A pour-over will is used when a trust is in place.
Many people think of estate planning as a binary decision – they need to choose either a last will or a revocable living trust (RLT).
Although one of these must set the foundation for your estate plan, they are not necessarily mutually exclusive.
A pour-over will (POW) can benefit a RLT-based plan.
According to a recent Bankrate article titled “Do you need a pour-over will in your estate plan?,” sometimes people want to consolidate assets after they die.
This is where a POW is helpful.
A grantor will often fund the RLT with specific assets while alive.
These assets will bypass probate and be distributed by the trustee to the beneficiaries according to the terms of the RLT.
Sometime assets will not be able to be added to the RLT while the grantor is alive.
This could be for a variety of reasons.
Maybe the assets are not eligible for transfer to the RLT while the grantor is still alive.
Perhaps the assets were accumulated too soon to the time of death to be transferred.
Whatever the reason, it is often wise to include a POW.
It essentially serves as a safety net.
Or think of a POW as the backstop when playing kickball out on the playground in grade school.
If assets are left outside of the RLT and no last will is created, they will be subject to intestate rules.
This means the assets outside of the RLT would be distributed according to the laws of the state.
It is a far lengthier process and can end with assets being left to those not of your choosing.
With a POW, the assets outside of the RLT at death are left to the RLT after the death of the grantor.
Benefits of a RLT and POW combination include reducing probate complexity and protecting the assets.
Unfortunately, the assets not titled to the RLT will still be subject to probate.
This POW may also be challenged by family or friends.
Another reason to have a POW with your RLT-based plan is to nominate guardians for any minor children who might be orphaned.
For these and other reasons, it is important to work with an experienced estate planning attorney admitted to practice law in your state of residence.
Reference: Bankrate (April 20, 2022) “Do you need a pour-over will in your estate plan?”