create a pour-over will, it functions in a similar sense to a last will in that triggers upon your death but it acts to transfer assets into a living trust. It can offer backup so you avoid the scenario above because upon that sudden death the pour-over will would be used to transfer any assets you missed (so long as they were included in the pour-over will).
How Does a Pour-Over Will Work?
Like a last will, a pour-over will starts by first dealing with any specific bequests that are to be distributed. This would be the specific inheritances that you want to pass on to children, spouses, or friends.
After that finishes the residue of the estate would then move into the trust. The successor trustee would continue to manage the trust according to the terms that were set in place when you created it. There is quite a lot of room for various terms such as who should get property, when they should get it, and the like. This is good for inheritors who are bad at managing their finances. But it could also be given over at once, should that be what you want.
Keep in mind that assets that have been transferred to a trust already should be removed from your will, since they are no longer part of your estate but property of the trust.
Should I Speak With an Attorney?
Setting up a living trust properly requires an experienced estate planning attorney who can help you work backwards from your goal to create a trust that looks out for your specific needs. From there you can work together to create a pour-over will that harmonizes with your trust as a part of a comprehensive estate plan.
If you just want a last will, you can create this on your own but it is recommended you consult with an attorney to ensure that the will is legally enforceable. Some clauses may not be, or there may be better options available to achieve your goals that an attorney could suggest.