A testamentary trust is a special kind of trust that is established in a will. It is different from an inter vivos trust, which is a trust that is created during the course of a person’s lifetime. Testamentary trusts can provide substantial benefits and you need to decide if creating a testamentary trust makes sense in the context of your estate planning. An experienced attorney can provide you with help in understanding what a testamentary trust is, how it works, and why you may want such a trust to exist.
Unsworth LaPlante, PLLC has extensive experience with trust creation, and we can provide you with advice on all different kinds of trusts and estate planning tools that can help you to accomplish your goals and build your legacy.
We will work with you to make sure that you select the right types of trusts to meet your needs and that those trusts are created properly so they are legally enforceable and so you get the expected benefits. To find out more about how a testamentary trust can be used as part of your estate plan, give us a call at (802) 879-7133 or contact us online to speak with a member of our legal team and learn more.
What is a Testamentary Trust?
According to Investopedia: “A testamentary trust is a legal and fiduciary relationship created through explicit instructions in a deceased’s will. A testamentary trust goes into effect upon an individual’s death and is commonly used when someone wants to leave assets to a beneficiary, but doesn’t want the beneficiary to receive those assets until a specified time. Testamentary trusts are irrevocable.”
Testamentary trusts are frequently used when someone wishes to leave money to minors but does not want those children to inherit the money until they are 18 years of age or until they reach some designated milestone. Testamentary trusts are also a popular option when someone has a small estate, but has a large life insurance policy which will distribute a substantial death benefit. When a testamentary trust is created, the proceeds from that life insurance policy can be distributed to the trust instead of simply being paid out to a designated beneficiary.
Testamentary trusts are an alternative to inter vivos trust, which are created and which are in effect during your lifetime and which can be revocable and modifiable. You provide for your testamentary trust when you make your last will, and you can actually create multiple testamentary trusts in a single will. An estate planning attorney can provide you with help in deciding if you should create any testamentary trusts and can assist with the process of trust creation.
Do You Need a Testamentary Trust?
Testamentary trusts can provide important protections for young children by giving you continued control over money that is left for the kids in your life. If you want control over who will be the trustee and who will manage money or property that you leave to minors in the will, a testamentary trust can give you that control.
Because children cannot inherit until they turn 18, the court could appoint a guardian for money you have left to children if you don’t make a testamentary trust or other alternative plan. The guardian the court selects might not be the person you would have selected to manage the money of the children. You can also make certain that a child isn’t handed a huge sum of money on his 18th birthday with no oversight over those funds if you create a testamentary trust.
There are also other ways to provide for minors though, so you should be sure to talk with an attorney about which options are best for your situation.
Getting Help from A Trusts Lawyer
You want to make certain that you do everything possible to protect your wealth and to make certain that an inheritance you leave to your loved ones is a true gift and not a burden or a hindrance. Trusts are powerful estate planning tools that can allow you to protect assets and to even maintain continued control over money which has been left behind to the people that you love. You need to work with an experienced attorney to find out which trusts make sense for you and to ensure trusts you create will provide the desired protections. Unsworth LaPlante, PLLC can help.
To find out more about testamentary trusts and about the role of trusts within your estate plan, download our free estate planning worksheet . You can also give us a call at (802) 879-7133 or contact us online to speak with a member of our legal team to get personalized advice about how trusts can work to protect you and your heirs. Contact us now to find out more.
- An Overview of Estate Planning With Life Insurance - April 21, 2021
- Share Final Arrangement Preferences in Your Estate Plan - April 12, 2021
- Do You Still Control Property in a Living Trust? - March 31, 2021