A pour-over will is like any other will except that it has one beneficiary, a living trust. This type of will “pours” any property owned by the testator at death into a trust he or she set up before passing away. The assets will be subject to the distribution plan in the trust and will receive the benefit of the trust’s tax reduction provisions. Most estate planners today recommend this testamentary structure – a combination of a living trust and a pour-over will – with the primary objective being minimizing probate. While a pour-over will needs to go through probate, like any other will, it likely will contain relatively few assets, and these assets will not have significant value. This means that the estate may qualify for summary probate procedures, which are much faster and cheaper than formal probate procedures.
Pour-over wills were void at English common law because the testator could change the disposition of the trust at any time and essentially execute changes to the will without meeting any formal requirements. Today, however, all U.S. jurisdictions recognize their validity, subject to slightly varying rules. A pour-over clause can be validated either by referencing a previously existing trust into which the property will be poured, or under the doctrine of acts of independent significance by referring to some act that has significance apart from disposing of probate assets.
A pour-over will adds security and tranquility to an individual’s estate planning because any assets that do not make it into the trust will pour into the trust at the testator’s death. It is a protection intended to guarantee that any assets that were not included in the trust become assets of the trust upon the party’s death. This saves the testator the additional effort of having to constantly add or replace trust assets based on property gained or transferred during his lifetime. With a pour-over will, the testator need only include certain valuable property in the trust, and all other property is covered by the will. The trust is the primary mechanism for distribution, and the pour-over will picks up any property not in the trust at the time of death.
Dennis executes a living trust that distributes his trust property in equal parts to his three children and his favorite charity. Without a will, Dennis’ property outside the trust when he dies will be distributed according to state law, omitting the charity entirely. Had Dennis executed a pour-over will, the charity would have received one-fourth of his remaining property.
Like any other will, a pour-over will must be executed according to the typical will formalities. While these formalities vary by jurisdiction, they most likely will include the following:
That the testator has capacity;
That the will is in writing;
That the will is signed by the testator; and
That the signing is witnessed.
The Uniform Testamentary Additions to Trust Act (UTATA) imposes several requirements for this testamentary scheme to be honored by the probate court. The will must indicate the intent to incorporate the trust, the trust must identify the pour-over will, and the trust document must be executed prior to or contemporaneously with the will. UTATA specifically dictates that any probate assets transferred to a living trust be treated identically to other assets in the trust, thus saving the probate court extensive time and cost. Some jurisdictions require that if the trust document is amended, the pour-over will must also be republished, either by re-execution or codicil. In these jurisdictions, if the trust is revoked by the testator and the pour-over clause is neither amended nor deleted, the pour-over gift lapses.
A pour-over will also typically provides that if the trust is partially or wholly invalid, assets should be distributed under the terms of the invalid trust. If the pour-over clause fails, the assets are distributed according to intestacy. It is important to consult an experienced attorney in the field of estate planning to effectively draft a pour-over will.