A pour-over will is created to catch any assets or property that had been left out of

a living trust, either intentionally or inadvertently. A living (or inter vivos)

trust is a legal instrument in which the grantorthe one who owns the propertytransfer
s control of property to a trustee to manage for one or more beneficiaries durin
g the grantors lifetime. Sometimes, for convenience, people intentionally omit putt
ing certain assets, such as a car or real estate, into a trust. Upon the testato
rs (grantors) death, the pour-over will must go through probate, and any property not
left to specific beneficiaries will spill over into the trust for the benefit of
the trusts named beneficiaries.
Unlike a testamentary trust will, which creates a trust upon the death of the te
stator subsequent to probate, a pour-over will does not create a trust. The trus
t associated with it is a living trust, which the testator created either at the
same time he wrote his will, or at some time prior to writing the will. The pou
r-over will and the living trust are connected. However, the living trust itself
is a valid document and can exist without the pour-over will while the pour-ove
r will must be linked to a trust in order to have a destination for the left-ove
r assets and property.
This example illustrates the difference. Suppose you own a house, two cars, some
jewelry, and $250,000 cash in bank accounts. You set up a living trust (set up
during your lifetime) for the benefit of your children, and you transfer your ba
nk accounts into the trust to be managed by your appointed trustee, possibly you
rself. Your estate attorney helps you write a pour-over will, and in your will,
you leave your house and cars to your children, but forget to mention the jewelr
y. After you die and your will goes through probate, because of the pour-over pr
ovision in your will, your jewelry will go into the living trust, one of the ben
eficiaries of the will, which, in turn, benefits your children.
If, instead of setting up a trust during your lifetime, you make a testamentary
trust will, after your death and after probate, a trust will be set up and the s
pecific assets you indicated in your will shall go into the trust for the benefi
t of your trust beneficiaries. This trust does not exist until you die.
>>>>>
Trusts
Trusts are estate-planning tools that can replace or supplement wills, as well a
s help manage property during life. A trust manages the distribution of a person
's property by transferring its benefits and obligations to different people. Th
ere are many reasons to create a trust, making this property distribution techni
que a popular choice for many people when creating an estate plan.
Creation of a Trust
The basics of trust creation are fairly simple. To create a trust, the property
owner (called the "trustor," "grantor," or "settlor") transfers legal ownership
to a person or institution (called the "trustee") to manage that property for th
e benefit of another person (called the "beneficiary"). The trustee often receiv
es compensation for his or her management role. Trusts create a "fiduciary" rela
tionship running from the trustee to the beneficiary, meaning that the trustee m
ust act solely in the best interests of the beneficiary when dealing with the tr
ust property. If a trustee does not live up to this duty, then the trustee is le
gally accountable to the beneficiary for any damage to his or her interests. The
grantor may act as the trustee himself or herself, and retain ownership instead
of transferring the property, but he or she still must act in a fiduciary capac
ity. A grantor may also name himself or herself as one of the beneficiaries of t
he trust. In any trust arrangement, however, the trust cannot become effective u
ntil the grantor transfers the property to the trustee.
Example: A grantor transfers money to a bank as trustee for the grantor's childr
en, with the bank instructed to pay the children's college expenses as needed; t
he bank carefully manages the money to ensure there are funds available for this
purpose. The children do not have control of the funds and cannot use the funds
for any other purposes.
Testamentary and Living Trusts
Trusts fall into two broad categories, "testamentary trusts" and "living trusts.
" A testamentary trust transfers property into the trust only after the death of
the grantor. Because a trust allows the grantor to specify conditions for recei
pt of benefits, as well as to spread payment of benefits over a period of time i
nstead of making a single gift, many people prefer to include a trust in their w
ills to reinforce their preferences and goals after death. The testamentary trus
t is not automatically created at death but is commonly specified in a will and
so as a will provision, the trust property must go through probate prior to comm
encement of the trust.
Example: A parent specifies in her will that upon her death her assets should be
transferred to a trustee. The trustee manages the assets for the benefit of her
children until they reach an age when the parent believes they will be ready to
control the assets on their own.
A living trust, also sometimes called an "inter vivos" trust, starts during the
life of the grantor, but may be designed to continue after his or her death. Thi
s type of trust may help avoid probate if all assets subject to probate are tran
sferred into the trust prior to death. A living trust may be "revocable" or "irr
evocable." The grantor of a revocable living trust can change or revoke the term
s of the trust any time after the trust commences. The grantor of an irrevocable
trust, on the other hand, permanently relinquishes the right to make changes af
ter the trust is created. A revocable trust typically acts as a supplement to a
will, or as a way to name a person to manage the grantor's affairs should he or
she become incapacitated. Even a revocable living trust usually specifies that i
t is irrevocable at the death of the grantor.
Transferring Assets
Irrevocable trusts transfer assets before death and thus avoid probate. However,
revocable trusts are more popular as a means of avoiding the probate process. I
f a person transfers all of his assets to a revocable trust, he owns no assets a
t his death. Therefore, his assets do not have to be transferred through the pro
bate process. Even though the grantor of the trust died, the trust did not die,
so the trust assets do not have to be probated. However, trusts avoid probate on
ly if all or most of the deceased person's assets had been transferred to the tr
ust while the person was alive. To allow for the possibility that some assets we
re not transferred, most revocable living trusts are accompanied by a "pour-over
" will, which specifies that at death, all assets not owned by the trustee shoul
d be transferred to the trustee of the trust.
Example: Mark sets up a revocable trust, which states that on his death, his ass
ets should be distributed to his children in equal shares. Mark transfers his ho
use to the trust, but does not transfer some rental real estate he owns. At Mark
's death, the trust can distribute the house outside of the probate process, but
the rental real estate will have to be probated. Based on the will, the probate
court will order the rental real estate be transferred to the trustee, who will
then distribute it according to the terms of the trust.
Successor Trustees
Although a grantor may name himself as trustee of a living trust during his life
time, he should name a successor trustee to act when he is disabled or deceased.
At the grantor's death, the successor trustee must distribute the assets of the
trust in accordance with the directions in the trust document. In many states,
certain people must be notified at the death of the grantor.
Getting Help With a Trust
Trusts have important tax, governmental assistance, probate, and personal ramifi
cations, so an experienced estate planning attorney should be consulted at all s
tages of the process -- from preliminary discussions to execution of trust docum
ents. Go here to find a knowledgeable estate planning attorney near you.