What is 'Pour-Over Will'

A pour-over will is a legal document that ensures an individual’s remaining assets will automatically transfer to a previously established trust upon their death. 

BREAKING DOWN 'Pour-Over Will'

A pour-over will works in conjunction with a trust. In estate planning, trusts provide a way to avoid the probate process when transferring assets after the grantor’s death. When the time comes to settle an estate, assets funded into the trust get distributed to beneficiaries as directed by the grantor. A pour-over will covers assets that the grantor has not funded into the trust at the time of death. Absent explicit directions provided via a will, remaining assets would instead be subject to laws of intestate succession as established by the jurisdiction in which the individual died.

Pour-over wills act as a backstop against issues that could frustrate the smooth operation of a living trust. They ensure any assets a grantor neglects to add to a trust, whether by accident or on purpose, will end up in the trust after execution of the will. The will can also provide extra protection against legal issues with a trust by stipulating that the assets intended for the trust be distributed to the trust’s beneficiaries should it become invalid or, in the case of an unfunded trust, should it become legally difficult or impossible to fund at the time of the grantor’s death.

Revocable and irrevocable trusts

Estate plans typically pair pour-over wills with living trusts, which require that grantors transfer assets to them prior to their death. Most smaller estates use revocable living trusts, which allow grantors to control the assets in the trust until they pass away. Larger estates will sometimes use irrevocable trusts to reduce the tax burden for beneficiaries, particularly if they will be subject to an estate tax. Once grantors transfer assets to an irrevocable trust, the assets come fully under the control of the trustees. Pour-over wills work with either type of trust.

Example of a pour-over will

Suppose an elderly couple wishes to distribute an estate to their children and grandchildren. To minimize the legal hassle of multiple probate processes that would be triggered by their writing individual wills, they decide to establish a living revocable trust into which they can transfer their assets. Alongside the trust, they both draft pour-over wills directing any remaining assets be added to the trust upon their deaths. When the husband dies, his car, which the couple titled only in his name, ends up flowing smoothly into the trust. The wife continues to act as a trustee, so she may continue to use the car as if it were titled to her, even though its title gets transferred to the trust. Upon the wife’s death, any assets that have remained in her name also get transferred to the trust. A named successor trustee then manages or distributes the assets as directed by the terms of the trust.

RELATED TERMS
  1. Clifford Trust

    Clifford Trusts allow grantors to transfer assets that produce ...
  2. Irrevocable Trust

    An irrevocable trust cannot be modified, amended or terminated ...
  3. Incentive Trust

    A legally binding fiduciary relationship in which the trustee ...
  4. Authorized Investment

    Authorized investments are those that are permitted within a ...
  5. Trust Property

    Trust property includes assets such as securities, cash and property ...
  6. Dynasty Trust

    A dynasty trust is designed to grow wealth for a grantor's descendants ...
Related Articles
  1. Managing Wealth

    Pick the Perfect Trust

    Trusts are an estate plan's anchor, but the terminology can be confusing. We cut through the clutter.
  2. Financial Advisor

    Advisors: Tips for When to Employ Living Trusts

    Revocable living trusts accomplish estate planning objectives that aren't possible with a will. Here are some of the cases that show when to use a trust.
  3. Financial Advisor

    Irrevocable Trusts: New Trends You Need to Know

    Several improvements and additional provisions have been added to irrevocable trusts in recent years making them considerably more versatile than before.
  4. Financial Advisor

    Understanding How Top Trust Companies Operate

    Trust companies perform a wide range of services related to investment and asset management. Learn why to use a trust company and what they can do for you.
  5. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
  6. Managing Wealth

    Surprising Uses for Trust Funds

    Here are five common situations where a trust fund makes financial sense.
  7. Retirement

    Living Trusts vs. Simple Wills: A Comparison

    A look at wills versus living trusts and when to choose one over the other.
  8. Personal Finance

    Buying a Home in Trust

    Buying a home in a real estate trust allows for tax advantages, possibly avoiding probate court, and future family conflict. Below we outline the two different types and what to arm yourself ...
RELATED FAQS
  1. What is the difference between a revocable trust and a living trust?

    Learn how a revocable trust and living trust are two terms used to describe the same thing and what the key provisions are ... Read Answer >>
Trading Center