Estate Planning in North Carolina: What is a ‘Pour-Over’ Will?

Everyone should have a will in place. It is the most fundamental and foundational estate planning document. You can use it to accomplish a number of different tasks, including for distributing money, property, and other assets to your selected heirs. Under North Carolina law (NC General Statutes § 31-1), “any person of sound mind, and 18 years of age or over, may make a will.” You can revise your will as many times as you want.

As important as it is to have a well-drafted will, it is not always the most effective and efficient strategy that a person can use to transfer assets. Many people and families can benefit from setting up a trust. In this context, a trust grantor may benefit from an estate planning strategy called a “pour-over will.” Here, our Charlotte estate planning lawyers explain the most important things that you should know about pour-over wills in North Carolina.

To understand pour-over wills and how they work in North Carolina, you first need to understand living trusts. Simply defined, a living trust is a legal document that allows a trustee to hold the ownership of a certain asset or property for the eventual benefit of the trust grantor’s heirs. In general, living trusts in North Carolina are revocable—meaning the person who creates the trust can maintain full control over it during the course of their life. The primary benefits of a living trust is that you can use it to pass down assets/property outside of the probate process.

To be valid, a living trust must be “funded.” As a general rule, it is not sufficient to create and sign a trust document. You also need to take action to ensure that the property in question is actually held by the trust. Failure to fund a living trust could prevent it from functioning. How exactly this works depends on the specific nature of the property in question.

In some cases, you may have to take action to “re-title” property. This is usually the best approach with assets that have a title, such as a bank account, real estate, or motor vehicles. With non-titled assets—art, jewelry, antiques, etc—it is best practice to sign a document that clearly transfers ownership rights to the trust.

As cost effective and efficient as living trusts can be, they also tend to take a little more work on the front-end. Many people use living trusts to avoid probate, but they do not want to be stuck in a position where they are forced to update their trust documents every single time they gain a new asset that has value. A pour-over will is designed to solve this problem. Pour-over will exist mainly to help people avoid probate.

Although every will can have unique language, a pour-over will typically states something to the effect that all remaining personal assets that you own that would be otherwise subject to the probate process should automatically be transferred to the ownership of your revocable living trust. In other words, a pour-over will is a type of back-up plan. You can “pour it over” the rest of your estate plan to help ensure that any property/assets that you might have missed or not considered will also be assigned to your trust.

In practice, setting up a pour-over will can be complicated. It only makes sense to use one as a back-up tool if you have a comprehensive, well-designed estate plan in place. If you are considering using a pour-over will as a strategy to ensure that you limit your exposure to the probate process, an experienced North Carolina estate planning attorney can help.

At Arnold & Smith, PLLC, our top-rated North Carolina estate planning lawyers possess the passion, professional skills, and real life experience on which you can rely. Everyone deserves personal guidance and support from their estate planning professional. If you have any questions or concerns over pour-over wills, we are available to help. Contact us today at 704.370.2828 to arrange your fully confidential initial case evaluation. We represent people and families throughout the area, including in Mecklenburg County, Stanly County, Iredell County, Cabarrus County, and Union County.