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Tying Up the Loose Ends: Why a Pour-Over Will Is Useful

It’s been six years since Michael Jackson died, but his estate planning strategy still offers valuable lessons. I already talked about one lesson, the need to designate the right executor for your estate, in a previous post (“The Attics of Life”). Today, I want to look at a tool called pour-over will: How are these wills defined? Why are they useful?

So back to Michael Jackson. When the King of Pop died, many were curious to know how his assets would be distributed. Disappointment soon followed. The singer’s will, which became a public document at Jackson’s death, consisted of a mere five pages and revealed little valuable information. It listed his children by name, stated clearly that his ex-wife Deborah Rowe was omitted from the will intentionally, named the executors to the estate and included instructions for the guardianship of his children. Regarding finances, it simply devised that the musician’s entire estate should transfer to the Michael Jackson Family Trust. The will was a pour-over will, that served as a supplement to Jackson’s trust-based estate plan. The details of Jackson’s bequest, i.e. which inheritor should receive which portion of the estate, were spelled out in the living trust and thus remained private.

Why would Jackson, or anyone else for that matter, need a pour-over will that does nothing more than transfer property to an already existing trust? Well, the tool helps make things complete. Remember the post a few weeks ago where I talked about funding a trust, “Titles and Schedules”? I wrote about the importance of transferring your property into your trust and how to do it. Obviously, there’s always the chance that you miss something and that an asset does not get transferred before you die. Having a pour-over will guarantees that the property will be distributed according to the provisions in your trust.

As for the proceedings — like all other wills a pour-over will is subject to probate. Any assets that are not already part of a living trust when the trust maker dies have to go through this process, and the trust must be kept going until it is completed. If you have been diligent about funding your trust and the value of your probate estate is less than $150,000 you could qualify for the expedited and cheaper small estate probate process. Otherwise, you’re looking at regular probate. Supplementing your living trust with a pour-over is still a good idea because it helps tie up loose ends.

by Kevin J. Moore