How Pour-Over Wills Can Keep Your Estate Safe from the Risk of Intestacy
A pour-over will is a legal document that directs the transfer of your remaining estate assets to a pre-established trust. Pour-over wills only take effect upon death and are often used to ensure that estate assets are kept safe from probate. In some cases, they can also provide additional funding for a trust.
Read more to learn about the requirements for establishing a trust and writing a pour-over will, or contact Ross & Shoalmire’s experienced team of Texarkana estate planning lawyers today to speak to an attorney and schedule your initial, no-obligation consultation.
An Overview of Pour-Over Wills
Pour-over wills are almost always used in conjunction with a living trust.
A living trust is a special legal arrangement between the trustor, their beneficiaries, and a designated successor trustee. If you establish a living trust, you agree to transfer control of certain assets to the trust. Depending on the type of trust you have formed, this can occur before or after your death. Once the trust is funded, the successor trustee must manage its assets in the interest of the trust charter and its named beneficiaries.
Pour-over wills work by directing the transfer of assets from your estate to your trust. These assets could include:
- Real property
- Motor vehicles
- Cash accounts
- Retirement savings
- Insurance policies
- Any other assets not designated for distribution in your will
- Any other assets not transferred to your revocable living trust
Any assets covered by a pour-over will may still be subject to probate, but they will, at the very least, be spared from intestate succession.
How Pour-Over Wills Help Avoid the Risk of Intestacy
In an intestate succession, your state’s probate code determines how your assets will be distributed. Both Texas and Arkansas have their own rules of intestacy. They differ in detail, but both states will privilege your close living relatives over all other potential heirs. This means that your surviving spouse and living children, if any, will most likely receive an inheritance. However, there is no guarantee that their inheritance will be split fairly or as you intended.
Creating a pour-over will can eliminate the prospect of intestacy, giving you greater control of forgotten or omitted estate assets than you would have had without a pour-over will or similar provision.
Using a Pour-Over Will with a Revocable or Irrevocable Trust
You can use a pour-over will with either of the two main categories of trust.
These two categories include both of the following types of estate planning trusts:
- Revocable trusts. A revocable trust is a trust that is established during your lifetime. So long as you remain alive, you can access, use, and enjoy any assets transferred to the care of the trust. You can also amend the trust’s terms or revoke it outright at any point before death.
- Irrevocable trusts. An irrevocable trust is a trust that is established during your lifetime or, in the case of testamentary trusts, at the time of your death. You cannot typically change the terms of an irrevocable trust after it has been established and funded. However, these trusts provide an enhanced layer of asset and liability protection than revocable trusts.
Small estates often incorporate revocable living trusts, whereas larger estates—especially those at risk for the federal estate and wealth tax—typically create more extensive irrevocable trusts.
You can use a pour-over will with either type of trust, provided that the provisions of both your pour-over will and your trust comply with applicable Texas or Arkansas state law.
How to Create and Execute a Pour-Over Will in Texas and Arkansas
Pour-over wills are not very complex, but they can take time to configure properly.
For your pour-over will to be found valid during probate, you will need to:
1. Establish a Trust
Establishing a trust is a prerequisite to writing and executing a pour-over will.
Deciding what type of trust to establish is mainly dependent on your goals. Some of the most common types of trusts allowed under Texas and Arkansas law include, but are not limited to, the following:
- Revocable living trusts
- Education trusts
- Charitable trusts
- Special needs trusts
- Medicaid asset protection trusts
Every type of trust has its own requirements, and they may not all work in conjunction with a pour-over will. Before making a decision, schedule a consultation with a Texarkana estate planning lawyer.
2. Name Your Trustee as a Beneficiary in Your Pour-Over Will
If you set up a trust, you’ll need to think about who you’d like to name as a trustee.
Your trustee is the person or party responsible for managing your trust assets. If you have a revocable living trust, you may be able to act as a trustee for the duration of your lifetime. However, once you pass away, trust administration will become the task of whoever you have named as a successor trustee.
Since trusts are not legal entities in the same sense as small businesses and limited liability companies, they cannot usually hold property in their own name. Instead, your assets must be transferred to the trustee, who has a fiduciary duty to manage them on behalf of your beneficiaries.
Doing this safely requires including very specific language in your pour-over will.
3. Designate an Executor for Your Estate
Pour-over wills transfer assets to your trust, but any assets governed by a pour-over will must first pass through probate. To ensure your estate is probated with minimal delay, you should name an executor in your last will and testament.
Your executor can be a friend, a family member, or an experienced estate planning lawyer. They will be responsible for initiating probate, providing a copy of your will to the probate court, and managing estate assets until they can be transferred to your trust.
4. Review Your Sources of Trust Funding
A trust is only legally recognized if it has been properly funded.
Although different types of trusts are subject to different rules and restrictions, most common types of trusts used in estate planning can receive, manage, and redistribute various assets. These could include:
- Your home
- A second home or vacation home
- Commercial real properties
- Cash reserves and stock portfolios
- Interest-bearing accounts
- Artwork
- Firearms
Your trust’s assets are its funding. They ensure the trust’s solvency, provide a pre-specified source of administrative income for the trustee, and are the basis of your beneficiaries’ inheritances.
5. Consult a Texarkana Estate Planning Lawyer
Pour-over wills only work when they’re structured correctly: in accordance with state law and alongside an established, funded trust.
Ross & Shoalmire’s experienced team of estate planning lawyers has spent years helping families in and around Texarkana protect their legacies. We could help you:
- Establish a revocable living trust
- Structure and condition inheritances for your beneficiaries
- Write a valid and enforceable pour-over will for any assets you omitted from your trust
- Explore and discuss strategies to keep your entire estate out of probate
- Determine whether your estate plan could be strengthened by naming a health care proxy, executing powers of attorneys, designating guardians for your children, or keeping assets safe from creditors
You don’t have to take chances with your estate or legacy.
