What is A Pour-Over Will?
California law provides for the disposition of a person's property by will. In addition, existing law establishes simplified procedures for addressing a decedent's estate valued under $150,000, including authorizing the successor of the decedent to collect property due to the decedent without letters of administration or awaiting probate of a will.
California law also provides for a devise of property by will to the trustee of a trust established by the testator, commonly referred to as a pour-over will. A pour-over will is like any other will, except that it has only one primary beneficiary, the testator's trust. Without a pour-over will, any property acquired after you set up your trust that inadvertently is listed in your name rather than in the name of your trust would normally pass to your heirs as determined under State law, who may or may not be the same people that you name in your trust to receive your assets at your death.
The pour-over will ensures that any such assets will be added to your trust so that they will be ultimately distributed to the beneficiaries you name in your trust. However, the pour-over will controls only probate assets, (assets not titled in a trust, in joint tenancy, not being inherited by a surviving spouse, and not in an IRA or 401K with named beneficiary). Probate assets can also be found where the decedent failed to name an IRA or 401K beneficiary. It is called a pour-over will because it "pours" assets into the trust and applies to assets that are usually titled in the name of the decedent only. It is a back-up for any property that might not have been properly transferred to the trust during the settlor's lifetime. Why should there be a transfer of assets under a pour-over will when there is already a trust in place? This can happen because of negligence, mistake, or procrastination. Sometimes a lack of understanding about how a trust works contributes to this problem.
Confusion might also be a factor, particularly when real property is refinanced. The lender often requires that the property be taken out of the trust when it is refinanced, but the settlor does not put it back into the trust after the refinance is completed and it is likely the lender will not encourage the owner of the property to transfer it back to the trust after the refinancing. An exception to formal probate administration was established by a 1993 California case, Estate of Heggstad and a recent Court of Appeal, Fourth Appellate District case Ukkestad v. RBS Asset Finance, filed March 16, 2015, both of which provide an exception to formal probate administration in certain circumstances.
For example, if the trust includes a list of assets and language that constitutes a conveyance, or if the settlor signs an agreement stating they are assigning all their assets to their trust, a petition can be filed with the court asking that all of the assets be declared to be trust assets. This petition procedure avoids a full probate of the assets that were not transferred to the trust by changing their titles. If the facts of a case do not give rise to an affidavit procedure or a Heggstad and/or a Ukkestad petition, it is likely that a pour-over will must be probated.
California Senate Bill SB 155 authored in 2015 that would have established simplified procedures for the distribution of property, real or personal property of any amount or value, devised by a will to the trustee or trustees of a recipient trust without procuring letters of administration. The Bill would have authorized a trustee to file a verified petition setting forth specified facts in the superior court of the county in which the estate of the decedent would be administered, and would have authorized the court to issue an order that a particular item or items of property pass without administration and transferred to the trustee of the recipient trust.
This Bill would have required attorneys' fees for services performed in connection with these provisions to be determined by a private agreement between the attorney and the client, and would have specified that attorneys' fees would not subject to court approval. However, SB 155 did not pass, and to date, no new legislation addressing these issue has been drafted.
Afsar Estate Planning provides a Pour-Over Will for each Clients' Estate Plan