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.

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.

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.

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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.

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Is a Living Trust Liable or Subject to Probate?

References

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Do It Yourself Last Wills & Trusts

Last wills and trusts are two ways to distribute your property after you die. A will and a trust may be used together or separately. Even if you set up your own will or trust, you may wish to consult an attorney to ensure your will or trust meets your state's laws and that you have not overlooked anything.

How Much Money Do You Need to Start a Living Trust?

A living trust is used for estate planning and acts as a holding area for property. The person who creates the trust can retain control over his property in a revocable living trust. A trust can be created for many purposes, including caring for a child or elderly person or avoiding probate, which can be a lengthy process. The terms of the trust dictate when the trust beneficiaries receive the property in the trust. A living trust can be revocable, which means it can be amended or terminated by the person who created the trust, or irrevocable, which means it can be amended or terminated under limited circumstances, if at all. A grantor -- the person who creates a trust -- gives up all control over property in an irrevocable trust, whereas the grantor retains control over property in a revocable trust.

A Living Trust Explained

A living trust is a legal device that establishes how your property is to be transferred upon death, but goes into effect during your lifetime. The grantor, who puts his property into the trust, assigns a trustee to administer the trust on behalf of a beneficiary. There are several types of living trusts. In comparison, a testamentary trust is created by the terms of a will and does not go into effect until death. Living trusts avoid probate but testamentary trusts do not.

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