Creating an estate plan often begins with drafting a will to explain how you would like your property distributed after your death. A pour-over will specifies that some or all of your property will be given to a trust rather than directly to individual heirs. “Pour-over” means that remaining property in your estate, after any specific gifts to individuals are made, goes directly into the trust.
The trust you use to receive the pour-over may be a trust that already exists, or it may be a trust that you create along with your new will. Choosing to use a will with a pour-over provision assures that any property you did not place into an existing trust during your lifetime ends up in the trust. There are many reasons why you might want your property in trust rather than given straight to a relative, such as saving on taxes or maintaining property in good condition through a managing trustee.
Another benefit of a pour-over will: if all your property goes into the trust, probating the will may be unnecessary or very simple. In California, a will disposing of assets totaling less than $150,000 does not have to be probated unless there are special circumstances.
Not all types of assets can be poured over into the trust, however. Any assets already held by a different trust, property owned by joint tenancy where the second owner survives the person making a will and trust, and retirement accounts such as IRAs and 401ks will not pour over into the trust. Further, your pour-over will must contain specific language explaining your intent that property will pour over.
Last year, California’s legislature enacted a new law that makes creating an effective pour-over will even easier. Previous law stated that pour-over wills are only valid if the trust was created before or at the same time as the will. Sometimes creating the trust at the same time presented problems for people planning their estates, or they did not realize that they had to create both at the same time. Under the new law, the trust can be created up to 60 days after the will is signed. (Probate Code section 6300.)
Both the new and the old law specify that the trust cannot be revoked or terminated before death. If the trust is revoked or terminated, the will’s pour-over provision will not be effective. Any property not specifically devised to an heir will pass to relatives through intestate succession, which is discussed in some of our other blogs.
Please note that people with international heirs or who are not U.S. citizens should seek legal advice to determine if a pour-over will is right for them.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet’s website or call her office at (650) 469-8206.
