Using a Will to Fund your Trust? The Pour-Over Will Explained

We've talked previously about why you still need a Last Will and Testament with a Trust. Now let's talk about that Will in detail - the Pour-Over Will. What it is and how does it differ from a normal Last Will and Testament or Living Will?

Your pour-over will works in conjunction with a living trust. In layman's terms, it grabs non-trust assets and pours them into your trust. One way we have heard it described is with a cup and saucer example. Think of your trust as a teacup, with the tea, of course, being your assets held in trust. One of the functions the saucer placed under your cup serves is that it catches anything that doesn't make its way into or spills out of the cup. That saucer is your pour-over will, collecting assets that did not make their way into the trust rather than leaving them to fall to the table, which here is probate. Another way to think about your pour-over will is that it is a safety net, catching assets before they hit the floor, which is again, probate.

Next, in both form and execution requirements, a pour-over will is the same as any other last will and testament and performs the same functions: Setting forth your distribution of your assets; nominating an executor to manage and administer your estate; and finally, nominating guardians for any minor children you may have.

The only real difference is that a typical last will and testament says who is to receive what, whereas a pour-over will simply dictates that all of your assets are to go to your trust, which then says who is to receive what from your estate.

This is so long as assets outside of the trust don't reach the probate threshold in value: $184,500.00 as of April 1, 2022, in California for example. Just remember, this is a cumulative calculation, meaning it is made up of all of your assets, excluding those with beneficiary designations on them like retirement accounts or bank accounts with pay-on-death designations (assuming the beneficiary is alive at your passing). If we are below the probate threshold, then assets are to be delivered to the Successor Trustee of your trust and distributed per the terms laid out therein.

In practice, pour-over wills are not really waved around and don't end up in probate court, giving the whole purpose of having a trust is to avoid probate in the first place. However, remember that beneficiaries and heirs are entitled to a copy of the pour-over will at your death.

Lastly, we have your living will. A living will is a phrase still used on occasion, but it really refers to a document that is now incorporated into your advance health care directive and encompasses your medical wishes on aspects such as pulling the plug, organ donations, etc. Due to this incorporation, the phrase living will is, essentially, out of date.

With that, your key takeaway is that a pour-over will is like any other last will and testament, but specifically works in conjunction with your trust and pours all of your non-trust assets into your trust at your passing to be distributed from said trust.

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