WHAT IS Abeyance
BREAKING DOWN Abeyance
Abeyance results when the current owner or holder does not declare a single current beneficiary. Instead, the new owner is determined through the outcome of a particular event at some time in the future. Thus, the ownership of the property, office, or title is left unfilled. Abeyance is derived from the Old French word abeyance, which means a longing or gaping, with future expectation. Many estates are placed in trusts with stipulations that must be fulfilled before ownership can be taken. For example, if a trust fund is to be given to a child once he or she finishes college, the funds are said to be in abeyance until the goal is reached.
Abeyance also exists when there is no one who can easily declare future ownership. For example, a trust could be set up by a parent who has no grandchildren, but hopes to have grandchildren one day, and wishes to leave funds to them at some future date. Because these grandchildren do not yet exist, the proceeds would be held in abeyance until these children are born.
Abeyance in testamentary trusts
A testamentary trust is a legal arrangement created as specified in a person's will. It is created to address any estate accumulated during that person's lifetime or generated as a result of a postmortem lawsuit, such as a settlement in a survival claim, or the proceeds from a life insurance policy held on the settlor. A trust can be created to oversee such assets. A trustee is appointed to direct the trust until a set time when the trust expires, such as when minor beneficiaries reach a specified age or accomplish a deed such as completing a set educational goal or achieving a specified matrimonial status.
Four parties are involved in a testamentary trust. The first is the person who specifies that the trust be created, usually as a part of a will, but it may be set up in abeyance during the person's lifetime. This person may be called the grantor or trustor but is usually referred to as the settlor. Then there is the trustee, whose duty is to carry out the terms of the will. They are named in the will or may be appointed by the probate court that handles the will. In addition, there is the beneficiary or beneficiaries, who will receive the benefits of the trust. And, although not a party to the trust itself, the probate court is a necessary component of the trust's activity as it oversees the trustee's handling of the trust.