If you have a small estate a will may be enough. If you have a living trust, you will need a pour-over will.
A will is the document that names your beneficiaries, the ones who will get your assets when you pass away and your executor, the person you want to be in charge of dealing with the court and attorney, paying off your bills, gathering your assets and distributing your assets to your beneficiaries. If you have young children, your will will also name the guardians for your children.
Wills have been a major plotline in many novels, movies and shows because the transfer of wealth and the document that controls it fascinates us. You’ve seen the dramatic setting - family members gathered around a big conference table in a dimly lit law office while the somber old attorney slowly reads the dead father’s will and the looks of anguish, sadness and joy on the family members faces as they learn what their father left them. In the movies a will is often the last effort of a dying man to make a last statement to bring justice or vengeance to his family.
In real life, a will is not so dramatic. In its essence, a will simply directs a chosen person to distribute the estate, whatever it may be, to certain individuals. Most wills instruct the executor to distribute the estate to the surviving spouse, then to the children.
Our country, and each state, has strict procedures to transfer assets at death, and many of the procedures have been carried over from England.. The process may seem stiff, antiquated and unnecessary, but if you think about it, you want this done in an orderly, fair and reliable manner. If the transfer of assets at death could be done with a wink and a nod under the cloak of darkness, it might not go so well.
When someone dies, if the estate value is more than a threshold amount, the estate must go through probate. Small estates usually don’t require probate. In California, the probate threshold is $184,500 (adjusted from $166,250, effective April 1, 2022).
In California, probate is a cumbersome and expensive court process in which a judge makes sure that all creditors have been notified and paid, taxes have been paid, assets have been appraised and accounted for, all heirs and beneficiaries have been notified and given an opportunity to contest the will, and finally, that the assets are distributed to the correct people. The probate process is safe and reliable, but it is not cheap, and a modest estate will take about one year to get through probate.
A will is your written instructions on who will manage the probate process and who will receive your assets. If you die without a will, you die “intestate.” (Intestate is from the Latin word intestatus, which means you were too lazy to plan before you died.)
If you die intestate, your state’s intestacy rules will kick in. The court will appoint an executor, regardless of who you may have wanted, and it will direct the distribution of your assets according to your state’s intestate succession rules, regardless of what you may have wanted.
If you were married with no children: All assets are distributed to your surviving spouse.
If you were not married but had children: All assets are distributed to your children.
If you have more than one child, then assets are shared equally amongst the living children. If a child died before you,, that child’s children will take that child’s share.
If you were married with children: Your community property assets are distributed to your surviving spouse. Your separate property is distributed to the surviving spouse and the children, one-half to each if one child and one-third to the surviving spouse and two-thirds to the children if more than one child.
If you had no spouse or children: All assets go to your kin or heirs based the closest relationship, e.g. first parents, then siblings, then cousins, etc..
If you have no heirs or kin: All assets escheat to the state. Escheat means the state gets your assets.
To make a will, you must be 18 or older and be of sound mind. A standard will is a typewritten document that must be signed by you and two witnesses. The witnesses cannot be family members. A simple will names your executor and a backup executor and states how you want your assets to be distributed.
A will can be handwritten instead of typed. This is called a holographic will. A holographic will does not have to be completely handwritten, but the material provisions must be handwritten by the testator, the person making the will. And it must be signed by the testator. It does not have to be witnessed or even dated. If you intend to make a holographic will, you should hand write the whole document and not insert typed text, and you should sign and date it. This will make it less vulnerable to a court ruling it invalid.
A will can include provisions to create a testamentary trust. A testamentary trust is a trust that is created on death. A testamentary trust might be important if you have young children, and you want to leave their inheritance in a trust for a family member or friend to manage until your children reach a mature age.
We do not recommend wills with testamentary trusts because the estate will have to go through probate. If you want a trust set up upon your death for your children’s inheritance, it is much more efficient and cost effective to use a revocable living trust. We call these “asset protection trusts."
A pour-over will is one of the documents included in a revocable living trust estate plan (along with a durable power of attorney, advance health care directive, HIPAA, certification of trust and trust transfer deed). I tell my clients that the pour-over will is a safety net.
When you create a living trust, you need to transfer your probatable assets to it, so your family can avoid probate. In California, assets that will go through probate include real property (your home) and/or other assets like bank accounts and brokerage accounts worth more than $184,500.
But what if you don’t transfer all your assets to your revocable living trust? Let’s say that when you pass away, you have a $50,000 bank account titled in your name. Who gets it? That’s when the pour over will steps in. Whatever is not in your trust, will be subject to the pour over will. And the pour over will simply instructs your executor to distribute any and all assets not already in your revocable living trust to your revocable living trust.
A will is a necessary part of an estate plan. You need a will if you want a say who gets your assets. And if you have assets that will go through probate, a revocable living trust estate plan, which would include a pour over will, will allow your family to avoid probate and save substantial money, time and hassles when you pass away.
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