When establishing a trust, there are instances when a person leaves out assets, whether intentionally or not. Some grantors purposefully do not include assets in a trust because it would be disadvantageous. For instance, insurance companies charge higher premiums for trust-owned cars. It is also possible that a grantor failed to include a property in the trust because the asset was unknown until the time of death.
Whatever the situation, the grantor needs to protect these assets and ensure that their heirs and beneficiaries will receive them after their death. Fortunately, this is possible through creating a pour-over will.
How a pour-over will works
After establishing a living trust, you can create a pour-over will to supplement it. How does this work? When creating the will, the testator instructs that any remaining assets not originally part of the trust will pour over the same after the testator’s death. This includes intentionally left-out properties and unknown properties, such as unknown inherited assets or debt payments.
Explicit directions are essential
Any remaining assets indeed transfer smoothly to the living trust with the help of a pour-over will. However, note that pour-over wills still have to go through probate. This is why the testator must clearly state in the will that they intend for the remaining properties to transfer to the trust. Otherwise, the courts will apply California’s intestacy laws and may distribute the properties against the testator’s wishes.
Like any other estate planning tool, a pour-over will has its benefits and disadvantages. While the will does protect the remaining assets, it will still go through the lengthy and costly probate process and may be subject to estate taxes. Whether or not you need to include this tool in your estate plan will depend on your goals and priorities. Having a legal professional assess your situation can help you establish a solid estate plan.