Once a client has their Last Wills and Testament (“Wills”) and revocable trust created, their financial situation doesn’t just stand still. More often than not, a client’s financial situation will fluctuate throughout their life.
A pour-over Will brings added security to an estate plan–making room for all of those potential life changes–by explaining what to do with new and unaccounted assets. This helps keep up with asset changes between times when your client updates wills and trusts.
What is a pour-over Will?
A pour-over Will is a Last Will and Testament that is used in conjunction with a revocable (a/k/a living) trust. The pour-over Will instructs your personal representative to transfer (or pour over) any assets owned in your client’s individual name to your client’s revocable trust after your client’s death.
A pour-over Will is a safeguard for those assets that may not have been moved into the client’s revocable trust before their death. It will allow the assets to move into the trust and skip probate.
An example of a pour-over Will
How does a pour-over Will work in practice? Let’s take a look at an example:
Sam worked with his financial advisor to form an estate plan that holds almost all of his assets and property in his revocable trust. They created a revocable trust with Sam’s house and investment accounts.
Four years later, (i) Sam purchased two new fancy cars in his individual name, not in the name of his revocable trust and (ii) Sam received a new account in his individual name from selling his shares of a local business. These new assets are not titled in the name of his revocable trust.
Sam has a pour-over Will, though, which directs his personal representative that any assets and property that are titled in Sam’s individual name at his death, should be given to the trustee of his revocable trust. This means that even the cars and the new account created above will be disposed of in accordance with the terms of Sam’s revocable trust after Sam’s death.