Pour over clauses are provisions in a will that specifies that any assets not specifically mentioned in the will are to be put ( “poured over”) into a trust upon the testator’s death. These pour over clauses ensure that any surplus assets are managed and distributed according to the terms of the trust. It also provides a seamless transition of the estate’s assets into the trust.
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A pour over clause simplifies estate management. By automatically transferring all assets not explicitly mentioned in the will to a trust, it helps in streamlining the estate settlement process.
It also offers greater flexibility and control over how and when assets are distributed. With a pour over clause, you can ensure that your estate plan reflects these preferences, even for assets not originally placed in the trust.
Unlike wills, which become public record upon probate, pour over wills are private documents. The pour over clause helps maintain privacy regarding the distribution and management of your assets.
Assets transferred through the pour over clause may bypass the lengthy and public probate process. It is because they become part of the trust, which is not subject to probate.
A multi-million dollar BC estate was the subject of recent Vancouver estate litigation. The Court in Waslenchuk Estate, 2020 BCSC 1929 was asked to examine the interrelationship between a Will and a Trust. The deceased’s Will contained a clause that “poured” the residue of her estate into a Trust, which could be amended or revoked at any time prior to her death. Is the distribution of an estate’s residue to an amendable, revocable inter vivos trust valid in BC? As a result of the outcome in Waslenchuk Estate and the BC Court of Appeal’s decision in Quinn Estate (Re), the definitive answer is no. Here is why.
Lorraine Waslenchuk died in Vancouver in 2016. Her husband, Dennis Waslenchuk, died a year earlier. The Waslenchuks, who did not have children, lived in the United States from 1975 until 2014 when they moved to Vancouver. While living in Connecticut, the Waslenchuks executed their wills, prepared by a US lawyer.
Mr. and Mrs. Waslenchuk executed their wills on November 27, 2013. At the same time their wills were prepared, the Waslenchuks settled separate revocable and amendable inter vivos trusts (also called “living trusts” in Connecticut). The Waslenchuks’ trusts were intended to provide a vehicle to manage their assets in the event they became incapacitated, to provide for the ultimate distribution of their assets upon their death, and to minimize the impact of probate.
A pour over clause is a dispositive provision in a Will directing that all or part of an estate be added to an existing trust, the terms of which are not reiterated in the Will itself. Article II.C of Mrs. Waslenchuk’s Will stipulated that the residue of her estate was to be distributed to the trustee of the Trust and then disposed of in accordance with the terms of the Trust.
The Trust specifically stipulated that it is an amendable, inter vivos trust. A few years after Mrs. Waslenchuk’s death, the BC Court of Appeal in Quinn Estate (Re), 2019 BCCA 91 concluded that a will purporting to pour its residue over to an amendable trust is invalid in BC. Was the combined effect of the Trust document and Article II.C of Mrs. Waslenchuk’s Will a “pour over” clause” and thus invalid?
Janet Letourneau was the executor of Mrs. Waslenshuck’s Will. Ms. Letourneau was also Mrs. Waslenchuk’s only surviving sibling. Ms. Letourneau applied to the court for direction in her capacity as executor of her sister’s estate, taking no position on the question of whether Article II.C was an invalid pour over clause. As a potential beneficiary, however, Ms. Letourneau, retained separate legal counsel and took the position that Article II.C was a “pour over” clause.
If Ms. Letourneau’s position that Article II.C was invalid, then the distribution of the residue of Mrs. Waslenchuk’s multi-million-dollar would be by way of intestacy, wholly to Ms. Letourneau, pursuant to the Wills, Estates and Succession Act, S.B.C. 2009. If Ms. Letourneau’s position as a potential estate beneficiary was not correct, then the residue would be distributed in accordance with the provisions of the Trust: one-third to Ms. Letourneau; one-third to the estate of Mrs. Waslenchuk’s brother’s estate; and the remaining third to two charities.
Mr. Justice Walker concluded that Article II.C of the Will was a pour over clause. The facts of the Waslenchuk matter fell squarely within the analysis and holdings in the Quinn Vancouver estate litigation. The impugned clause in Mrs. Waslenchuk’s Will reflected Mrs. Waslenchuk’s clear intention to pour the residue of her estate into the Trust, which could be amended or revoked at any time prior to her death. Article II.C was an invalid pour over clause, it was of no effect and distribution of the residue of Mrs. Waslenchuk’s estate passed on an intestacy to Ms. Letourneau as sole beneficiary.
A Will is meant to reflect the fixed and final intentions for the disposition of a person’s estate upon death. BC’s Wills, Estate and Succession Act (WESA) requires particular formalities for the proper execution of a Will to ensure certainty as to the deceased’s final wishes and to avoid controversy (and possible estate litigation). Having two witnesses present at the time of a will-maker’s execution of his or her Will or codicil serves to protect against fraud or undue influence, or the perception of such, thereby helping to ensure certainty of the will-maker’s final wishes. A will-maker can change his or her intentions by revoking a Will and executing a new one, or by executing a codicil to the existing Will, so long as the requirements in WESA are met.
A pour over clause in a Will to an amendable or revocable inter vivos trust creates the potential for mischief as it allows a person to reserve the right to make a future unattested codicil to the Will. Put bluntly, a person could one day execute his or her Will, fully observing the execution strictures of WESA, leaving the residue of his or her estate to a revocable, amendable, inter vivos trust, which he or she could then revoke or amend the following day without regard to any execution strictures.
A pour over clause to an amendable or revocable trust is not valid in BC since it purports to reserve, onto the will-maker, the right to make a testamentary disposition in the future without complying with the formalities of WESA. The curative provisions in s. 58 of WESA can be used to “save” a Will that does not meet the formal requirements of WESA. However, section 58 of WESA cannot be used to save a pour over clause in a Will as such clauses are substantively invalid.
To effectively implement a pour over clause, you need to set up a trust. This trust should sign with your estate planning goals.
Then, have your attorney draft a will that includes a pour over clause directing assets into your trust. Keep in mind that you have to regularly review and update your will to reflect changes in your life circumstances and assets.
By incorporating a pour over clause in your estate planning, you’re taking a significant step towards achieving peace of mind. It helps you know that your assets will be managed and distributed according to your intentions, providing security and clarity for your loved ones.
Reach out to us now and allow Onyx Law Group help with drafting your pour over clause. We take the stress off you and give you an unforgettable experience!
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