How Does an Advancement Work for Wills & Trusts?

How Does an Advancement Work for Wills & Trusts?
••• signing a contract image by William Berry from

The legal term "advancement" doesn't come into play with wills or trusts, only inheritances. An individual who expects to inherit property from someone when that person dies may request an advance of a portion of that inheritance from the individual before their death. But the estate administrator will take that advance into account after death. Those with specific questions about advancement on an inheritance should consult an estate lawyer.

What Is an Inheritance?

An inheritance occurs when an individual dies and bequeaths some or all of their property to others, explains Trust & A person dies intestate if they don't leave a will or any other kind of estate provisions, such as a trust. The law automatically distributes the intestate property to the individual's appropriate relations based on each state's statutes in this case. For example, a spouse and minor children usually receive assets before a sibling or parent if there's no will or estate plan.

Each state has its own inheritance laws and its own statutory order in which relatives stand in line to inherit property. If the deceased left a valid will, trust, or other document, intestate inheritance only occurs if any property remains that was not distributed by those means.

What Does Advancement Mean?

A person has no actual heirs until after his death. Before he dies, all individuals who may stand to inherit after his death are prospective or potential heirs. Such potential heirs can ask the individual for an advancement on their expected inheritances, but the individual has no legal obligation to give them such an advancement because one only becomes an heir with a legal claim on the assets after the individual's death.

Most states only consider a lifetime gift to be an advancement on an inheritance if an individual makes that gift to a lineal descendant (children and their descendants), not to an ancestor (parents or grandparents).

Presumption of Advancement

In absence of contrary evidence, common law presumed that a lifetime gift to relatives constituted an advancement on an inheritance, but various laws have evolved in U.S. states. Some states don't presume that a lifetime gift is an advancement. Other states follow the Uniform Probate Code and demand a statement in writing or some other type of written proof from the heir or the decedent indicating that a gift was intended as an advancement.

Equal Distribution of Assets

Common law assumes that an equal distribution of an inheritance should include all property, including that given by advancement. The law allows an estate executor or administrator to consider an advancement as part of the recipient's inheritance after death when a gift is proven to be an advancement on inheritance.

When the administrator considers the full amount of property to be inherited equally by multiple heirs (this amount is known legally as the "hotchpot"), any advancement of intestate shares that those heirs previously received will be considered in deciding how much they're due now.

Example: Dwindling Assets

People often have fewer assets than they expected to have at death. If Bob received an advancement on his inheritance from John of ​$10,000​, but John's property was only worth ​$30,000​ when he died and he had five valid heirs to the property, each heir would be due only ​$6,000​. Bob already received ​$4,000​ more in his advancement than he was due.

The good news for Bob is that he doesn't have to return any amount of advancement, even if it was disproportionately large. The bad news: He's not getting any more. The administrator will divide the ​$30,000​ of property between the four other heirs since Bob already got all that he was due.