Can a Trust legally pay a debt that’s outside the Trust?
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Can a Trust legally pay a debt that’s outside the Trust?
My Aunt has a revocable Trust of which I am a trustee. She passed away before all
her assets were put into the Trust. Two accounts now have to go through Oregon
Probate. The State requires finding blood relatives they say need to be notified of
her passing even though they are not a beneficiary in the Will. My question is, is
the Trust legally responsible for any debts incurred outside the Trust?
Asked on May 5, 2017 under Estate Planning, Oregon
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If the debts are necessary for the functioning of the trust or the accomplishment of its ends/goals, then even if technically outside the bounds of the trust, the could be paid so that the purposes of the trust can be served. Or if the trust instrument gave the trustee sufficient discretion as to, under the terms of the trust, pay these debts, he or she may do so. The debts either need to be necessary ones or within the trustee's reasonable discreation under the trust's terms.
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