How Does an Advancement Work for Wills & Trusts?

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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 portion of that inheritance from the individual before his death. But after death, the estate administrator will take that advance into account. Those with specific questions about advancement on inheritance should consult an estate lawyer.

Inheritance

"Inheritance" occurs when an individual dies intestate, i.e., without creating any sort of legal instrument that bequeaths some or all of his property to others. At this point, the law automatically distributes the intestate property to the individual's relations. Inheritance law comes from individual states, and each state has its own statutory order in which relatives stand in line to inherit property. If the deceased left a valid will or trust, or other document, inheritance only occurs if any property remains that was not distributed by the will or trust.

Advancement

A person has no actual heirs until after his death. Before he dies, all individuals who may stand to inherit after his death are only 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, since 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 inheritance if an individual makes that gift to a lineal descendant (children and their descendants), not to an ancestor (parents, grandparents, etc.).

Presumption of Advancement

The common law presumed, in absence of contrary evidence, that a lifetime gift to relatives constitued an advancement on inheritance. However, various laws have evolved in U.S. states. Some states do not presume that a lifetime gift is an advancement. Other states, following the Uniform Probate Code, demand a statement in writing from the heir or the decedent, or some other type of written proof, that a gift was intended as an advancement.

Equal Distribution

The common law assumes that an equal distribution of inheritance should include all property, including that given by advancement. Therefore, once a gift is proven to be an advancement on inheritance, the law allows an estate executor or administrator to consider that advancement as part of the recipient's inheritance after death. 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 those heirs previously received will be considered in deciding how much they are due now.

Example: Dwindling Assets

At death, people often have fewer assets than they expected to have. For instance, if Bob received an advancement on his inheritance from John of $10,000, but when John died his property was only worth $30,000 and he had five valid heirs to the property. Each heir would be due only $6,000, so 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.