There are numerous documents people can use when drafting an estate plan. Some of them take effect while the testator is still alive, while others only have authority after their death. Testamentary documents that gain authority after someone’s passing are often the main priority during estate planning.
Many testators establishing an estate plan choose between a trust or a will. A will can be someone’s primary testamentary instrument, or they might rely on a trust instead. Occasionally, testators decide to utilize a combination of both instruments to maintain optimal control over their legacies.
It is common practice to prioritize transferring high-value resources or assets that require management to a trust to fund it. Other assets may remain the direct property of the testator. However, the goal may be to have the trust control and distribute all of their property after they die. A pour-over will can be a way to facilitate the accomplishment of that goal.
What is a pour-over will?
Typically, wills describe how to distribute someone’s property to their beneficiaries. They may also name a personal representative to oversee estate administration or a guardian to care for minor children. A pour-over will is different. It provides instructions for the remaining assets in someone’s estate to transfer to the trust they created.
That transfer occurs as part of the probate process, which means that the assets transferred contribute to the overall value of the estate. They may be subject to creditor claims or can contribute to estate tax risk. Still, allowing the trust to manage the distribution of those assets can potentially be more effective than directly to beneficiaries with a traditional will.
The remaining assets in an estate that the testator did not use to fund a trust can be worth thousands. They can also have emotional value, which could lead to conflict among beneficiaries if a testator does not address those assets. A combination of different estate planning documents is often necessary for those with complex personal holdings or complicated family circumstances.
Taking the time to address any residual assets in an estate after dealing with its highest-value resources is generally a smart move. A pour-over will is one of many estate planning instruments that can optimize someone’s control over their final legacy.
