Want to know how to make an estate planner cringe?

Tell them, “I don’t need to fund my trust, I have a pour over will.”

If you have a revocable living trust as part of your estate plan, you probably also have a pour over will. We explain to our clients that the pour over will is supposed to be used as a “safety net” in case something gets missed in the trust funding process. It is not  supposed to be use as a substitute for funding your trust!

Here’s an example to further illustrate the point. Let’s say that client Alice has a trust, but she forgets to retitle one of her bank accounts into the trust’s name when she does her trust funding. When Alice dies, if the bank account is owned in her individual name alone, with no beneficiary or joint owner listed, then that bank account will have to be handled through probate court as part of Alice’s probate estate. Luckily, Alice’s pour over will lists her trust as the beneficiary of her probate estate. Most people thing this solves the problem, and probate is still avoided–but not so fast!  While the pour over will ensures that Alice’s probate estate ultimately ends up in the trust and can be distributed as Alice intended, he family will still have to navigate the probate process in order to make that happen. A pour over will doesn’t avoid probate–it just dumps the probate estate into a trust at the end of the process.

One of the biggest benefits of  a trust is avoiding probate if your assets are coordinated properly with the trust. Relying on your pour over will to ensure that your assets will eventually make it to the trust completely negates this benefit!  While it is a common misconception that a pour over will avoids probate, the opposite is true—the pour over will is only ever used in probate court.

Relying on a pour over will to fund your trust can result in a lot of unnecessary fees and time spent in probate court. All of this cost and headache could be avoided by taking the steps to complete your trust funding during life.