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Everything You Need to Know about a Pour-Over Will

What Is a Pour-Over Will?

 

As the awareness about estate planning grows, more and more people are considering establishing living trusts as part of their estate planning strategy to help them enjoy the use of their property and help their beneficiaries bypass probate when transferring assets after they are no more.

But what some of these people do not know is that a living will may not completely protect their estate unless they execute a valid pour-over will.

Pour-over wills cover personal assets omitted from a revocable living trust due to an oversight during the trust creation process or because the assets were purchased after the trust had been created. A pour-over will transfer (pours-over) an individual’s remaining assets into the trust after the trust maker/testator’s death to make the asset transfer process easier for the decedent’s beneficiaries.

Suppose you have an existing living trust, or you’re considering making one as part of a comprehensive estate plan. In that case, understanding how a pour-over will works and whether or not you need one is crucial. This general guide offers some insight into the subject, so keep reading for more details.

How Pour-Over Wills Work 

One of the foremost objectives of estate planning is to bypass the probate process and make it easy for a deceased person’s beneficiaries to assume the legacy preserved for them.

In furtherance of this goal, many people opt to transfer their assets to a trust while still alive. Trusts are considered legal entities that can own property in their own right. But since they are not natural persons and cannot die, probate cannot apply to them, which makes it a great estate planning tool.

However, most people are constantly acquiring property throughout their lifetime. Some people may also deliberately leave some assets out of their trust for ease of management or accessibility. Unless the trust is continuously updated to capture the newer or left-out assets, the settlor may die without transferring the assets that have been left out.

Where one dies with such left-out assets, the assets will be administered under state intestacy law. Through this process, the property may go to people other than those intended by the owner. That is where pour-over wills come into play.

They specify that the remainder of the settlor’s estate, not included in the trust, should transfer to the trust upon their demise. Although pour-over wills work in hand with living trusts, they will not help you avoid probate. This is because all assets covered by the will must go through probate before entering the trust. Still, they can help make the process easier.

Who Benefits from a Pour-Over Will?

Pour-over wills are essential for individuals who have created living trusts. Even if you don’t currently have a trust but plan to establish one in the future, it’s advisable to create a pour-over will alongside your trust.

Many people also benefit from pour-over wills when they forget to transfer an asset into their revocable living trust or acquire new property after the trust creation process. Through a pour-over will, the asset can still be transferred to the trust and distributed according to the terms of the trust.

Pour-over wills also protect any assets mistakenly left out of a living trust due to an oversight or lack of attention.

For instance, if you have real estate properties that are not included in your trust – either because you forgot to transfer them or acquired the property after setting up your trust – a pour-over will cover such assets, ensuring that they still end up in your trust and distributed according to your wishes.

What Is the Difference Between a Will and a Pourover Will?

A will, also known as a “last will and testament,” is a legal document that outlines the distribution of an individual’s assets and personal belongings after death. It is created by the testator (the person making the will) during their lifetime and takes effect after death.

On the other hand, a pour-over will serve as a safety net for any assets not transferred to a living trust before the testator’s death. It is essentially a backup plan to ensure that non-trust assets are eventually transferred to the trust and distributed according to its instructions.

Advantages of Pour-Over Wills

Confidentiality

Wills become public records as soon as the testator dies. This means that with a regular will, anyone can find out who inherits your assets. On the other hand, trusts are confidential. When you create a living trust and a pour-over will that transfers all you own to your trust upon your death, the property will be distributed according to the terms you set in your trust. It would be extremely difficult for anyone other than the trust beneficiaries to know who gets what.

 

No Asset Is Left Behind 

The main advantage of pour-over wills is that they are a safety net for a person’s assets. As an estate planning device, the pour-over will takes care of any asset left out of your trust intentionally or inadvertently. Because you’ve already established a trust with named beneficiaries, there’s no question or confusion about who gets what.

Disadvantages of Pour-Over Wills

The main disadvantage of a pour-over will is that it will not avoid probate. Since the property left behind is not yet part of the trust, it is deemed part of the decedent’s estate.

Like a traditional will, it must pass through probate before being transferred to the trust. This could delay the administration of the trust for months.

Fortunately, there are ways around this. If you have purchased significant assets such as real estate after the creation of your trust, you can discuss with your estate planning attorney to ensure that those assets are transferred to the trust as soon as possible.

If you do this consistently, you reduce the risk of your valuable assets remaining unprotected. Any asset left behind would likely be of minimal value.

How does this strategy help you? Colorado probate law provides for certain pathways that allow the beneficiaries of an estate with minimal value, also known as a small estate, to avoid a lengthy probate process. These pathways are explained below.

Informal Probate 

The executor of your pour-over will apply for informal probate with the registrar of the relevant Colorado probate court. This process is usually used when a will is uncomplicated and not expected to be contested as with a pour-over will.

The application process involves filing a statement containing estate details with the registrar. If the registrar is satisfied that the legal requirements of the probate code have been met, they will issue a written statement of informal probate. Informal probate is final and conclusive unless a formal court order overrides it.

Small Estate Property Collection and Distribution

By the probate code, a decedent’s successor can collect personal property, such as money in the bank, from the person who has custody without going through probate.

All the successor needs to do is present an affidavit showing details of the property, including its fair market value, to the custodian at least ten days after the decedent’s death. Upon receiving the affidavit, the person holding the assets must transfer them to the decedent’s successor.

This procedure only applies to small estates that fall within certain statutory limits. If you are unsure whether your estate would qualify for this exemption, please discuss the issue with your estate planning attorney in Centennial, CO.

Get Help With Your Colorado Wills and Trusts at Duncan Legal, PC

Do you have questions about the various kinds of wills or trusts in Colorado? Or do you need some clarity on the probate vs. Trust administration debate? We can help at Duncan Legal, PC.

Our Colorado estate planning attorneys thoroughly understand the state’s probate law. With our extensive estate planning experience, we can work with you to create a unique estate plan that suits your intentions and circumstances.

Do not hesitate to contact us today if you need a  trust lawyer in Centennial, CO, or if you need to create solid estate planning documents like a living will. Let us help you secure your assets and protect your loved ones.

Flat-fee options are available for wills, trusts and probate:

(303) 394-2358