Pour-Over Wills: How They Work with Revocable Living Trusts

What is a Pour-Over Will?

A pour-over will is a crucial part of an estate plan that is centered around a revocable living trust. A pour-over helps to ensure that any asset that is required to go through probate will be transferred the revocable living trust. Although one of the primary purposes of estate planning is to avoid the time and cost of probate administration after death, there are situations where probate administration may be required. For example, if a bank or financial account does not have a designated beneficiary, or other property such as real estate is not held by the trust, probate administration may be required. In such cases, a pour-over will serves as a safety net to ensure assets and real estate that may have been unintentionally left outside the trust or acquired after the trust was created are transferred to the trust for distribution. It should be noted that a pour-over not a standalone document but is part of a comprehensive estate plan with the revocable living trust as the controlling document for distribution of property. A pour-over will help to ensure that any assets left outside the revocable living trust at time of death will ultimately be included in the trust to be managed and distributed according to the trust’s instructions.

What is a Revocable Living Trust?

A revocable living trust is a legal document that is created during your lifetime to hold your assets. Typically, you serve as the trustee while you are alive and maintain total control over the assets in the trust with the authority to transfer assets in and out of the trust and to amend or even revoke the trust during your lifetime. After death, the trust becomes irrevocable and the named successor trustee in the trust takes control to carry out your management and distribution instructions in the trust.

A revocable living trust provides you with greater control and flexibility than a standard will about how your assets are managed and distributed after death. A revocable living trust is also a private document and avoids probate administration. Typically, a revocable living trust provides a distribution plan that outlines person’s wishes concerning who will receive the trust assets and how the assets will be managed and distributed. For example, if parents are deceased, a living trust can instruct a successor trustee to manage the trust assets and to distribute all or portions of trust property when a child reaches a specified age or allow for distributions for specified purposes such as a child’s health care, education and support. Provisions in a living trust can also address not only how you want your assets distributed upon your death, but also how you want your assets to be managed and used for your own care if you become incapacitated and lack the mental capacity to manage the trust.

A joint revocable living trust is a single trust document that two persons establish to hold title to assets which they typically own together as a married couple. While both spouses are alive and competent, they both are trustees of the trust, have full control of the trust assets and can change the trust at any time. If one spouse becomes incapacitated or dies, the other spouse continues to control the trust assets and can use the assets for their needs. If both persons become incapacitated or die, then the successor trustee steps in with the authority to ensure the trust assets are managed and distributed properly.

An important advantage of a revocable living trust is that it can be designated as a beneficiary on bank and financial accounts to transfer assets in the accounts at time of death to the trust. A revocable living trust can also be named in an enhanced life estate deed, commonly referred to as a lady bird deed, for direct transfers of real estate property to the trust after death. A lady bird deed is a popular estate planning tool that avoids probate for real estate property and is a special method of automatically transferring your home and other real property after death. Whether it is a good option for your estate planning depends on your circumstances.

What is the Difference Between a Pour-Over Will and a Will.

A standard or simple will, typically known as a Last Will and Testament, states how your assets are to be distributed when probate administration is required. It usually includes the names of beneficiaries, amounts of distribution and other information about how and to whom the property in your estate is to be distributed. Although both a standard will and a pour-over are subject to probate administration, which is supervised by the probate court and a matter of public record, a pour-over will provides a more private process that transfers estate property directly into the trust. A pour-over will paired with a revocable living trust will help to stream line the process and reduce complications of dealing with any probate administration that may be necessary.

Benefits of Revocable Living Trust with Pour-Over Will

One of the most important benefits of having an estate plan with a revocable living trust and a pour-over will is that it and provides clear and detailed instructions which will allow your appointed fiduciaries and loved ones to manage assets efficiently and with fewer complications. It can also help to reduce confusion and disputes and provide for a smooth transaction during a stressful time. Although a standard will without a trust may be sufficient in some circumstances, an estate plan with a revocable living trust and pour-over will is a good choice for making the management and transfer of your assets more efficient and private.

Schedule a Free Consultation with an Estate Planning Attorney

At Ager Law Office, Bill Ager helps individuals and families with all aspects of estate planning, including Wills, Revocable Living Trusts, Durable Powers of Attorney for Property and Financial Matters, Patient Advocate Designations and Enhanced Life Estate Deeds (Lady Bird Deeds). From his Ann Arbor office, Bill Ager serves clients throughout Washtenaw County. To schedule a free consultation for an understanding of the cost of an estate plan specifically tailored to your needs, or for updating your existing plan, call (734) 649-0784, send an email to bill@agerlawoffice.com, or use the online contact form on this website.