Can a Deceased Person's Estate Give Property Under a Trust?

By John Cromwell

Normally, trusts are used to keep property out of an estate. Having property included in probate delays its distribution to the heirs and beneficiaries of a decedent. Placing property in trust prior to a person’s death keeps it out of this probate process. However, a person may decide to have property placed in a trust after his death for other reasons. In such a case, a deceased person’s estate may give property under a trust.

Normally, trusts are used to keep property out of an estate. Having property included in probate delays its distribution to the heirs and beneficiaries of a decedent. Placing property in trust prior to a person’s death keeps it out of this probate process. However, a person may decide to have property placed in a trust after his death for other reasons. In such a case, a deceased person’s estate may give property under a trust.

Why Create a Trust?

A trust is a legal device used to transfer property to a person or group of individuals. These people are known as beneficiaries and intended to benefit from the property. However, the property is held by a trustee who manages and distributes the property to the beneficiaries. This is done in an attempt to prevent beneficiaries from wasting trust assets or making poor investments. An example of a situation where a person may want to leave property to a person subject to a trust is if the recipient is a child.

Protect your loved ones. Start My Estate Plan

Testamentary Trust

If you want to leave someone property subject to a trust, you need to do so through a will. This type of bequest is known as a testamentary trust. Generally, the will transfers all of the estate to the trustee. The will establishes the beneficiaries of the trust and its terms. As long as the person who is setting up the testamentary trust is alive, he can change trustees, beneficiaries and the trust’s terms at any time.

Pour Over Will

In some cases, a person may create a trust prior to his death and place some of his property in it, while keeping the rest for himself. When that person dies, he may then want his property placed in the trust he already created. A pour-over will transfers all property the decedent owned not already bequeathed into the pre-existing trust. If for some reason the original trust is determined to be invalid, a pour-over will can provide that all of the property is to be distributed to the trust beneficiaries based on the trust terms. By doing this, the purpose of the trust can be fulfilled using the valid will.

No Contest Clause

Some beneficiaries of the will and trust may argue that they should get the property outright. A no-contest clause is a means to deter beneficiaries from disputing the will and resulting trust. If a beneficiary challenges a will or trust that has this clause, he loses all rights and benefits to the property.

Protect your loved ones. Start My Estate Plan
What Are the Benefits of Placing Property in Family Trusts?

References

Related articles

Does a Will Supersede a Trust?

A will and a trust are separate legal documents that commonly work together under a unified estate plan. While the will and trust ideally work together, because they are separate documents, they sometimes conflict with one another, either intentionally or accidentally. Whether a will supersedes a conflicting trust generally depends on the type of trust involved and timing of respective transfers under the will and trust. A living trust generally supersedes a will, but a will generally supersedes a testamentary trust.

Can an Heir Sell Property When the Title Is in a Revocable Living Trust?

Revocable living trust property generally cannot be sold outright by a beneficiary; the property must be first transferred to the beneficiary and placed in his name. However, if under the terms of the trust, the beneficiary has the right to claim trust assets for personal use, this is a simple issue of transfer. The key issue is the trust's restrictions on distributions. The trust creator's intent, whether there are multiple beneficiaries or the existence of a spendthrift clause can limit a beneficiary's ability to sell trust assets. Trust law varies by state so consider consulting an attorney if you wish to sell trust property.

Administration of a Testamentary Trust in Arizona

Like wills, trusts are often an important part of the estate planning process. Testamentary trusts, in particular, are a great tool for Arizona residents who want to leave property to another person but maintain control, even after death, over how and when those assets are used. Since a testamentary trust is included in your will and takes effect when you die, the trust is monitored by an Arizona probate court to ensure the terms of the trust are carried out according to your wishes.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Is a Living Trust Liable or Subject to Probate?

A living trust holds assets that are managed by a trustee for intended beneficiaries. Also called a revocable trust, it ...

The Difference Between a Grantor & a Beneficiary

Grantor is the legal term for a person who creates a trust, and beneficiaries are people named by the grantor to ...

Compare Trusts & Last Wills

Although both trusts and wills are used to convey property to beneficiaries, they are two entirely different means of ...

Taxes & the Advantages of Living Trusts

A living trust is a document that a person creates while he is still alive, which enables him to financially provide ...

Browse by category
Ready to Begin? GET STARTED