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Kirtland & Seal, L.L.C.

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How pour-over wills work

On Behalf of | Jan 4, 2019 | Estate Planning, Firm News

Once you set up a revocable living trust to hold your assets, you don’t necessarily stop acquiring new assets. What happens if you die before some of those new assets have been added to the trust (or otherwise been assigned designated beneficiaries)?

This is where a pour-over will comes in handy. In simple terms, this kind of will takes control of everything that doesn’t already belong in your trust or passes directly into the hands of others according to plan. The assets are “poured over” into the trust you already established and distributed by its terms.

Here’s a quick example of how this can work:

  • You sign over the majority of your real estate, including the home you live in, to the trust you have established. It’s designed to distribute your assets evenly between your two children when you die.
  • You keep a personal bank account out of the trust because you prefer to handle your ordinary expenses that way — although the money you’re keeping is somewhat substantial.
  • When you die, the house and your other real estate will pass to your heirs (or be sold, and the money divided according to your directions) without ever going through probate.
  • Your bank account, however, has to be handled separately. Since you are the only person with access to the account, no one can access it until it goes through probate.

Once your bank account has gone through probate, the assets it contains can then be added to your trust and divided up.

While pour-over wills are handy to catch assets that people haven’t had time to add to a trust before death or assets that they’ve deliberately kept out of a trust for some reason, they don’t function the same as a trust and can’t protect your assets from probate. That’s why it’s essential to keep moving newly-acquired assets into your living trust on a regular basis.

Do you need more information about estate planning options? Talk to an experienced attorney about your goals to see what’s possible.