How to Use a California Pour-Over Will

Wills and trusts are the two basic legal instruments people use to pass their property and assets after they die to their loved ones. Today, many Californians favor using trusts instead of wills to ensure that desired transfer. One main reason is that trusts are designed to avoid probate, and wills are not.

But while trusts are powerful estate planning tools, there are times when it is impractical or even impossible to name all of your assets and place them in trust. If you are a Californian with a trust but no will, what happens to all those assets not explicitly put in trust? 

One solution is to have a California pour-over will. This ensures that any property not placed in trust will be given to your loved ones according to your wishes. This type of will is commonly used as a protection and a fail-safe when using trusts.

What Is a Pour-Over Will?

Suppose your estate plan is based around a living trust. In that case, you are probably familiar with the benefits that this type of trust provides over a standard will. Avoiding probate, reducing attorney's fees, and providing privacy for you and your loved ones are the primary benefits of using a living trust. 

Ideally, you transfer all your accounts and property into the living trust during your lifetime. Ownership of the assets is transferred from you as an individual to you as the trustee. Since a living trust is revocable by you, California law allows you to be the grantor, the trustee, and a beneficiary. You might also name the trust as the beneficiary of your life insurance, retirement accounts, and other assets. 

The trust is a legal entity separate from both your estate and you as an individual. 

Most people name themselves as the trustee and beneficiary of their living trust. They continue to use and enjoy the accounts and property, even though the legal ownership now resides with the trust.

 But if you do not transfer those accounts and property into the trust, they remain owned by you as an individual and are part of your estate. Without a will, your property will be distributed according to state law when you pass away. The result might significantly differ from how you want them to be distributed.

Your California pour-over will can prevent this from happening. The pour-over will names your living trust as the beneficiary. This allows any money or property you own individually to be transferred or "poured over" into your living trust upon your death. When used together with a living trust, a pour-over will acts as a safety net to capture any property that you forgot—or did not have time—to place in the trust.

How Does a Pour-Over Will Work?

There are four parties involved in a pour-over will and the related trust:

  • The testator is the person who creates the will.
  • The beneficiary is the person or entity who receives the property owned solely by the testator at their death.
  • The executor or personal representative is the person who carries out the testator's wishes as stated in their will.
  • The trustee is the person who controls trust accounts and property.

You, the testator, name a beneficiary when you create a pour-over will. That beneficiary receives any property you own in your name at your death. This person can also be the trustee of your living trust. They may also serve in the triple roles of the beneficiary under your will, the trustee of your trust, and the executor.

However, suppose you want the beneficiary and the trustee to be the same person. In that case, your pour-over should be drafted with care and caution. This is the time when a qualified California trust and estate attorney can help you avoid future legal issues.

For example, the simple mistake of referring to the trustee by name and not "as trustee" might result in property passing to them personally instead of to the trust.

You will also name an executor of your pour-over will. The executor is legally responsible for ensuring that property ends up being owned by the trust according to the instructions in the will.

Your will directs the executor to legally transfers your accounts and property into the trust at your death. The trustee then controls the distribution of the property from the trust.

You can choose to have one person be both the executor and the trustee. Or you can name separate people, so one person does not control the entire asset transfer process.

Can You Avoid California Probate with a Pour-Over?

Probate is the court-supervised proceeding that oversees the transfer of your accounts and property to beneficiaries.

In California, only accounts and property owned solely in your name at your death are subject to probate. Trust accounts and property are not. Your pour-over will directs your property outside your trust to be transferred into your trust at your death.

But, at the time of your death, that "left-over" property is not in the trust and may be subject to probate.

However, suppose you have transferred most of your assets to your trust. Your "left-over" property outside the trust may fall below the California probate threshold and not be subject to California probate at all.

While the threshold amount changes, if your estate is worth $166,250 or less in 2022, you can avoid a California probate. But if your estate is worth more than that amount, your estate will most likely go through probate.  

One of the primary reasons to meet regularly with your California estate and trust attorney is to keep your estate below the California probate threshold.

Your Next Best Steps

Strategically using trusts and a pour-over will is a powerful estate planning tool. Used correctly, you can avoid probate and still ensure your assets are distributed in the future according to your wishes.

Let us show you how to use trusts and a pour-over will to protect your family. Although California trusts and estate law may be complicated, this is all we do. San Diego Legacy Law, PC is a qualified estate planning attorney firm in San Diego, California. We are familiar with all federal and California estate and trust laws. We know how to best help you achieve your estate planning goals, especially how to use trusts and wills to ensure your wishes.

Call today for a free consultation and learn your next best steps.

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