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When Do You Need a Pour-Over Will?

People often consider making revocable living trusts to avoid an arduous, costly probate process for their beneficiaries. Instead, the ownership of assets in the trust passes relatively simply to a successor trustee. Occasionally, someone may pass away before successfully placing all their assets that they intend for a successor trustee to inherit into their living trust. The trust’s creator may not have had the time or passed unexpectedly before the transfer of the assets. In this case, the investments outside the trust would still have to go through the extensive probate process the decedent had been trying to avoid. In this case, the decedent would have wanted a pour-over will to avoid this possibility.

What is a Pour-over Will in a Living Trust?

A pour-over will is a type of will designed to transfer assets to a previously created living trust automatically upon a person’s death. Often, a pour-over will is a simple document with phrasing like, “any assets or property that are not in my Trust at the time of my death, that are not clearly left to a beneficiary of my Will, should immediately go into my Living Trust.” This type of will allows someone to have assets outside their trust without the fear that regular probate laws would not adequately transfer them to their trust’s successor.

A pour-over will, as a document, has its advantages in its simplicity. When there is one single record (the trust) controlling an estate in its entirety, it remains clear under whose ownership everything is supposed to end up. It is unlikely that everything you own while living will be included in your trust at the time of your passing for various reasons. So a pour-over will gives you the confidence that those assets will remain private and out of probate when they transfer to your trust.

Why Would Assets Be Left Out of a Living Trust?

Sometimes people purposefully keep assets outside of their living trust on purpose. Certain things you own, like vehicles and specific types of real estate, should stay outside the trust and allow a pour-over will to account for them when you pass. For example, let’s say you own a car in your name instead of in your trust, and that vehicle is involved in an accident. In that case, if you are liable for damages exceeding your insurance’s coverage limits, it would be harder for a creditor to try to go after the assets in your trust. Another reason for keeping a vehicle out of a trust is that some insurance companies charge higher premiums for vehicles owned by trusts.

Other times people leave assets outside a living trust due to unforeseen circumstances. Maybe they forgot a specific investment while filling out the original paperwork. Possibly they died before they got around to finishing the paperwork. Or, there may be a chance that a person does not realize they have a particular asset in the first place.

Let us now say that an individual inherited a piece of property from a grandparent’s last will. On their way to collect ownership documentation, the beneficiary perishes in a car accident. That person may have a living trust ready to transfer ownership to a successor trustee, but without a pour-over will, the newly acquired inherited property will be caught in the messy situation of probate.

Do I Need a Pour-over Will?

A pour-over will is a highly specialized document. Anyone working on a living will or general estate planning may consider researching the necessity of a pour-over will. If a pour-over will is something you wish to discuss with an attorney further, schedule a consultation today with our law office. Our experienced lawyers are waiting to answer your questions and concerns regarding estate planning and pour-over wills. Call us today at (805) 244-5291.

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Estate Planning Attorney Eric Ridley