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Counsel's corner: estate planning and advancements
Steve Lopez explains the benefits of having an estate plan.
WRITTEN BY :   Steve Lopez

Parents often give a large sum of money to one of their children during life with the intention of making that gift an advancement against the child’s inheritance. Many times the parents making the gift are reluctant to explain their intention to their children because they do not want to hurt their feelings. Some of the gifts occur during special occasions such as weedings which could blur the line as to whether the gift is a true gift or if it was going to count against their inheritance.
When this situation happens and a parent passes away without an estate plan, that gift against the child’s inheritance is called “advancement.” Usually, in a situation where a parent leaves no estate plan, this could result in fighting amongst the siblings as to whether to count the gift as an advancement or a gift given during the parent life time, an” inter vivos gift”.
The law on advancement is complicated and could lead to some contentious litigation. Generally, in order for a transfer of property to be considered an advancement there must be a showing of an intention on the part of the parent to treat the transfer as part of the child’s inheritance. An advancement is an irrevocable gift, usually made by a parent to a child wherein the parent intends for it to be charged against the child’s share of the estate should the parent dies without a will or trust. The doctrine of advancements is based on the assumption that a parent would prefer that his children share equally in his estate so that one child is not preferred to another.
This doctrine originated in several early English statutory enactments and has become part of the common law of the United States. Most jurisdictions in the United States, however, have enacted statutes modifying the common law of advancements in one way or another, usually with the purposes of settling disputed or doubtful points, clarifying the doctrine, and preventing fraud.
Many states have enacted provisions of the Uniform Probate Code, or similar provisions, allowing for an advancement although the decedent did not otherwise so intend, provided that certain conditions specified in the statute exist. Some states, such as California and Nebraska, have statutorily modified the common law to expand application of the doctrine of advancements to inter vivos gifts made by one who dies and leaves a will. For this reason, it is important that counsel consult any applicable state statute when dealing with a case involving a question of advancement.
The question whether a particular transfer constitutes an advancement usually arises in the course of proceedings after the parent’s death to determine the distribution of his or her estate. Such proceedings are usually initiated by the administrator of the parent’s estate (usually the oldest sibling) or by petition to the probate court by another child, seeking a declaration that the sibling’s share of the estate should be reduced by the amount of the gift. In certain situations, such as where an administrator asserts that a transfer was a loan, the child himself may petition the court for a declaration that the transfer was an advancement, subject to setoff rather than repayment.
If you pass away leaving behind a will or trust, the terms of that document control the amount of your loved ones’ inheritances. So, if you give your child a large gift during your lifetime and did not account for it in your Will or Trust, then the terms of the document control the distribution of your estate. Your remaining beneficiaries can’t request that the gift be treated as an advancement on that child’s inheritance.
If you intend to treat a lifetime gift to a loved one as an advancement against his or her inheritance, you’ll want to put it in writing, preferably in your will or trust.
The purpose of this column is to provide general information on the law, which is subject to change. It is not legal advice. Consult a lawyer if you have a specific legal problem.

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Published: April 4, 2013 – Volume 11 – Issue 51



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