A pour-over will is a specific type of will that is designed to work in conjunction with a trust. It ensures that any assets not already placed in the trust during the individual’s lifetime will be transferred to the trust upon their death. This legal instrument is particularly beneficial for those who wish to consolidate their estate under a trust structure, making the distribution of assets smoother and more efficient. Below are three practical examples of pour-over wills in estate planning.
In this scenario, John and Mary, a married couple, own a family business. They have established a revocable living trust to manage their business and personal assets. However, they have not transferred the business’s ownership documents into the trust before John’s unexpected passing.
To ensure that the business continues to operate smoothly and that their children inherit it, they drafted a pour-over will. This will stipulates that upon John’s death, all remaining assets, including the family business, automatically pour over into the trust.
By using this approach, Mary can manage the business without the complications of probate, as the trust already outlines the succession plan for the business. The pour-over will acts as a safety net to capture any assets that were not formally transferred to the trust.
Sarah, a divorced mother of two, has recently remarried to Daniel, who also has children from a previous marriage. To ensure that all of their children are treated equitably and that their estate is distributed according to their wishes, they set up a trust and a pour-over will.
In their pour-over will, they specify that any assets they own at the time of death, which have not been transferred to the trust, will automatically pour over into the trust. This includes Sarah’s home and investment accounts that they have yet to transfer.
By doing this, Sarah and Daniel ensure that the trust dictates how the assets are divided among all the children, avoiding potential conflicts and ensuring that each child receives their fair share. The pour-over will simplifies the process, as the trust provisions will take precedence.
Tom, a retired engineer, has accumulated a significant amount of retirement savings, including a 401(k) and various investment accounts. He also created a revocable living trust to manage his assets and ensure a smooth transition to his heirs.
However, Tom failed to transfer his retirement accounts into the trust before he passed away. His pour-over will states that all assets not included in the trust at the time of his death—including his retirement accounts—will pour over into the trust.
This will allow Tom’s designated heirs to benefit from the trust’s stipulations regarding distributions, which were laid out explicitly in the trust document. By using a pour-over will, Tom’s family can avoid the complexities of probate regarding his retirement accounts while ensuring that the assets are managed as he intended.