The language surrounding estate planning can be confusing. You may already have a will, but perhaps the term “pour-over will” has come to your attention. What is a pour-over will, and how is it different from a more typical last will and testament?
What is a will?
A will is a written declaration stating how you want your assets distributed to your heirs when you die. Generally, there are certain formalities laid out in state statutes that must be followed for a will to be effective and enforceable.
For example, the will might need to be signed in the presence of a certain number of witnesses who also sign it.
In your will, you might name an executor. This is the person who will oversee the probate of your will after you pass away, ensuring all your affairs are wound down according to the law and your assets are distributed per the terms of your will. You might also name a guardian for your minor children in your will.
What is a pour-over will?
A pour-over will is used in conjunction with a trust.
A trust is a document that sets up a separate legal entity with the purpose of holding estate assets, which can be distributed to your chosen trust beneficiaries. Trusts can go into effect during your life and continue after you are gone. Trusts are overseen by a trustee who, depending on the type of trust created, might be you or a third party. All assets placed in a trust become the property of the trust entity itself, relinquishing you of ownership rights of the assets.
Still, problems can arise if assets are left outside of the trust upon your death. If you have no estate planning document assigned to these assets, they would normally be distributed per state intestacy laws, which are outside of your control.
This is where a pour-over will comes into play. The pour-over will is basically a document stating that any estate assets not placed into your trust at the time of your death will be transferred to your trust upon the event of your passing. In this way, a pour-over will complements a trust, ensuring all your assets will belong to your trust upon your death and passed on to your beneficiaries accordingly.