A “pour-over will” is an often misunderstood legal document.
In fact, a “pour-over will” is really just a “last will and testament,” which is always paired with a revocable living trust (RLT).
And a pour-over will may have no practical purpose if its maker (i.e., the “testator,” if male, or the “testatrix,” if female) has no minor children and no assets subject to probate.
In such instances, a pour-over will resembles the “Maytag Repairman” of marketing campaign fame – with nothing to do.
According to a recent article from The Street titled “4 Concepts You May Be Getting Wrong About Pour-Over Wills,” the purpose of a pour-over will is two-fold: to nominate guardians (i.e., backup parents) for any minor orphaned children; and to transfer any “orphaned assets” left outside of its companion RLT into the trust via probate.
Probate is the court-supervised legal process used to verify your last will and appoint a personal representative (i.e., the “executor,” if male, or the “executrix,” if female) to administer the estate.
In the end, a pour-over will functions as an “insurance policy” of sorts for your estate plan.
Here are four key misconceptions and mistakes of which to be aware.
Pour-over wills are unnecessary if you have a RLT.
Many people make the mistake of thinking they do not need a pour-over will because they already have a RLT.
However, this is dead wrong.
Very few people are as diligent about “funding” their RLTs as they ought to be.
We are human, after all.
The pour-over will resolves this problem, albeit by default through probate.
The personal representative does not matter because I plan to fully fund my RLT.
Again, life often gets in the way of our best intentions.
For example, say you have a large digital asset, like crypto, and completely forget to transfer it into your RLT.
In that case, your personal representative will be in charge of ensuring that the crypto account eventually transfers to your RLT.
I have a RLT and pour-over will. I am done with estate planning. Yaay!
Not so fast.
This would be like saying you had your car washed and will never need to wash it again.
The pour-over will takes orphaned assets left in your name and transfers them into your RLT.
Again, the pour-over will is a safety net.
Nevertheless, it, too, must be kept current.
Estate planning attorneys commonly recommend a review of your plan every three to five years.
I recommend at least a “self-review” every two years.
Regardless, a thorough estate plan review should be made whenever there is a trigger event, like death, divorce, or remarriage.
There is no need to do anything in the event the RLT has not been “funded” with my assets before I die because I have a pour-over will.
Why even have a RLT intended to avoid probate if you have no intention to “fund” it with your assets now or by beneficiary designations at death?
That is truly paying twice for your estate plan.
You paid to have the RLT created but left it empty.
To be administered and distributed according to the provisions of your RLT, all of your assets must first pass through probate via the pour-over will.
But wait, there is more.
What if your RLT is deemed defective at best or invalid ab initio at worst?
In that event, your pour-over will should provide for an alternative disposition of your estate should the RLT fail to function.
This will help ensure that your objectives are carried out, even if not perfectly, as opposed to defaulting to distribution by intestate succession.
The humble pour-over will is really an essential legal document accompanying every RLT-based estate plan.
Accordingly, it should be afforded the respect and maintenance it is due.
Reference: The Street (June 14, 2023) “4 Concepts You May Be Getting Wrong About Pour-Over Wills”