What Is a Pour-Over Will?
In California estate planning, a testator is a person who has executed a last will and testament that is in effect at the time of his/her death, and the pour-over will is one type of will that a testator can execute.
A pour-over will is a type of will where there is only one beneficiary: the testator’s revocable living trust.
To ensure that assets are subject to the distribution plan in the trust, the pour-over must be created.
The reason it’s called a pour-over will is that it “pours” the assets into the trust.
Without a pour-over will, the testator’s assets could be distributed under the California probate code, and be contrary to the testator’s intent. For example, a testator may have disinherited his siblings under his trust, but if an asset is not titled in the trust, and a pour-over will is not created to bring that asset back into the trust, the siblings would inherit that asset in probate court.
Types of Assets Controlled By a Pour-Over Will
Pour-over wills are used to distribute probate assets.
What are probate assets?
Probate assets are assets that are not in a revocable trust, titled in joint tenancy, and are not being inherited by a surviving spouse.
Sometimes, in situations where mistakes have been made, such as failing to name beneficiaries for 401Ks or IRAs, they can also be considered probate assets. When retirement accounts do not have a designated beneficiary, they have to be distributed through probate court unless they are under a certain threshold ($166,250) and can pass via a small estate affidavit (described below).
Additionally, a pour-over will is also used to distribute any type of tangible property, like clothes, jewelry, vehicles, etc.
It’s not always necessary to probate a Pour-Over Will.
In California, so long as the value of the personal property probate assets (stocks, cash, brokerage accounts, retirement accounts) is less than $166,250, probate can be avoided with a small estate affidavit. For real property, the limit is much less ($55,425).
The successor trustee will be able to take control of those assets by executing a small estate affidavit, and there will be no involvement of the courts. A small estate affidavit is typically a two-page document that is notarized and includes a certified copy of the death certificate. Banks and financial institutions are familiar with the small estate affidavit, and when presented with one, will know how to transfer the assets referenced in the small estate affidavit.
What Happens Without a Pour-Over Will?
If someone dies with a living trust, but without a pour-over will, there would usually be two distribution plans. One of them would be for the probate assets, while the other would be for the assets in the trust.
The assets in the trust would be transferred according to the beneficiary provisions in the trust, while the probate assets would be distributed to the testator’s nearest relatives under the California probate code. For the probate assets to be transferred in accordance with the trust provisions (and not under the probate code), there must be a pour-over will.
If a pour-over will is created, it also revokes any other prior wills.
When Must The Pour-Over Will Be Created
Typically, the pour-over will is created at the same time a person executes their living trust and other estate planning documents. In fact, the pour-over Will will reference the newly created trust, and pour-over language will be included in the Will to ensure that the revocable trust is the beneficiary of any probate assets (assets not titled in the name of the trust and/or missing beneficiary designations).
Guardianship Provisions for Pour-Over Wills
The other purpose of a pour-over Will is to ensure that guardians are nominated for minor children in case the testator dies prior to his or her children reaching adulthood. A person executing his or her will can plan in advance who will take care of their minor children in the event they die before their children become adults, and these guardianship nominations carry great weight with the probate court. The testator can specify who is the guardian of the estate (takes care of the finances) and who is the guardian of the person (who physically takes care of the children)–oftentimes the same person serves both roles.