When an estate disposes of a passive activity, the estate is permitted to deduct suspended or unused passive losses, i.e., those it has previously not been allowed as deductions. Generally, the distribution of passive activity property would not be a taxable event. In the case of a distribution of passive activity property on termination of an estate, absent amendment to the Code, there seems to be no ability to pass through suspended losses to the beneficiaries. Depending on the facts, this might be an asset that should be distributed or sold prior to termination.
as for transferring property into the trust that you own see a tax lawyer. the way i see it that would likely create tax problems because you would be the grantor, trustee and beneficiary and would as such might actually convert the trust to a grantor trust and lose those previous PAL.
