ARE “POUR-OVER WILLS” SUBJECT TO FORMAL PROBATE ADMINISTRATION?

William Sweeney

Existing 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.

Existing law also provides for a devise of property by will to the trustee or trustees of a trust established or to be established by the testator or by the testator and some other person, commonly referred to as a pourover will. A pourover will is like any other will, except that it has only one primary beneficiary, which is the testator's living trust.

For example, without a pourover will, any property acquired after you set up your living 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 pourover 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 pourover will controls only probate assets, i.e., assets that are not titled in a trust, not in joint tenancy, not being inherited by a surviving spouse, and not in an IRA or 401K with named beneficiary(ies). However, probate assets can also be found in situations in which a mistake has been made, such as failing to name beneficiaries for an IRA or 401K.

Why is it called a pourover will? Because it "pours" assets into the trust and applies to assets that are usually titled in the name of the decedent only. The pourover will is a back-up for any property that might not have been properly transferred to the Living Trust during the settlor's/trustor’s lifetime.

Why should there be a transfer of assets under a pourover will when there is a living trust? There are several ways that this can happen, such as negligence, mistake, and procrastination. Sometimes 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 lender probably will not encourage the owner of the property to transfer it back to the trust after the refinancing.

The pourover will transfers assets to the trust to ensure that these assets will be subject to the distribution plan in the trust and will also receive the benefit of trust's tax reduction provisions. With limited exception, existing law provides that the decedent's property, including property devised by a pourover will, is generally subject to formal probate administration.

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(s)/trustor(s) signs an agreement stating that they are assigning all of 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.

Assuming the facts of a case do not give rise to an affidavit procedure or a Heggstad and/or Ukkestad petition it is presently likely that a pourover will must be probated. There is a current bill in the California Senate (SB 155) that would establish 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. Senate Bill 155 was introduced by Senator Hertzberg, February 2, 2015.

Senate Bill 155 would authorize the trustee or trustees of a recipient trust to file a verified petition setting forth specified facts in the superior court of the county in which the estate of the decedent may be administered, and would authorize the court to issue an order that a particular item or items of property pass without administration and are transferred to the petitioner as trustee or trustees of the recipient trust. The bill would require 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 specify that attorneys' fees are not subject to approval by the court. As of October, 2015, Senate Bill 155 is pending in the legislature. At this time, the status of the bill is unknown.

What happens if property subject to probate is not in a trust at the death of the trustor or successor trustor depends on the facts of each case. If probate is necessary or not that is where I can be of help. I make a difficult and bewildering probate process as simple as possible. If you are not sure what to do please contact me. If you wish to gain more information on California probate, Heggstad Petitions, or whether your pourover will must be probated, please contact me for a free consultation. I will spend time with you to answer your questions. From my office in Southern California, I represent families in all Southern California counties, including Imperial County, Los Angeles County, Orange County, San Bernardino County, San Diego County, others spread across the state and interested parties outside California.

To schedule a consultation, call me toll free at 800-575-9610 or locally at 760-989-4820. I enjoy meeting in person whenever possible, but am also available via Skype and email or through my online contact form.