Do I Need a Pour-Over Will in California?

As you probably know, we really love to stress the importance of having a legally valid will. A will is the cornerstone of any plan for your future and the financial future of your loved ones, but with over half of Americans lacking a will, it really can’t be said enough: The best time to make a will is right now.

However, not all wills are created equally, and there are different wills that apply to different situations. While we tend to think of wills as mainly the traditional type that requires two witnesses and a comprehensive list of all of your assets, as well as who you’d like to leave them to, there are some other will options. One of those is a pour-over will.

How do pour-over wills work?

A pour-over will exists alongside a living trust. If you need a refresher, a living trust is an estate planning strategy that allows a trustor (ie. the person creating the trust) to place their assets into a trust, thereby ensuring that those assets no longer form part of the estate.

When the trustor passes away, their estate will likely be small enough to qualify for simplified probate, thereby saving the estate executor and the trustor’s family a lot of expenses, frustration, and time.

The assets in the trust also have named beneficiaries, meaning that the trustor’s loved ones can receive their intended inheritance much faster than if they’d had gone through traditional probate.

However, it’s always advisable to add a pour-over will, which catches any assets that haven’t been included in the living trust and automatically adds them to the trust after the trustor’s death.

Like a regular will, a pour-over will nominates someone to ensure that the assets that still form part of the deceased’s estate are appropriately distributed. But instead of ensuring that assets are distributed to beneficiaries, an executor named in a pour-over will has the job of transferring all remaining assets into the trust.

Advantages of pour-over wills

One of the main advantages of a pour-over will is that it covers any assets a trustor might have missed when creating the living trust, while also covering anything that was added to the estate after the living trust was created. It’s basically a safety net for ensuring that nothing slips through the cracks.

If the trustor had a living trust without a pour-over will, any assets that are left over are considered to be part of the trustor’s estate. And if there was no will at all, simply the living trust, then those left-over assets will be distributed according to California’s succession laws. That means that the assets may not go to the intended beneficiary. That’s why a pour-over will is essential in ensuring that assets don’t need to be probated and that they go to the intended beneficiary.

A pour-over will also makes the job of the estate executor much easier. They only have one job: Adding all assets named in the pour-over will to the trust. From then on, the successor trustee takes over and distributes the assets to beneficiaries in accordance with the terms set forth in the trust.

Another big advantage of pour-over trusts? Privacy. Once a will is filed with a court, it becomes part of the public record. That means that anyone can look up who inherited what assets, and what formed part of the estate. Trusts, on the other hand, are private. The public cannot see what assets are held in the trust, nor can they learn who inherits what. Transferring the estate’s assets to a trust through a pour-over will ensures that no one can find out how assets were distributed.

Disadvantages of pour-over wills

The main disadvantage of a pour-over will is that if the value of the property that is left to be “poured over” into the trust is too large, then probate may still be required. That’s why smart estate planning advises trustors to place the majority of their estate into the living trust during their lifetime, and leave the pour-over will for smaller assets that won’t require probate.

In California, estates that are smaller than $184,500 qualify for a small estate affidavit that allows an executor to distribute the estate’s property without going through probate. If the assets covered in the pour-over will exceed this amount, then they’ll have to go through probate. Beneficiaries may then be stuck waiting for months on their inheritance, and face high probate fees, thereby eliminating the entire point of a living trust in the first place.

Why do I need a will if I have a living trust?

As mentioned before, not everything gets covered in a living trust. It’s more than likely that trustor’s will acquire more assets after having set up a living trust, and if those assets aren’t covered by a pour-over will, then they’re considered to exist “intestate” when the trustor passes. This means that the assets that are left over fall under the jurisdiction of California’s succession laws.

So if someone wanted to leave a specific family heirloom to their niece, or donate money to a charity, those wishes would not be considered if the assets were not covered by a pour-over will. Instead, they’d be distributed according to fixed regulations, regardless of the testator’s wishes.

Do assets in a pour-over will avoid probate?

Not necessarily. Assets in a pour-over will only avoid probate if their total value is under $184,500, thereby qualifying the estate for a small estate affidavit. If the assets total more than $184,500, then they will have to go through probate.

Is a pour-over will right for me

Whether a pour-over will is right for you or not depends on your specific situation. If you have a living trust, then you should certainly consider a pour-over will to cover any assets not already held in the trust. If you’re someone who would rather work with a traditional will instead, then a pour-over will is not necessary.

However, those who are keen to reduce the size of their estate with the help of a living trust should certainly add a pour-over will to complement the trust.

Need help with a pour-over will? We can help

At ClearEstate, we specialize in all kinds of estate planning situations. From discussing ways to set up trusts to helping you create a comprehensive will, we’re here to ensure that you and your family are set up for the future. If you’re curious to learn more about pour-over wills or are wondering whether they’re right for you, then reach out for a free consultation and find out how we can help.